Globalization’s thrill fades
PwC’s survey shows corporate bosses remain confident, though
Report shows skepticism about benefits
Globalization took another knock Monday with the publication of a report that showed corporate titans around the world have become more skeptical about the benefits of integrating people, companies and governments.
Still, the CEOs surveyed said they are more confident about the growth prospects for their own firms and the global economy over the next year.
The annual survey of chief executives by PricewaterhouseCoopers found that while for the past 20 years business leaders have been largely positive about an increasingly integrated global economy marked by free trade and frictionless capital flows, they are increasingly skeptical about its impact in some areas.
Forty-four percent of business leaders firmly believe globalization has done virtually nothing, for example, to help close the gap between the rich and poor.
The conclusions from the taxconsulting firm were released on the eve of the World Economic Forum’s annual meeting in Davos, a gathering attended by some of globalization’s biggest cheerleaders.
“CEOs used to be very positive about the ability and benefits of globalization,” Bob Mortiz, PwC’s global chairman, said in an interview. “They saw the world transforming with a few mega-trends: Shifting demographics, a bigger consumer base around the world. There wasn’t as much knowledge or focus on the implications of that downstream.”
The report, based on interviews with nearly 1,400 CEOs from 79 countries, revealed that just 13% of corporate leaders feel globalization has “to a large extent” helped solve the problem of income inequality.
PwC’s survey comes as new estimates released Monday by antipoverty organization Oxfam showed that just eight people own the same wealth as the poorest half of the world — more than 3.6 billion people.
Oxfam used data from Forbes’ billionaires list and Credit Suisse’s 2016 Global Wealth report to illustrate the growing gap between rich and poor. Data provided to USA TODAY by Credit Suisse showed that in Russia the richest 1% controls 74.5% of total wealth. That is the highest figure outside of Africa. In the U.S, it is 42.1%.)
There was similar recognition of climate- and resource-related downsides in PwC’s survey. Only 15% of CEOs strongly felt globalization has helped avert those risks.
Moritz said the findings were in stark contrast to the first PwC CEO survey in 1998, when globalization concerns were absent. The last time the survey included direct questions about globalization was 10 years ago, when 73% of CEOs thought it was good for both developed and developing markets.
The majority of CEOs (60%) in the latest survey still believe that globalization makes it easier to move capital, people, goods and information across borders, enabling more connectivity and creating a skilled and educated workforce. However, worries about protectionism are growing, with 59% of CEOs concerned about restrictive trade policies.
The survey found that while CEOs from around the world have plenty to fret over in the year ahead — economic uncertainty, over-regulation, availability of key worker skills and worries about protectionism top the list. They are extremely confident about their companies’ growth prospects for the next 12 months. And nearly 3 of 10 (29%), up from 27% last year, believe global growth will accelerate in 2017. Thirty-nine percent of U.S. corporate bosses, versus 33% last year, are confident about revenue growth.