Debt crisis, AI, SME digitalization: The hot topics of Summer Davos 2023
The World Economic Forum’s 14th Annual Meeting of the New Champions (AMNC23) brought together influential leaders, entrepreneurs and innovators from around the globe on June 27 to June 29.Also known as the “Summer Davos Forum,” AMNC23 was held in Tianjin, People’s Republic of China, with the theme “Entrepreneurship: The Driving Force of the Global Economy.” The annual meeting aims to foster collaborative efforts in addressing the critical geopolitical and geoeconomic challenges facing humanity—such as sustainable energy transition, internet of things (IoT) security and safeguarding nature and climate.
In the opening ceremony, Chinese Premier Li Qiang emphasized the need for communication, cooperation and openness to sustain economic globalization and global supply chain stability. He highlighted China’s major contributions to global economic growth—being the first in the world for goods trading in six consecutive years—and outlined China’s commitment to innovation, sustainability and global cooperation to aid world economic recovery.
This year’s topics centered on key issues that have the potential to either transform or derail economies and societies worldwide.
A debt crisis for developing countries
Soaring global debt and rising interest rates are forcing governments worldwide to divert funding from important development goals, such as education and climate change. The issue is exacerbated in developing countries that are forced to get credit at very high interest rates.
Global debt hit $305 trillion in previous months due to compounding shocks, such as COVID-19 and the war in Ukraine. Developing countries, in particular, saw external debt levels grow by over 15 percent last year compared with prepandemic levels. The interest cost on external borrowing is, on average, three times more for developing countries than for developed countries, resulting in developing countries using a far greater percentage of their domestic revenue on interest payments.
At the Summer Davos Forum, political and economic leaders called for better coordination and communication among major world economies to help curb the global debt crisis. Experts stressed that governments, the private sector and international financial institutions like the International Monetary Fund need to create new funding mechanisms. International lenders were also urged to increase access to long-term public financing and improve market borrowing terms for developing countries.
The need for AI guardrails and responsible design
At the Summer Davos forum, experts agreed that artificial intelligence (AI) models are powerful, creative technology that could change human civilization. One session discussed AI’s potential to revolutionize health care by improving medical diagnosis, health-care delivery and clinical trial selections. A report was also shared about the success of FireAId, a pilot initiative that uses AI to predict wildfires with 80 percent accuracy rate.
Forums discussed the need for a framework to develop responsible generative AI models and address AI’s potential negative consequences. Emilija Stojmenova Duh, Slovenia’s Minister of Digital Transformation, expressed concerns about the biases inherent in AI systems and the need to eliminate them. Darko Matovski, CEO of CausaLens, stated that to build trust in AI innovation, humans need to understand how AI systems operate; AI, in turn, must be able to explain its decisions and actions.
To regulate AI, panel members leaned toward a public-private approach between governments and the tech industry. Legislators alone might create regulation that’s inadequate in controlling risks or stifles positive innovation. Tech companies have a better understanding of AI and thus can help governments worldwide ensure that people feel secure in a world with AI, especially those who may be displaced by AI development.
Digital inclusion for entrepreneurs of all sizes
Small and medium enterprises (SMEs) make up the majority of companies worldwide. However, while the digital economy contributes a significant portion to the global gross domestic product, the gaps in digitalization between large businesses and SMEs prevent digital productivity gains from translating into overall economic growth.
SMEs face challenges in investing in digital upgrades due to high costs, technological barriers and security challenges. A promising solution is the creation of collaborative technology-driven models to help increase SMEs’ digital capabilities in payment, security, marketing and more, at a lower cost. The “Platform + Independent Software Vendor (ISV)” model, for instance, allows ISVs to use a platform’s repertoire of open APIs to build a customized solution for an SME’s unique need. An example in Hong Kong is restaurant outlet Kitchen 11 Food Court, which uses Alipay’s Smart Restaurant solution to resolve bottlenecks during peak hours. The food court enables customers to use the Alipay app to view menus, order and pay on their phones, removing the in-person frictions of queuing, ordering and paying at every restaurant stall.
SMEs also struggle with being data-ready and data-driven. Many are unable to unlock valuable insights that can help them gain a competitive advantage due to limited resources, a lack of data policies and difficulty extracting value from data. Multiple Summer Davos sessions called upon stakeholders to help SMEs prioritize data readiness through collaborations between the public and private sectors. Private sector players were urged to share best practices and knowledge on quality management and data governance. Governments and regulators were asked to simplify regulatory frameworks and provide incentives for responsible and ethical data management. International and civil society organizations were encouraged to promote the responsible use of data and provide open-source data tools and training resources.
This year’s Summer Davos concluded with experts emphasizing the need for business communities and public sectors to work together to maintain the benefits of a connected and relationship-based world. For Philippine SMEs, embracing AI, data readiness and vital collaborations with the government and private sector can transform their decision-making processes. More importantly, these can help them respond to market trends, streamline operations, capitalize on growth prospects and ignite innovation. INQ
(This article reflects the personal opinion of the author and not the official stand of the Management Association of the Philippines or MAP. The author is NextGen vice chair of MAP ICT Committee and vice president for external relations at First Circle. This article was co-written with Jess Jacutan, First Circle’s content marketing lead. Feedback at [email protected] and [email protected]).
