January 24th, 2012
12:07 PM GMT
Davos, Switzerland (CNN) - Four years ago, the halls of Davos buzzed with excitement nine short months before the near-collapse of the Western banking system. Oil was above $100 a barrel, while sovereign funds from China to the Middle East started to flex their muscles on the global stage of the World Economic Forum.
There is now a bitter aftertaste that lingers after the recent upheaval of that financial crisis. The debt burdens in Europe and the U.S. still need to be reckoned with, giving those from the emerging markets the space to bask in the limelight here at this now fabled mountain retreat.
The central theme at the gathering of power brokers is transformation. That could simply be defined as the rise of the developing world – which is clearly transforming business as we know it today.
Here is just a sample of what leading chief executives are saying. The head of food and consumer products giant Unilever says 55 percent of the group’s earnings are coming from the developing world. “Power is going back to where it was 300-400 years ago,” said Paul Polman, a co-chair at this year’s annual meeting. “For Europe to expect the same sort of role in the future or the same level of prosperity is naïve.”
Dennis Nally, chief executive of the global consulting group PWC, said we are in a “significant re-balancing that is taking place, that is real and is here to stay.”
Recent market analysis supports their views. Standard Chartered bank took a view to 2030 and said we will see a more than fourfold increase in global GDP to more than $300 trillion. What is striking is that the bank says two-thirds of that growth will coming from today’s emerging markets, supported by 98 percent of the population growth from the developing world.
This re-balancing may be shaking those that are being dislocated by rapid change - but Nally says that “CEOs and businesses are more comfortable at dealing with all of those kinds of issues” than this transformation presents.
Government, it seems, is not. Business leaders suggest that the lone superpower at the tail end of the 20th century, the U.S., is starting to retrench. “The United States is going back to its home turf and abdicating its role as the global policeman,” said Unilever’s Polman. At the same time, businessmen say the new emerging powers, especially China and India, are not willing to step up to grasp the baton of global leadership just yet.
Prince Turki al Faisal, the former head of Saudi Arabia’s intelligence services, says this has spilled over into the United Nations Security Council, where the five permanent members vie for power, but choose not to move with the urgency required on issues such as Iran and Syria. This in turn, many believe, enhances global risks for business.
With tensions in the Strait of Hormuz rising after unilateral sanctions by the European Union on Iran, oil prices strategist believe will have $100 a barrel as a base to move higher. It is still unclear how Syria will play out or how the new governments of the Arab Spring will develop.
Those risks, of course, complicate the transformation that is underway for the fast-growing economies, but do not appear to serve as roadblocks to their growth plans over the next two decades.
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