What is the World Economic Forum annual meeting, set to begin in Davos tomorrow?

Why is the global meeting held, and what happens as part of it? We explain.

Who initiated the World Economic Forum (WEF)?

German professor Klaus Schwab founded the WEF. He was a mechanical engineering graduate who then earned a Master of Public Administration degree from the John F. Kennedy School of Government at Harvard University.

From 1972 to 2003, Schwab was a professor of business policy at the University of Geneva. He founded WEF in 1971, originally known as the European Management Forum. It introduced the concept of “stakeholder capitalism.” According to Schwab, “It is a form of capitalism in which companies do not only optimize short-term profits for shareholders, but seek long term value creation, by taking into account the needs of all their stakeholders, and society at large.”

The WEF website says of the idea: “A company should serve all its stakeholders, not just its shareholders: employees, suppliers, and the community it is part of.” As an extension of this, business, government and civil society leaders have made their way to the high Alps “to consider the major global issues of the day and to brainstorm on solutions to address these challenges,” it adds.

What happens at WEF?

Initially, Professor Schwab focused the meetings on how European firms could catch up with US management practices. Events in 1973, namely the collapse of the Bretton Woods fixed exchange rate mechanism and the Arab-Israeli War, saw the Annual Meeting expand its focus from management to economic and social issues.

Two years later, the organisation introduced a system of membership for ‘the 1,000 leading companies of the world’. The European Management Forum was the first non-governmental institution to initiate a partnership with China’s economic development commissions in 1979 – the same year China and the US established diplomatic ties.

Davos brings together some 3,000 participants (including paying members and selected invitees), among whom are investors, business leaders, political leaders, economists, celebrities and journalists, for up to five days to discuss global issues across 500 sessions. Thus, the WEF has become a forum for various stakeholders to meet and discuss global and regional socio-economic issues.

Last year, the major themes at the event were Artificial Intelligence, geopolitical uncertainties, climate change and the slowing pace of China’s economic growth.

Who funds the WEF and why is the WEF Meeting held at Davos?

The WEF is largely funded by its partnering corporations. These are generally global enterprises with annual turnover greater than $5 billion. Davos was the setting for Thomas Mann’s novel The Magic Mountain. The book is the story of a young man who goes to Davos to stay at a sanatorium for three weeks and ends up spending seven years.

Relaxed in its serene environs, it seeks to cut through the many distractions of global politics to succeed in its mission to create a more prosperous global economy.

What else happens at WEF?

In the past, it has been used as a location for pivotal international diplomacy as leaders can break tensions in the town. The WEF website states that North and South Korea held their first ministerial-level meetings in Davos. At the same Meeting, East German Prime Minister Hans Modrow and German Chancellor Helmut Kohl met to discuss German reunification.

In 1992, South African President de Klerk met Nelson Mandela and Zulu prince Mangosuthu Buthelezi at the Annual Meeting, their first joint appearance outside South Africa and a milestone in the country’s political transition.

In 1998, participants emphasised the need to include major developing countries in the process. One idea was to set up a body to include 20 countries – half developed economies and the other developing ones. Such a meeting of what became known as the G20 was held in Bonn, Germany, later that year. Participation was restricted to finance ministers and its scope was limited to global finance.

The G20 meeting was eventually elevated to a summit. This happened in 2008 when the US hosted a G20 summit in Washington DC to address the impact of the global economic crisis.

The WEF also went on to regularly publish global rankings and indices, such as the Global Competitiveness Report and the Global Gender Gap Report.

This explainer contains portions of a story first published in 2024.