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World Affairs, Economy
Mahesh

16/01/24 06:23 AM IST

World Economic Forum

In News
  • Davos brings together around 3,000 participants (including paying members and select invitees) — investors, business leaders, political leaders, economists, celebrities, and others — to discuss global issues across 500 sessions.
Historical background
  • German professor Klaus Schwab founded the WEF.
  • He was a mechanical engineering graduate who then earned a Master of Public Administration degree from the John F. Kennedy School of Government at Harvard University.
  • From 1972 to 2003, Schwab was a professor of business policy at the University of Geneva.
  • He founded WEF in 1971, originally known as the European Management Forum.
  • It introduced the concept of “stakeholder capitalism.”
  • According to Schwab, “It is a form of capitalism in which companies do not only optimize short-term profits for shareholders, but seek long term value creation, by taking into account the needs of all their stakeholders, and society at large.”
  • The WEF website says of the idea: “A company should serve all its stakeholders, not just its shareholders: employees, suppliers, and the community it is part of.” As an extension of this, business, government and civil society leaders have made their way to the high Alps “to consider the major global issues of the day and to brainstorm on solutions to address these challenges".
Working of WEF
  • Initially, Professor Schwab focused the meetings on how European firms could catch up with US management practices.
  • Events in 1973, namely the collapse of the Bretton Woods fixed exchange rate mechanism and the Arab-Israeli War, saw the Annual Meeting expand its focus from management to economic and social issues.
  • Two years later, the organisation introduced a system of membership for ‘the 1,000 leading companies of the world’.
  • The European Management Forum was the first non-governmental institution to initiate a partnership with China’s economic development commissions in 1979 – the same year China and the US established diplomatic ties.
  • The WEF has become a forum for various stakeholders to meet and discuss global and regional socio-economic issues.
  • The WEF is largely funded by its partnering corporations. These are generally global enterprises with annual turnover greater than $5 billion.
Significance
  • In the past, it has been used as a location for pivotal international diplomacy as leaders can break tensions in the town.
  • The WEF website states that North and South Korea held their first ministerial-level meetings in Davos. At the same Meeting, East German Prime Minister Hans Modrow and German Chancellor Helmut Kohl met to discuss German reunification.
  • The G20 meeting was eventually elevated to a summit.
  • This happened in 2008 when the US hosted a G20 summit in Washington DC to address the impact of the global economic crisis.
  • The WEF also went on to regularly publish global rankings and indices, such as the Global Competitiveness Report and the Global Gender Gap Report.
Source- Indian Express

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