Davos Forum Buffeted By A World Of Contradictory Forces

Yet the Forum's hottest economic and technological topic, artificial intelligence, is pushing strongly in the opposite direction.

In geopolitics, there is no doubt that the adoption by America of the aggressive, bullying tactics already used by Russia and China, in economics through tariffs and in politics through military action in disregard of international law, has created an atmosphere of fear and trepidation.

Even longstanding allies such as Canada, European NATO members, and the Japanese and South Koreans who Italian Prime Minister Giorgia Meloni has just visited, are facing attacks and insults from America.

Meanwhile, however, the arrival of AI and of quantum computing is bringing the prospect of technological disruption but also potentially transformational advances in knowledge and productivity.

These technological advances know no borders and promise to make the world feel even smaller in terms of how production is organized and ideas and services are exchanged. The optimism associated with that technological development is a main reason why so many stock markets globally rose to new highs during 2025, despite the geopolitical tensions.

Certainly, the expansion of public spending on defense, especially in Europe, Japan, South Korea and Taiwan, also helped boost the share prices of defense manufacturers, but enthusiasm about technological transformation played the bigger part. In fact, one of the biggest economic and financial questions this year is whether the boom in tech investment might have been excessive.

Throughout history, new technologies have generated financial booms and busts, as vast amounts of money chase speculative bets on where and by whom profits may be made. Those new technologies may well still prove transformative in the long term, but the path to that transformation often involves financial crashes and bankruptcies.

Trump will arrive in Davos with the biggest US delegation ever to attend the Forum, intending no doubt to display American power and to tell the world that geopolitics and economics now have to operate in new ways.

He will not recognize the potential for a financial crash, nor the contradiction between his goal of deglobalization and the goals of hyperglobalization represented by some of the US technology billionaires attending alongside him.

Trump is a notoriously bad listener, but both he and the tech billionaires would do well to pay attention to another of the forces that will be on display in Davos: the growing prosperity, power and relevance of an array of smaller and medium-sized powers.

The aggressive superpowers may dominate the conversation about war, peace and military capabilities, but among the 65 heads of state and government attending will be many whose collective actions on trade, climate, foreign investment and migration will matter at least as much, if not more than, those of America, China and Russia.

At the military level, the three great powers are dominant. But on all other dimensions the world is becoming more multipolar as economic power becomes more widely distributed. The countries of Southeast Asia, with a combined population that exceeds that of the European Union, are now consistently growing more rapidly than China.

The EU's recently concluded trade agreement with the Mercosur bloc in South America, which will soon be debated in the European Parliament, matters because of the greater size of those countries both as markets and as producers.