The Sunday Mail
On the eve of the annual World Economic Forum meeting at Davos, Oxfam released a report stating that the richest one percent of the world population owns just about as much wealth as the remaining 99 percent.
This data is undeniable testimony to growing inequality across the world.
Correspondingly, the World Economic Forum has served to provide the aesthetics of global leaders and corporate tycoons sitting in front of audiences, conversing with what is portrayed as spirited concern about this wealth disparity.
The theme at Davos this year is “The 4th Industrial Revolution”.
Discussions are focused around the notion that a technological revolution could be an effective tool that will serve to adjust wealth disparity by offering more opportunities for inclusive wealth accumulation.
Unfortunately, much of the discourse at Davos this year has entirely missed, if not purposefully ignored, the key issues causing wealth disparity.
This is largely due to a skewed business and governmental representation. Panelists are disproportionately executives of corporate entities and governmental institutions from developed economies.
Davos, therefore, exemplifies the “agency problem” in its efforts to discuss global wealth disparity.
An agency problem is when a principal hopes for an agent to perform a function, yet that agent has a conflict of interest motivated by an outcome that goes against the function ascribed by the principal.
More simply, the agents at Davos stand to gain from continued inequality, though it may be in the short term.
Simple analysis interrogating the relationship between developed economy corporations and governmental institutions would identify structures that continue to enable global wealth inequality.
Consider that for a matter that involves approximately 40 percent of world GDP, the Trans Pacific Partnership (TPP) has not been thoroughly critiqued at Davos.
What is dressed as a free trade agreement between over twenty nations is in fact a legislation that aims to override sovereign countries’ legal, judicial, and regulatory frameworks in order to protect corporate interests of multinationals.
For instance, under the TPP, private international tribunals which will almost definitely represent interests of developed nation corporations will be legible to sue elected governments if respective governments pass environmental, financial, or health and safety legislation that compromises the interests of foreign investors and enterprise.
This would cement a century’s long trend where terms of trade and legal business environments have been designed in a manner that favours corporations from developed countries.
According to a McKinsey report, since 1980 profits for companies from developed economies more than tripled in real terms from $2 trillion to $7.2 trillion by 2013.
Today, developed economy corporations earn more than two-thirds of global profits.
It is highly unlikely that such a number is attributable to micro-economic efficiencies alone.
The idea of trade and economic liberalisation has been often prescribed for developing nations, yet evidence shows that for developed nations and recently emerging countries in Asia, industrial protectionism and reserving of certain sectors has been the almost assured route to local economic development.
Comparative advantages have to be nurtured in an insulated market, but developed economy enterprise has not been so patient with Africa.
Thus, if global competition can be seen as races to industrialise and then expand markets, perhaps Davos can revisit the theme of “4th Industrial Revolution”.
Most developing countries were excluded from the three prior revolutions, and now in an era of increased technology excludability as reflected by present day trade agreements such as the TPP frameworks on patents and intellectual property, it is overly ambitions to imagine that this fourth revolution can offer better parity in the context of wealth opportunity.
It would be disingenuous to suggest that the global economy as influenced by developed economy companies and governmental institutions has not brought about notable increases in human development.
Africa, for instance, has benefited from the global dispersion of capital, technology and intellectual property from developed countries.
Many developing countries have even started to reform and modernise their economies on the strength of these economic elements. That is undeniable.
Yet, the increasing global inequality trends rightfully suggest that a wealth effect goes beyond simple assimilation of these mega-trends shared as per existing status quo.
So, in a context of wealth equality, developing economies must confront structures that cause the disproportionate share of global profits and wealth accumulation.
This should have been themed at Davos if the World Economic Forum truly meant to correct wealth inequality.
However, such a discussion would command greater credibility if developing economies themselves had more representation at stages like Davos.
Conceivably, such representation of developing economy wealth interests would overcome the aforementioned agency problem that exhibits itself annually in Switzerland.
Unfortunately, this representation seems stubbornly hard to do within developing economies themselves.
Ideally, developing nation corporations and governmental institutions would demand more space in forums such as Davos to go and carry unison voices expressing the wealth interests of their home economies.
However, in Zimbabwe for example, governmental institutions and corporations have been frustratingly slow in converging socio-economic ideals and exuding such coherence in public platforms.
It is therefore encouraging that the Ministry of Youth, Indigenisation and Economic Empowerment which is the cornerstone of ideals to rectify wealth and opportunity disparity, has been actively engaging with corporate Zimbabwe in open platforms.
It is important that Zimbabwe cultivates an economic existence where corporations and governmental institutions work to construct frameworks and economic designs that are founded on the understanding of mutually vested interests.
Just like how corporations and governments in developed nations work hand in glove under the understanding of national interest, developing nations such as Zimbabwe should do the same.
To create such an environment, discourse should be constructed around what we envision as a relationship of national interest between our Government and our corporations.
More importantly, what are the codes of conduct that must exist between Government and corporations to sustain this relationship of national interest?
It is particularly this conversation which must be conducted if we are to gain any traction in achieving profitable economic empowerment.
For instance, corporate Zimbabwe has missed that it is the intended first beneficiaries of economic empowerment, and if Zimbabweans who are not in enterprise are to be economically empowered, it will be a trickle-down effect from corporate Zimbabwe that will do so.
Thus, there is a responsibility within this code of conduct for corporations in Zimbabwe to actively and overtly uphold their responsibility in engaging with Government on how best they can contribute to economic empowerment for Zimbabweans.
On the other end, Government should uphold its expected conduct in order to retain trust from corporations that it acts as an agent of national interest.
This involves attending to matters of institutional credibility such as corruption, patronage, and universal treatment to all business agents.
If Government and corporations uphold their expected conduct, there will be much more cohesion and conformity in national interest.
It is important for the ethos of economic empowerment to be a success in Zimbabwe.
It may not yet be clear to many even within our borders, but economic empowerment is a drive that is a solution to rectifying wealth inequality at a global scale.
It serves a greater context than just Zimbabwe. Developing nation governments and corporations must function in congruence towards economic structures that rectify wealth disparity.
In Davos, corporations and governmental institutions from nations such as Zimbabwe should advance for better terms of trade, legislation that locks in long term capital, fair competitive markets and global governance reforms.
However, if our governments and corporations do not step up, the beneficiaries of the current practices will keep dominating the economic processes.
