Transcript Multipolarity & inter

Multipolarity & inter-state
cooperation
Robert H. Wade
LSE
June 2011
Continued rise of multipolarity?
• Techno-optimists see technology as
unstoppable vehicle of progress on world
scale.
• Bill Gates: “Think of all the progress made
in 20C”. “What abt WWI, WWII,
Depression?” “There will always be blips.”
• Danger of forecasting to 2025: J K
Galbraith
Multipolarity: near-term obstacles
• My role as advocatus diaboli.
• Current crisis: not a “blip”, no return to
“normal” within 3 yrs. Remember 19291940.
• In West, all policy tools exhausted:
• Eurozone.
US: fundamentals unchanged
• households too much debt;
• real estate values still falling;
• stimulative measures blocked by pol
paralysis;
• banks wh caused crisis are the big
winners;
• long-term unemployment crisis,
infrastructure crisis.
China: looming disturbances
• Premier Wen Jiabao: economy is
“unstable, unbalanced, uncoordinated, &
ultimately unsustainable”
• Growth will slow sharply, b/c driven by (1)
heavily subsidised investment; (2) Xs to
West. Transition to grter reliance on C will
be bumpy & long.
• Slow-down  SE Asia; commodity Xers
Multipolarity: longer-term obstacles
• Middle-income trap: MICs find it difficult
to sustain productivity increases and enter
higher value-added positions in GVCs.
• The ONLY economies to escape the trap &
enter ranks of “developed” in past 60 yrs:
Jpn, Taiwan, SK, HK, Sgp.
• For most DTCs 1980s, 1990s, early 2000s
“lost decades”, fell further behind West in
GDPPC.
• Exceptions: East Asian Tigers, China,
India
1960 1970 1980 1990 2000 2006
? Euro area ? Latin America and the Caribbean ? Sub-Saharan
Africa ? United States ? Middle East and the North Africa ? East
Asia and the Paci?c ? South Asia
Source: Calculated from World Bank World Development Indicators online.
SE Asia
• Malaysia, Thailand, Indonesia: “contenders”.
• All remain heavily dependent on MNCs for mfg Xs. Weak
backward links fr MNCs to domestic economy. No
national innovation systems. Few firms have regional
brand names.
• China re-concentrating regional production chains back
into China
• S. Yusuf: “Malaysian industry appears to be sliding
down the technological slope, and the incentives for
workers to improve their skills are weakening…
technological capabilities are relatively static (and may
even be declining)… industrial competitiveness is
marking time.”
Latin America
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Regional manufacturing VA/regional GDP:
1980: 27%
2009: 18% (= eurozone)
Brazil: in past 10 yrs share of
commodities in Xs doubled, to 46%;
share of mfrs collapsed, mainly b/c China.
Textiles, shoes, steel.
“In the grip of a great
convergence”?
• Title of Martin Wolf, FT, 5 Jan 11.
• Wolf’s response to those who doubt
continued convergence: “powerful mkt &
tech forces are spreading stock of
knowledge across globe. No one doubts
that Chinese & Indian people are capable
of applying it. They are as entrepreneurial
as westerners”.
• Misleading!
More inter-state cooperation?
• GDH report recognizes that more multipolarity
makes inter-state cooperation more necessary,
& more difficult, than when G7 (G1) ruled the
world.
• G20: held up as triumph of: multipolarity 
multilateralism
• G20 is unsustainable:
• Illegitimate on “input” (membership) side: no
explicit criteria; 173 states not represented.
• Regional governance? Chiang Mai Initiative
Multilateralization:
Conclusion: multipolarity 
multilateralism?
• I have raised doubts that multipolarity will continue.
• I have raised doubts about translation of multipolarity
into multilateralism.
• Overarching danger: we have now crossed
growth/climate/natural resource/population redlines all at
once.
• Before 2025 we will face crisis-driven choice b/w
collapse & a “reduced consumption” growth model.
• How can economy grow within constraints of sustainable
GHG emissions + resource use?
• How stupid are we?