Davos was different this year. Amidst the worst economic crisis in decades, the World Economic Forum's annual mega-summit in the Swiss Alps found itself at a crossroads. The Financial Times' John Gapper says the prototypal "Davos Man"--the international captain of finance whose prominence and significance has risen meteorically in recent decades--seemed humbled. Many of the financial sector's major players skipped the summit altogether (Bloomberg), and several big banks cancelled the glitzy parties they have traditionally hosted at the summit. The concern for policymakers, however, isn't the subdued party scene. Rather, economists fear this year's Davos gloom could foreshadow a broader shift away from the interconnected economic model the World Economic Forum has traditionally embraced.
Pleas for economic openness rang out at this year's summit, particularly among the leaders of emerging economies. Russian Prime Minister Vladimir Putin warned against reliance upon intervention and protectionism to cure economic ills, saying such policies could backfire (Guardian). Chinese Premier Wen Jiabao backed Putin, saying world leaders must remain vigilant (Xinhua) in their efforts to curb trade protectionism. Egypt's trade minister echoed concerns (Reuters) about protectionism, as did India's (Reuters). "We will only make the crisis worse if we succumb to the lure of protectionism and petty nationalism," added Angel Gurria, the secretary-general of the Organization for Economic Cooperation and Development, in an article published on the OECD's website.
Significant threats loomed for free-trade hawks well before Davos. In a recent op-ed, CFR's Jagdish Bhagwati questioned U.S. President Barack Obama's pronouncements on trade, saying Obama has ignored lessons from the Depression era. Obama aside, the short-term trade outlook isn't particularly rosy. The International Monetary Fund estimates global trade will contract 2.8 percent...
