At World Forum, High Spirits and Spirited Debate

DAVOS, Switzerland â€”  Good cheer over the prospects for global economic growth is almost--but not quite--overwhelming doubts, fears and guilt over November’s collapse of trade talks in Seattle at the World Economic Forum meeting here.

Experts at this conference of 2,000 business executives and leaders of government, labor and social organizations predict that the next few years will see extraordinary economic growth for Europe, continued technology-driven prosperity for the United States, major reform of Japan’s economy and a rise in economic status for many developing countries. One panel discussion concluded that the world is on the verge of a vast economic uplift.

Yet the lessons of Seattle were heard. It is clear from the tenor of debates here that the decade ahead will see greater emphasis on new rules for the global economy.

In some ways this year’s forum--held as usual in the Swiss Alpine ski resort of Davos, three hours by train from Zurich--resembles a dialogue of the deaf.

Corporate CEOs and economists are rejoicing in the growth of business in most countries.

“Foreign investment throughout the world has grown to $400 billion from only $20 billion 30 years ago,� said an enthusiastic Percy Barnevik, chairman of Investor AB of Sweden, an investment company with major holdings in Saab, Ericsson, ABB and other Scandinavian companies.

And not only rich countries rejoiced. Ernesto Zedillo, president of Mexico, celebrated his country’s increasingly robust export economy and moderating inflation by declaring here Friday that Mexico has become a “unique country for investment because it has free trade agreements with Europe and North America.�

But what of Seattle? the Mexican delegation was asked. Had not thousands of people demonstrated in Seattle against the global economy and its perceived harm to workers and the environment in poor countries, including Mexico?

In his speech, Zedillo dismissed those protesters as “globe-a-phobic�--people from rich countries who “want to protect developing countries from development.�

But a disconnect was in clear evidence as John Sweeney, president of the AFL-CIO, reacted to Zedillo’s celebration: “I don’t know what Mexico he’s living in. The living conditions of the workers at the maquiladoras are dreadful.�

Labor leaders and members of about 50 nongovernmental organizations ranging from the Nobel Peace Prize-winning Doctors Without Borders to Amnesty International are here, poking holes in the visions of prosperity.

“Globalization has increased the numbers of people in poverty around the world,� Sweeney declared. “Globalization must now be called to account, and Seattle was just the beginning.�

The difference is that in Davos, unlike in Seattle, those “globe-a-phobics� are not in the streets but at the table--often the dinner table at this tony gathering. And arguments over veal and risotto with a good local wine are friendlier and better natured.

Globalization’s critics are calling for “rules� on the movements of trade and capital and for forgiveness of Third World debt by banks and governments of the developed world. They demand a place at the table in any new global trade talks, with the threat that the global economy would not move forward easily without rules and participation by labor, environmental and other social organizations.

But what does this highfalutin brainstorming session say to ordinary people who are thinking about their jobs and investments?

It says that the next decade will be even more intense than the last. The reason this year’s forum, the 30th here in Davos, is attracting more attention than ever is the very fact that almost all the world’s economies are in tune about the need for investment and development. (President Clinton made a special visit to talk about globalization at the forum here on Saturday--too late for this column’s deadline.)

And yet anxiety is growing along with prosperity because change is happening so fast. Some of the fodder for experts here trying to divine the short-term economic future:

* The renewed competitiveness of Asian economies. Thailand and South Korea in particular have undertaken reforms and are now more competitive than ever, said economist Kenneth Courtis, the Tokyo-based director of Asian research for Goldman Sachs. “Korean car makers can now make and sell a vehicle for $7,000,� he noted. Those nations “were pussycats before, but now they’re tigers with claws.�

* Japan’s restructuring will affect the whole world. Japan this year and in the years to come will undergo a thorough financial transformation as it increases its money supply to cope with bad bank loans, problems with pension returns and enormous government debt. “The yen’s value [now around 105 to the U.S. dollar] will fall to 160 to $1 and money will flow out of Japan to invest elsewhere, which will provide further stimulus to the global economy,� Courtis predicted here Thursday. But a fall in the yen may induce others--including China--to devalue their currencies as well.

* The accelerating use of the Internet by businesses and individuals will cause radical change, only some of which can be foreseen. Chemicals and other commodities will fall in price as they are traded efficiently over the Internet. Political change seems inevitable: China has been clamping down on Internet use by its own people, trying to control the flow of information, the forum was told. But the Chinese government will have its hands full, predicted Lyric Hughes, president of ChinaOnline, a Chicago-based Web site that features business information about China. “There are now more than 1 trillion sources of information on the Internet,� Hughes says, “and it’s estimated that even the most skilled government can only keep track of 15% of the Net.�

Every year here in Davos, site of a former tuberculosis sanitarium and the setting for German author Thomas Mann’s novel “The Magic Mountain,� a lot of bright--and prosperous--people discuss the big ideas they think will affect the world economy. This year’s subject--the need to somehow manage the forces of globalization--was summed up by British Prime Minister Tony Blair on Friday.

“Prosperity comes at a price,� Blair said. “Forces more ferocious and far-reaching than any before are affecting the lives of individuals and societies.

“People don’t want government to stop change,� Blair said, “but to manage it, to give them a feeling of some security in times that are exhilarating but also frightening.�

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James Flanigan can be reached by e-mail at [email protected].