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The Davos model of globalization is in need of a successor that New Delhi could potentially offer.

Like most years, this year too commenced with the global business and intellectual elite making their way to the World Economic Forum at Davos this January in an attempt to demystify the world around and provide some answers to the challenges that abound. But by the time the Davos spectacle came to an end, there were more questions than answers for the world at large. The Davos Consensus has been stuttering for the past few years, with the covid pandemic having made it abundantly clear that old assumptions about the world would have to be reassessed in fundamental ways.

In some ways, this rethink should not be surprising, considering that Davos itself was a platform created to reflect the optimism of the global economic order that once prevailed around us. Though more than five decades old, it gained particular traction during the days of irrational global exuberance over an emerging economic order shaped by hyper-globalization. For a large part of the world’s elite, it was the epitome of human evolution, a world where conflicts would become marginal thanks to increased economic interconnectedness, where identities would be global, and where global institutions would effectively mediate inter-state challenges.

 

"The Davos Consensus has been stuttering for the past few years, with the covid pandemic having made it abundantly clear that old assumptions about the world would have to be reassessed in fundamental ways."

 

But today’s world is one that is being shaped by the forces of geopolitics in more ways than one. The Ukraine war, the Israel-Hamas conflict, the flaring up of threats to sea-lanes that are critical for global trade, and, of course, the China challenge—all these are forcing global policymakers to look at this crisis-ridden world through a different lens than what was used in the past. The earlier hubris that economic forces would drive global politics is now being shunned, as some of the most forceful defenders of economic globalization are having a rethink.

Strategic ties between the West and China will not get stabilized anytime soon, with the pandemic and its aftermath having alerted most nations to the need for self-reliance in critical sectors and minimal exposure to long and complex supply chains overseas. Few are willing to go back to the supposed golden age of globalization in the late 1990s and early 2000s, the benefits of which are increasingly being contested within as well as among nations.

The rise of Donald Trump in US politics was itself a response to the uneven benefits of globalization, and he dramatically changed the American political discourse on the issue. The Republican Party has been traditionally uneasy about the Davos Consensus. But Trump, more than any other president, challenged the political basis of economic globalization and America’s role in it. Ron DeSantis, Florida governor and a presidential candidate on the Republican side till recently, has called Davos a “threat to freedom” run by China. The presence of leaders of other major Western nations has also been thinning over the years.

 

"Ron DeSantis, Florida governor and a presidential candidate on the Republican side till recently, has called Davos a “threat to freedom” run by China."

 

Describing the post-pandemic period as “strange, extraordinary and difficult to analyze,” European Central Bank president Christine Lagarde suggested that global trade, which was disrupted in the last two years, “is beginning now to really pick up and in October, we had global trade numbers that for the first time in many months [were] up.”

In the last two months, though, we have seen Yemen’s Houthis deploying relatively cheap drones and armaments to wreak havoc with world trade. As the crisis in West Asia has escalated, energy prices have also gone up, with global hopes of a rapid economic recovery again under a scanner.
It is the Global South that is likely to drive global growth in the coming years, if present trends are anything to go by, with India being one of the top performers. It is, therefore, imperative for the developing world to have this reality better reflected in the agenda of platforms such as the World Economic Forum.

From climate and energy transitions to the regulation of artificial intelligence, the role of the Global South and nations such as India should be critical, and for that new coalitions and a more focused agenda will have to be formulated.

This is India’s moment, as New Delhi finds itself in a geopolitical and geo-economic sweet spot at a time when the story of China has lost a large part of its sheen. With the developed world looking inwards and China’s aggressive orientation towards the outside world, there is a leadership vacuum that needs to be filled.

 

"As trust becomes a key ingredient in inter-state relations, India’s ability to craft trust-based partnerships with multiple players at the same time is a sign of its growing self confidence as well as a willingness on the part of others to bet on India at a time of geopolitical turmoil."

 

India’s significant presence at Davos this year underlined New Delhi’s willingness to project not only its growing economic heft, but also the country as a source of innovation and tech. As trust becomes a key ingredient in inter-state relations, India’s ability to craft trust-based partnerships with multiple players at the same time is a sign of its growing self confidence as well as a willingness on the part of others to bet on India at a time of geopolitical turmoil.

As external affairs minister S. Jaishankar has pointed out, despite many positive outcomes of globalization, “it has also undeniably led to such deep economic concentrations that much of the world today depends on production of a few geographies.” He also said that “the global agenda in so many ways today is about restoring the world to its natural diversity.” It is for India now to evolve a new consensus that could in some ways challenge the Davos Consensus.

Harsh V. Pant (V-P ORF)
23 February 2024

 

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