Growing wealth divide puts globalization at risk

Wed Jan 11, 2012 10:17am EST
 
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By Ben Hirschler

LONDON (Reuters) - A backlash against rising inequality - evident from the Occupy movement to the Arab Spring - risks derailing the advance of globalization and represents a threat to economies worldwide, according to the World Economic Forum.

Severe income disparity and precarious government finances rank as the biggest economic threats facing the world, according to the group's 2012 Global Risks report released on Wednesday.

The 60-page analysis of 50 risks over the next decade precedes the World Economic Forum's (WEF) annual meeting in two weeks' time in the Swiss ski resort of Davos, and paints a bleak picture of an increasingly uncertain world.

Over the past four decades, Davos, which brings together politicians, central bankers and business leaders, has become a byword for globalization. Now confidence about the steady gains from the onward march of the global marketplace is faltering.

Rising youth unemployment, a retirement crisis among pensioners dependent on debt-burdened states and a yawning wealth gap have sown the "seeds of dystopia," according to the report, based on a survey of 469 experts and industry leaders.

For the first time in generations, people no longer believe their children will grow up to have a better standard of living.

"It needs immediate political attention, otherwise the political rhetoric that responds to this social unease will involve nationalism, protectionism and rolling back the globalization process," said Lee Howell, the WEF managing director responsible for the report.

The unsustainable level of government debt in many countries had already been highlighted as a top threat in the previous two WEF risk reports but the chronic nature of fiscal deficits means the issue remains centre stage.   Continued...