Global and European vision on modern challenges and solutions

Global and European governance is facing similar challenges: thus main international bodies’ vision and guidelines (e.g. Davos Forum, OECD and EU) specify common priorities and solutions in such spheres as digitalisation, measures affecting climate changes and post-pandemic recovery. Priorities in sub-regional entities, for example in the Baltic Sea States are not drastically different too; however most urgent for national governance’s actions are national recovery-resilience plans and sustainable socio-economic development. 

The World Economic Forum in Davos in January 2022 (which looked like an “assembly” of G-7 and G-20), managed to gather prominent public figures, state leaders, presidents and corporate gurus to discuss the ways to tackle modern global challenges. Davos Forum with its “Agenda-2022” provided an opportunity for global leaders and international communities to share their outlook, insights and plans (although online) related to urgent challenges and issues. Understanding the implications of global transformations for national governance, growth patterns and industry is vital for the EU states as well…
The World Economic Forum, WEF*) has become more relevant in modern political economy while continuing its tradition of discussing the state of the world at the start of each year by gathering politicians, business persons and economists.
*) The World Economic Forum (WEF) is the international organization for public-private cooperation committed to improving the state of the world. WEF engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas. The WEF’s strategic intelligence capabilities help making sense of the complex forces driving transformational change across economies, industries and global issues.

As soon as generally, the last couple of years were the “years of transformations”: both due to post-pandemic effect and fundamental challenges for socio-economic development, the next years are going to be aimed at recovery and resilience strategies. In post-pandemic, the decision-makers and national governance, social structures and business communities have been influenced by the basic ideas of survival and formulating perspective for the future growth.
Presently, the challenges have been “shifting”: i.e. towards assumptions about changing the old-type of growth models; the global balance of power continues to fray; the scientific and technological breakthroughs have been promising positive transformations in economies and societies, to name a few.
The WRF’s discussions and recommendations provide advises to global/regional leaders in preparing for “exponentially disruptive changes” in three main spheres: “mastering” the fourth industrial revolution, tackling increasing global challenges, and addressing global security issues.
Thus, particularly, the year of 2022 will be another year in dealing with some specific approaches concerning the digital agenda, political economy, workforce and sustainability…

The OECD**), on another side, sees certain growth since the depth of pandemic’s economic crisis occurred in 2020; thus, in 2022 and the next years may be quite “moderate” in major economies, according to the latest OECD Composite leading indicators (CLIs). The CLIs includes such factors as order books, confidence indicators, building permits, long-term interest rates, new car registrations and other cyclical indicators designed to anticipate fluctuations in economic activity. Among major OECD economies, a drop in momentum is visible in the latest CLIs for Canada, Germany, Italy and the UK; in Japan and the European Union the CLIs signal stable growth, though the peak in the indicators has also passed. In the US, the CLI also indicates stable growth, although the CLI level is now below its long-term trend; for G-7 the indicator shows “stable growth”. Among other major economies (e.g. Russia), the CLI is rising with signs of moderate growth; the CLI for China’s industrial sector shows a loss of momentum and has now dropped below its long-term trends. In India, the CLI continues to anticipate stable growth, whereas in Brazil the indication is for a sharp slowdown in growth.
Persisting uncertainties of the post-pandemic’s on recent indicators (notably from the impact of the Omicron variant), may result in higher than usual fluctuations in the CLI and its components. Although the CLIs should be interpreted with care at the post-pandemic time, its magnitude reflects a sign of the strength, rather than a precise measure of expected growth in economic activity, argued OECD specialists.
Source: https://stats.oecd.org/Index.aspx?datasetcode=MEI_CLI
**) Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.

The following issues are on the radar of global and European political expert’s communities:

= Digital issues. 20021 was the year with the premature hopes for the society’s “herd-immunity”, the end to pandemic lockdowns and a return to normality: all that disappeared at least for the start of 2022. Perspective trends in digitalisation have been described in the WEF’s pamphlet (“Fourth Industrial Revolution”, 2016); however, during last five years some new directions appeared which entered economy, finances and culture. Aside from increases in the social media and digital applications’ influence (with e.g. tiktok and instagram), there is growing trend in new and specific digital notions, like “non fungible tokens”, nfts+), as well as big capital’s interference in productive business and technology. While it’s hard to make accurate predictions in the unpredictable world (some still tried experiencing over the last two years), the year ahead will bring many surprises influencing life in 2022, including digital transformations.

+) NFTs are currently taking the digital art and collectibles world by storm. Digital artists are seeing their lives change thanks to huge sales to a new crypto-audience. And celebrities are joining in as they spot a new opportunity to connect with fans. But digital art is using NFTs to represent ownership of any unique asset, like a deed for an item in the digital or physical realm. NFTs are used to “tokenise things” like art, collectibles, even real estate; they can only have one official owner at a time and they’re secured by the Ethereal blockchain – no one can modify the record of ownership or copy/paste a new NFT into existence. Generally, NFT stands for non-fungible token; it is an economic term that used to describe numerous things: e.g. furniture, a song file or a computer; these things are not interchangeable for other items because they have unique properties. Source: https://www.tokenex.com/resource-center/what-is-tokenization.

In modern economy, NFTs have created what could be called the “digital deeds”; in the digital realm, NFTs are unique assets that can be bought and sold like any other. Thus, “tokenisation” is regarded as the process of converting a significant piece of data (e.g. account number), into a random string of characters (known as token) that, if compromised, has no meaningful value. These digital tokens may be used to buy physical things such as furniture, paintings or virtual assets like digital art, in-app purchases and even virtual properties. More in:
https://theconversation.com/six-big-digital-trends-to-watch-in-2022-174144

Digitalisation is entering all walks of life, including workplace and skills: thus, with the workplace set to change, so are the skills: according to the WEF, new occupations and skills in 2022 will account for 27 percent of big corporate employment, while technologically outmoded positions will decline from about 30 to 20 percent. Reference to:
https://www.weforum.org/about/what-are-the-forum-s-key-areas-of-focus
The shift in the division of labour between humans, computers and algorithms could potentially remove 75 million current jobs/occupations globally while generating 133 million new ones; thus, data analysts, software and application developers, e-commerce and social media specialists will be in high demand. Many “human” jobs, e.g. in customer service, organizational issues and innovation management, are expected to grow: e.g. from “taking jobs” approach, AI will create jobs and ensure employment across an array of different fields.

= Business and society. Last several years shave been a wakeup call for many CEOs to realize the need of including “public position” on socio-economic issues (from equality and inclusion to climate change) with a due attention to prompt actions on all these fronts. At the same time, the pressure to perform quick and resolute measures will intensify; besides, re-designed and stable corporate performance will be needed to encompass both profit (by shareholder return) and company’s impact on employees, customers, community and the global climate. Thus, the Aspen Institute’s business and society program suggested that 2022 will be a year when lofty promises on social issues shall produce real progress. Concerns about democracy in all walks of life will grow; the role of “social entrepreneurship” will be attractive to both the decision-makers and employees.
The rule of law and governance’s legitimacy in the eyes of the public will be a vital precondition for a healthy socio-economic system: employees and civil society want the governance structures are trustful and political priorities answer public needs. The biggest factors, though, would be the pressures from customers and empowered employees under the “use-threats” of data, artificial intelligence apps that increasingly manipulate personal data.
For the first time, in the years to come will be viable different business models (or different foundational business technologies) with a decentralized and inclusive internet/digital systems powered by crypto-currencies and blockchain. Probably, during 2022 these trends would be more hype than reality, argued experts, but first success stories will emerge paving the way to future progress. Thus, companies that can master the following three challenges will stand the present pressures: a) increasing the so-called DEI’s efforts for top-talented workforce, i.e. through diversity, equity and inclusion to “unite” individual and collective desires; b) in a transparent way demonstrate a serious and measurable contribution to human wellbeing; and c) closely cooperating with other progressive companies-organisations in pursuit of nation’s wellbeing.
As to the mitigation of climate change, modern doing-business processes are seeing some difficulties in dealing with the challenges: the long-term strategy suggests that sustainability’s goals will inevitably enter corporate ability to cope with the two main issues: i.e. stakeholder’s interest and that of employees, communities and suppliers. Global challenges and climate mitigation require urgent changes in supply chains, logistics, land and water use, harmful emissions, etc. as well as material-resources’ depletion and alignment with corporate purpose and values.
It is definitely not so easy for companies to adapt to new challenges: two sides of the transition are always present, i.e. reducing company’s negative environmental impacts and stimulating implementation of the positive ones; companies that manage progress on the paths of sustainability and reduction of negative impacts on climate will be always on the safe side. Reference to: https://www.aspeninstitute.org/blog-posts/predictions-for-business-society-in-2022/

Since the start of a new century, advanced societies have already benefited from the digital revolution’s progress; however, science and technology depends on the socially-oriented governance: hence, the national priorities shall be at the background of the digital transformation. Therefore, only closer interrelation of social, economic and ecological aspects in governance can produce needed advances: climate change measures shall include social justice and artificial intelligence which would lead to moral and ethical considerations, while individuals will take control over use of personal data.

= Public-private partnership. Transitioning to green requires significant financing; governments’ funding has been slow and often inadequate in supporting modern transformations and meeting global/European challenges; hence, making the private capital to participate is essential. As banks pivot to green financing, companies across economy sectors need to know the ways to “leverage” capital along necessary technological innovation. In this regard, the PPP and other forms of public-private collaboration are needed to practically and quickly develop clean technologies at a massive scale.
Whereas government funding and policy’s incentives can support research and innovation in clean technology, it is the private sector that really makes a difference and where all the innovations for sustainability occur. Business community was a vital partner in ensuring that the commitments the global governments made at COP26 at the end of 2021 would be translated into tangible actions. All companies have a role to play, no matter where they currently are on transitioning to green; companies across sectors need to continue to activate capital, technology and reporting to help the world achieve its climate goals. Only in doing so, the corporate entities will position themselves as the green-growth initiators.

= Other political issues. In big EU states the governance system in 202i-22 is either on the way to changes (like in France and/or Italy) or already has changed, like in Germany; e.g. predictions are that E. Macron will be reelected as president of France by about 65 percent of citizens in 2022. Three years ago, when Emmanuel Macron’s public approval rating dipped below 25 percent, it appeared plausible that he would either decline to seek reelection (like his unpopular predecessor François Hollande) or fall to far-right leader Marine Le Pen. But Macron gained substantial ground over 2020, despite a chaotic handling of Covid-pandemic, including repeated attempts in “reopenings” usually followed by a new lockdown when any reopening inevitably led to a surge in the disease. Macron also benefits from a divided far right, with newcomer Éric Zemmour digging into Le Pen’s base. Macron’s best-case scenario is that Zemmour and Le Pen continue to attack each other viciously, leaving whoever prevails in a weak position to take him on in the second round of the election.

= Post-pandemic situation and climate. It is presumed that artificial intelligence, AI will discover a new drug (or an old drug fit for new purposes) to be “promising enough” for clinical trials (85 percent of respondents). There has been for years a lot of hype about AI’s potential to transform drug discovery: 2022 will finally starting to see the hype turn into reality. In 2020, AI researchers based at MIT found a new type of antibiotics, and a British startup called Exscientia said its new pill for omicron would be the first AI-designed drug to be clinically tested on humans. In 2021, Exscientia followed that up with two more drugs, one for patients with tumors and another for Alzheimer’s disease psychosis. E.g.: https://www.vox.com/2020/1/31/21117102/artificial-intelligence-drug-discovery-exscientia.

Definitely, there is a price of climate change and nature protection: i.e. the social cost of carbon elimination (SCC) could show the economic damage resulting from emitting 1 ton of carbon dioxide. The social cost of carbon (SCC) is arguably the single most important concept in the economics of climate change; it represents the marginal social damage from emitting one metric ton of carbon dioxide-equivalent at a certain point in time. According to standard economic theory, it represents the price that should be put on carbon dioxide to reduce emissions to socially optimal levels along the optimal emissions trajectory; hence, the SCC has been highly influential in informing climate policy in advanced countries.
Experts are of the opinion that SCC is an important measure because it both guides the policy-making process and prevents governance from radically underestimating it. For example, in the US, the Obama administration had set the SCC at $51 per ton, whereas the Trump administration put it as low as $1; in early 2021, the Biden administration restored it to $51 as an interim move, promising to study the matter in depth and release its final determination somewhere in 2022.
Recent findings indicate that the official social cost of carbon should be substantially increased. Some say that when factoring in projected heat-related deaths (so-called “mortality cost of carbon”) the SCC can rise to $258 per ton. Present US Administration won’t go that far, but it really should go at least as high as $100, economists say. A wide variety of climate damages, e.g. sea level rise, extreme weather, direct effects of heat on productivity and agro-output, etc. must be monetized and summarized into a certain amount assessing the relative damage’s contribution to socio-economic situation. In addition, the magnitude of climate damages is sensitive to subjective choices around the monetization of non-market damages, and, since damages occur over long timescales, the discount rate at which future damage is converted into present value. Top SCC’s experts (e.g. Joseph Stiglitz in US and Lord Nicholas Stern in the UK’s School of Economics) predicted that around $100 would be appropriate world-wide; though other experts argued that a $125 would be a better estimate.
Reference to: https://www.nature.com/articles/s41467-021-24487-w.

= Industrial development. Over the last two decades, scientific research world-wide increased human ability to master biology together with advances in other spheres, e.g. in digitalisation, automation, AI and data-analysis in production processes. It all provided for a revolutionary transformation in practical aspects of bio-manufacturing enabling significant cost reductions in operations, which in turn have enabled a huge progress and maturation of the overall biological engineering and management. The perception of biology has shifted from a field of natural science to a consumer-technology progress (e.g. including fundamental “DNA-programming” and genetic code’s manipulation, in which the cost of “programming” has been declining by 50 percent each year) allowing companies to use the bio-technology for customers’ benefit.
These bio-technologies have driven further on the evolution of “general genetic engineering” towards relatively new spheres of synthetic biology, which helps to design and “form” new biological parts, processes and systems for specific customers’ purposes, so-called bio-tech. Innovations in synthetic biology has attracted investors’ attention: thus in 2020, global venture-capital invested into biotech a record $36.6 billion, while biotech IPOs raised more than twice the amount of capital compared to 2019.
Biotech is moving fast beyond its major present direction in healthcare; it is predicted that more than half of the new biotech applications in the next decade or two would occur in such sectors as agriculture and food, consumer products and services, new materials and energy.
Source: https://www.weforum.org/agenda/2021/12/how-to-fuel-the-biomanufacturing-revolution/

Thus, bio-manufacturing as a new trend in innovation has opened perspective ways to sustainable and innovative bio-solutions across numerous future value chains, enabling SMEs and big companies actively participate in production and distribution. Thus, according to a recent Mckinsey’s research, the economic benefits could be worth up to $4 trillion per year over the next two decades. Beyond its intrinsic economic, performance and environmental advantages, bio-manufacturing is also one of the most promising areas of developing technology when it comes to solving major European critical instances, e.g. micro-plastic pollution, pandemic’s prevention and preparedness to future crisis. It is anticipated that bio-manufacturing will unlock major advances in areas such as:
1. Bio-remediation: developed microbes and enzymes can metabolize wastewater contaminants and transform them into useful bio-products.
2. Bio-security: localized bio-manufacturing capabilities in various states are able to support rapid and effective responses both to post-pandemic growth and to stable exports.
3. Bio-innovation: development of existing and new ingredients and materials are enhancing value chains while offering alternatives to petro-chemical energy sources.
Although several efforts in numerous states have been directed towards above solutions, there are still obstacles to fully realized potentials of the bio-manufacturing revolution: e.g. presently, there is a need to accelerate the feedback between biological design and product application to ensure commercial success. In order to power the diversity of applications emerging from this field over the next 20 years, significant effort is needed to grow and develop the future bio-workforce.

= Political guidance and workforce. The general approach is that national politics must keep up with the pace of innovation in order to facilitate the necessary solutions and mitigating potential risks. Furthermore, early regulatory missteps can delay the progress of the bio-manufacturing revolution and constrain innovation, especially in more forward-looking applications. Instead, the states’ governance should do the following:
• Identify new public-private partnerships that that support the manufacture and distribution of sustainable goods enabled by innovative bio-manufacturing solutions, thus providing alternatives to petro-chemically derived products.
• Joint public-private cooperation to develop bio-security strategies that can keep pace with innovation. As the post-pandemic has demonstrated, pathogens do not respect borders; this highlights the need to include developing nations in planning and execution of bio-security initiatives.
As to workforce, the states have to significantly expand the bio-manufacturing type of workforce in order to realize the full potential of the bioeconomy and to enable local producers in manufacturing and distribution. Some measures include: a) establishing common “skill and training” requirements to facilitate better recognition of foreign formal qualifications and work experience to enable better workforce mobility; b) “moving” towards automation and digitalization in manufacturing to create a common “skills-set” across traditional manufacturing technologies that could be used as the bio-manufacturing workforce; and c) greater investment in early STEM education, with an emphasis on critical thinking and analytical problem-solving to encourage tomorrow’s leaders of the impact of growing global bio-circular-economy.
Note: for example a “transformation map” for Latvia shows the country’s position depicted in recent WEF’s edition of Global Competitiveness Index-2019 in some areas where a country has the greatest room for improvement. Source: https://intelligence.weforum.org/topics/a1G0X000006NwVTUA0

= Trends in Europe. One of the central issues is the EU’s political guideline towards both Europe’s ability to be economically independent and for the member states to have highly-developed industrial sectors. Until recently, there was a strong and long-held belief that in the globalised world supply chains were stable without any apparent shortages; this belief has been shattered by the new post-pandemic reality and geopolitical turbulences (e.g. national inclinations in China and the US). The reality of “America First” for vaccines was a wake-up call for states around the world: nobody could think that American partners would prevent European companies from accessing the essential elements which they actually produced themselves on American soil, and which they needed for manufacturing vaccines in Europe?!
Then, in the present shortage of semi-conductors, concrete consequences are felt for the EU’s economy and employment; the energy crisis additionally reminded on the EU’s dependence on imported fossil fuels (some states were using them as a geopolitical lever). Besides, there are the EU’s dependences on raw materials that are critical for the industrial transition (e.g. lithium or synthetic graphite), which are important for the electric batteries production. Just one example – prices on timber have risen by more than 25% in one year, the largest increase among all construction materials.
The EU’s roadmap for 2022 and ahead is straight and focused on the following points: a) the EU states must invest in cutting-edge products and technologies that allow to remain competitive and generate quality jobs; b) the EU must be a leader in the most “decisive global markets”, not a subcontractor for whoever resources; c) the EU shall be “a factory” that gives itself the means to cater for its own needs but also to conquer world markets and export; d) the EU is not going to separate and produce everything itself: but Europe shall not depend in all its supplies from the hazards of the “geopolitics’ value chains”. Sovereign, resilient and autonomous Europe with strong industrial background, according to the EU officials is not only a must in the EU growth but also reflects “increasing federating trends” at the European level…
Source: Commissioner Breton comments at the conference “A stronger industry for a more autonomous Europe”, in: https://ec.europa.eu/commission/presscorner/detail/en/speech_22_354

In 2000, the EU updated its political guidelines in view of creating a “genuine continental industrial policy” with export potentials based on European values and the member states’ understanding of the areas in need of reducing strategic dependencies and increasing the EU’s industrial capacity. In this regard, the EU continued efforts “to champion” European industrial alliances on batteries, raw materials, hydrogen, on semiconductors and data, as well as on space launchers and zero emission aircrafts. The following are some recent examples of European industrial alliances:
= On batteries: €120 billion of public-private investment in 2019 and 2020, 3.5 times more than in China; 70 major existing battery projects in the EU (or under construction), including more than 20 giga-factories. Training programmes for the 800,000 people who need retraining or professional development; and a “battery regulation” under negotiation.
= On hydrogen: €800 million from EU funds each year for hydrogen projects, with legislation under preparation on the concept and certification of hydrogen.
= On cloud: 40 European IT companies grouped together to develop the next generation of data processing technologies to position EU as highly secure and low-latency solutions. A technology roadmap already finalized with a “Common European Interest” project under way.
Rebalancing global value chains involves diversifying EU’s sources of supply; that includes consolidating EU’s international partnerships in the critical raw materials and minerals. The EU has signed initial partnerships with Ukraine and Canada while working closely with neighbors in Norway, Serbia as well as countries in Africa and Latin America. At the same time, the member states must strengthen their domestic capacities by developing innovative and sustainable industrial projects.
Reference to: https://ec.europa.eu/commission/presscorner/detail/en/speech_22_354

= EU’s support for culture, art and education. The EU intends to establish “cultural and creative sectors”, as part of the “European ideology”, to enrich the facets of European life, while contributing to Europe’s social cohesion and diversity. This sector plays a good part in the EU’s economy too: it represents 4.2% of the EU’s total GDP and 3.7% of the EU’s workforce.
The total budget available for so-called “Creative Europe” program in 2021-27 amounts to around €2.4 billion, an increase of 63% compared with 2014-20; the increased budget reflects the EU’s commitment to help the sector recover and foster resilience in the years ahead.
With a budget of around €385 million, nearly €100 million more compared to 2021, Creative Europe strengthens its support to creative and cultural partners taking due account of the challenges resulting from the pandemic crisis and the growing global competition. Cultural and creative sectors in 2022 are encouraged to use Culture-EU-portal, a recently launched online guide to the available EU funding. The interactive website gathers a total of 75 funding opportunities from 21 different EU programs, including Creative Europe and Horizon Europe as well as numerous structural funds and InvestEU program.
Sources: https://ec.europa.eu/commission/presscorner/detail/en/ip_22_286, and https://ec.europa.eu/culture/funding/cultureu-funding-guide.

In the education sector, the European “federal scene” has been more complicated due to the legal restrictions for EU to interfere directly into the states’ education policies, because education is the supplementing EU competence according to the EU law. Thus, in mid-January 2022 the Commission adopted a “strong” recommendation on “green transition in education and teaching” by supporting the states’ efforts to “equip learners with understanding and skills on sustainability, climate change and the environment” in schools, higher education institutions, non-governmental organisations and all education providers.
The member states’ future workforce needs additional competences “for the green transition, including critical thinking and initiative-taking” while respecting nature and understanding the impact of national development, policies and actions concerning sustainability, environment protection and global climate mitigation. The European youth is actually quite ready for this “support”: according the Eurobarometer survey, their top priorities for the years to come are: first, protection of the environment and combating climate change (67%); second, the improvement of education and training (56%).
Reference to press release in: https://ec.europa.eu/commission/presscorner/detail/en/IP_22_327.

Among supporting measures in “sustainable education” are the following: a) providing learners an adequate access to high-quality and inclusive education and training on climate change, biodiversity and sustainability; b) establishing “environmental sustainability” as a priority area in education and training policies and programs in order to enable the sector to contribute to the green transition; c) encouraging the “whole-institution’s” approaches to sustainability which would encompass teaching and learning, developing visions, planning and governance in teaching sustainability with an active involvement of students and staff and in partnership with local/regional communities; d) mobilizing national and EU funds for investment in training tools for sustainable and green infrastructures in order to increase national recovery, resilience and the education/training sector’s preparedness for the necessary transitions.
The 2021-2027 Erasmus+ program places a strong focus on the green transition in education and training with the EU’s budget of €26.2 billion, compared to €14.7 billion for 2014-20. For the 2022 annual work program the priority is given to education providers in developing green competences and skills, future-oriented curricula and planned approaches to sustainability.
See Erasmus+ program in: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_1326
On European sustainability competence framework in:
https://publications.jrc.ec.europa.eu/repository/handle/JRC128040

A special edition of the Trends Shaping Education (a triennial report examining major economic, political, social and technological trends affecting education) informs strategic governance’s thinking in the member states and stimulates reflection on the challenges facing education. The 2022 edition covers a rich array of topics related to economic growth, living and working issues, knowledge and power, identity and human interactions. It includes a specific focus on the impact of post-pandemic on EU and global trends, with new futures reflect crises’ effect on customers’ future expectations. Thus, the “trends” are giving policy makers, researchers, educational leaders, administrators and teachers a robust and specific source of international trends shaping education in schools, universities and vocational studies; it will also be of interest to students and the wider public. Source: “Trends in shaping education-2022” in:
https://www.oecd-ilibrary.org/education/trends-shaping-education-2022_6ae8771a-en

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