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INTERVIEW: Klaus Schwab of the World Economic Forum

Published by Newsweek on 1998-01-01

Klaus Schwab founded the World Economic Forum 30 years ago when he was a youthful professor of business management at the University of Geneva. Schwab, now 60, still teaches at the university, but he has transformed the Forum into what is arguably the most prestigious global network for decision-makers from politics, diplomacy, business and other high-profile fields. The father of two college-going children, Schwab sits on various corporate boards and also finds time for passions such as the environment and philanthropy. He spoke with Newsweek's Pranay Gupte in New York and Geneva recently:

How do you define "Responsible Globality," the theme of this year's Davos Meeting?
The mega-mergers of the past months, the global ramifications of the events in East Asia, Russia and Brazil, the fact that national boundaries have often become irrelevant, are just some of the signs that we live in a new reality where globalization is no longer a process but a condition. Second, why responsible globality? In a world which is becoming borderless, we have to create new global boundaries; we have to create procedural, legal and institutional mechanisms to avoid the malignant outbursts of a revolution which is irreversible. This, like the industrial revolution at the end of the last century, holds the key for better fulfillment by lifting millions of people out of poverty and providing them with adequate healthcare and education.

Now that the World Economic Forum is turning 30, what new directions do you see for your organization?
The World Economic Forum started out as the global interface between business and governments. But today we witness the tremendous acceleration of change driven mainly by the information revolution. In addition, civil society, represented by its own institutions like the NGOs has become--as US First Lady Hillary Rodham Clinton explained so well last year in Davos--the third leg of our global community. Thus, the Forum will turn into a true partnership of business, political, intellectual and other leaders of civil society.

Some grassroots activists say that the Forum doesn't pay sufficient attention to topics such as the environment and sustainable development. Your response?
We have been, during the 70s and 80s, at the forefront of creating an environmental conscience of business--and of course we still are. There is no well-known environmentalist who has not been to come to Davos, very often to shake up the participants. Our first meeting in 1971 in Davos was, for example, the platform to present to the world the famous report "Limits to Growth" of the Club of Rome. I personally served also as a key advisor to the Rio Earth Summit in 1992 and mobilized the business community for this summit and other events.

Beyond serving as a vehicle for high-level networking, how do you see the Forum's impact on global affairs?
Of course it goes beyond networking. Bringing together all those leaders at the beginning of the year creates an informal process to the take pulse of everybody's perceptions, to launch and to test new ideas and finally to stimulate a consensus on priorities.

Do you see financial volatility as the norm rather than the exception in the early years of the new millennium?
Yes, the world has become fast paced and complex--in short,vulnerable. We are also moving from a world which is tangible to a world which becomes increasingly intangible, just think of e-commerce. For all those reasons, and taking into account that regulatory attempts are usually reactive and not proactive, the time ahead will be full of surprises, particularly in the financial field.

Can and should globalization be rolled back?
To answer that question, I must pose another one: What does globalization really mean? In essence it creates the opportunity to share capital, technology and knowledge on a global scale. It is the only way to ensure that we can take care of a world which, at the end of this century, has four times more inhabitants than at the beginning of the century. Rolling back globalization reminds me of the workers in Manchester in the last century who tried to stop industrialization by smashing the machines. Just think of it.

Should the Bretton Woods institutions be replaced?
No, but improved by adapting them to the new necessities, for example integrating social needs more into the decision-making process. But to be fair we see already the first steps into this direction.

Notwithstanding all the talk about greater transparency, are private and public institutions really ready for it?
Transparency is not only a result of corporate decisions and government policies. It is very much technology driven. To preserve secrets in an internet society will be very difficult. Stakeholders, clients and the public will impose a penalty on those who do not open up.

How can the rich countries launch a meaningful assault on global poverty?
By sharing knowledge and supporting education. The new dividing line between richness and poverty is not between the haves and havenots but between the "knows" and "don't knows." If you have a good idea today you will find the capital nearly everywhere in the world. Therefore the best way to help the poor is to enable them to take advantage of a global knowledge economy.

What specific objectives would you like the Forum and the global community to set for the new millennium?
To live up truly to the motto of the foundation which is "Entrepreneurship in the global public interest." What we have to do is to strengthen entrepreneurship and at the same time social cohesion. Only if we have more winners than losers, we will enter peacefully into the new millennium.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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