Davos Was All About Globalization 4.0, So What Does It Mean?

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Written by Winona Roylance

With digital technologies continuously disrupting business, government, academia and society both on a national and massively global scale, the advent of Globalization 4.0—a term coined by this year’s World Economic Forum to signal the coming shift in globalized structures—may be upon us. Characterized by the major global changes brought on by technologies such as artificial intelligence, robotics and the Internet of Things combined with a rapidly fluctuating global economy, social inequality and political tensions both at the international level and between political leaders and citizens, Globalization 4.0 gives a lot of promise to the idea of a newly transformed world free of inequality and poverty—but first, several major obstacles, often fueled by the same hectic energy that drives the progress of these digital technologies, must be overcome; not only in order to begin working towards a more positive future, but more importantly to prevent the destabilization of the world as we know it.

First, the Fourth Industrial Revolution and its digital technologies have not only transformed virtually every industry across the board, but has done so on a global scale the likes of which has never before been seen. In fact, it is the massive scope, system-wide impact and increasing velocity of the Fourth Industrial Revolution that makes it so impactful—and potentially catastrophic. While technologies such as artificial intelligence and robotics have brought unprecedented advancements in nearly every industry, this same technology is also threatening to displace billions of workers in the very near future, and the question remains as to what kind of legislation—if any at all—should be put into place to prepare for this displacement of people and wealth that would undoubtedly upheave our current global social and economic structure.

At the same time, as we are attempting to grab a hold of the increasingly disruptive nature of the Fourth Industrial Revolution, rising rates in inequality also threaten the progress we’ve made in terms of equal distribution of wealth in the past few decades. With reports showing one percent of the world’s richest bringing in eighty-two percent of all wealth last year, this inequality in distribution of wealth will undoubtedly increase to socially catastrophic levels if no solutions are found soon. The problem isn’t only that the wealthy are becoming wealthier—studies show that extreme poverty, such as in sub-Saharan Africa, has also been increasing, and with other areas demonstrating similar trends, the Sustainable Development Goal of ending poverty before 2030 appears to be farther away than ever. It is absolutely imperative that governments begin working more closely together to rewrite our current global structures of finance, trade, wages and taxation on an international level.

However, with nations recently beginning to turn a resentful eye towards the global structures that have fueled many of today’s problems, several countries have begun adopting a reactionary approach to globalization by taking a more protectionist approach in international matters and electing nationalist leaders. This is, of course, extremely concerning for a number of reasons, most of which have to do with the fact that future projections reveal the world will continue to trend towards more globalized structures as technologies such as the internet and artificial intelligence continue to permeate every industry. It is crucial that cooperation both across nations and between national leaders and their citizens be increased rather than ignored in these times of global uncertainty, and that political good will is kept a priority moving forward.

Indeed, the World Economic Forum’s Global Risks Report reveals that the three biggest global risks likely to happen in 2019—extreme weather events, failure of climate-change mitigation and adaptation, and major natural disasters—are not risks brought on by globalization at all, but rather matters that will require international effort to ensure the safety of everyone affected. Similarly, in terms of business, the Allianz 2019 Risk Barometer indicates that the biggest threat to businesses is interruptions caused by issues such as tariffs and trade disputes, as well as recent changes in legislation and regulation such as Great Britain’s exit from the European Union. With a looming global recession projected to occur in 2020 or even as early as late 2019, it is imperative that world leaders continue to work towards cooperation in times of international crises, and that the international business landscape continue to work towards globalization—not against it.

However, while trade may be shifting towards a more closed model, the goods and services that are being traded are seeing a radical change. In fact, a recent report from the McKinsey Global Institute indicates that while it is true that trade is becoming concentrated within regions and that a smaller share of goods is being traded across borders, that which is being traded is changing drastically, with the services trade growing sixty percent faster than the goods trade in the last year. With services such as telecom, IT, business services and intellectual property charges as the most popular services being traded in recent years, this technology-oriented shift in services demonstrates that while physical trade borders may be closable, the more intangible services—many of which do not require the user to be in the same physical location as the service itself—cannot be contained to a single location, and must therefore be regulated from a more globalized perspective.

Ultimately, we are in a time of unprecedented change, which is not going to slow down. With the Fourth Industrial Revolution coinciding with increasing political tensions, a changing economic landscape and social unrest, many of today’s problems may appear to be caused by our rapidly globalizing world. However, it can also be said that most of today’s greatest achievements—be it in technology, medicine, political movements, social change or increased environmental awareness—are also due to the cooperation between nations and institutions that only globalization could bring about. As we enter the world of Globalization 4.0 it is important to understand how cooperation and solidarity—not isolationism—will be essential to the future success of mankind, and that in order to accomplish this, we will need to tear down traditional structures and redesign nearly all processes and institutions from the ground up. If done successfully, we may very well enter a new era of peace and prosperity.