Transcript Economic globalization and global economic governance.

Economic globalization and global
economic governance
Federico Steinberg
Outline
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Economic Globalization
Economic and Political effects of globalization
The challenge of global economic governance
What is economic globalization?
“A dynamic process of global economic
integration characterized by increasing freedom
in the movement of labor, goods, services,
technology, and capital”
(De la Dehesa, 2000).
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Increase in international flows of:
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Goods
 Services
 Capital
 Information
¿Migration?
Trade and investment
New global value chains:
Example: Volvo S40
Immigration
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3,5% of world population is migrant (220mn)
Causes: labor shortage and ageing in OECD,
abundance in developing countries
Impact: higher employment rate, higher mobility
and low unemployment rate in OECD countries
Elements of conflict in the EU:
Direct competition for jobs and ▼ wages
 Fear over the sustainability of the Welfare State
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Globalization
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Explanations:
- Ideas
- interests
- Institutions
- technology
Is reflected in:
- Deep economic liberalization
- Incorporation of millions of people to the
world economy, especially in Asia
- Change in the balance of power
Theoretical Economic implications of globalization
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Greater economical interdependence
Better allocation of natural resources
Greater opportunities of growth
Higher speed in technological transfer
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But…
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Is globalization something new?
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Ratios of commercial and financial integration similar
to the ones in 1900…BUT:
 New role of trade in services
 Intra-industrial trade
 Role of MNCs
 Higher financial interdependence:
Importance of the portfolio investment flows
 Frequency of crisis: México 1994/95, Asia 1997,
Brazil/ Russia 1998, Argentina 2001, CURRENT
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 Role
of emerging markets
Rapid growth of emerging countries
PIB en función del Poder de Paridad Adquisitivo
Fuente: FMI
70%
(% del PIB mundial)
65%
60%
55%
50%
45%
40%
35%
30%
Economías Desarrolladas
Economías en Vías de Desarrollo
The emerging world is already larger than the advanced in GDP termsmore importantly
in terms of GDP than the advanced
Emerging markets re-emerge
And the trend will continue
But China is the convergence story
But wait
Size is not
global presence,
YET
A new world map
Social trends (I)
Ageing
Urbanization
Social trends (II): Inequelity
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What is driving it?
Will it generate a backlash against globalization?
Social trends (III)
New middle classes
New opportunities for MNCs
 But products need to be costumized
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Growing energy demand
Structural features and transformations of
the world economy
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Convergence
Multipolarity
Interdependence
Growing rivalry and competition
Geo-economics and mercantilism/nationalism
Crisis/transformation of global economic institutions
New costs and risks…
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Less policy space for governments in economic policy:
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Short run adjustment costs:
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The Welfare State under pressure in rich countries
Unequal opportunities in poor countries
Higher unemployment/lower wages
Sectorial restructuring, relocation and outsourcing
Increased inequality
Greater economic insecurity:
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Microeconomic level: personal economic risks
Macroeconomic level: higher markets volatility and greater
exposure to external shocks
Political impact of globalization
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Diffusion of power in the world economy
States lose power in favor of:
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Markets
International economic institutions
New non-state actors(MNCs, NGOs, mafia, …)
 sovereignty reduced
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BUT:
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States are still the main actor of IR
The loss of power does not affect equally all countries
This situation demands new global economic rules
 Global governance
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Increasingly globalized world economy
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Economic Polices and Regulations still national
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Unequal distribution of gains from globalization
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Loss of sovereignty (and legitimacy)
= CONFLICT
(specially after the financial crisis)
Need for new global rules
 Global Economic Governance
(Everywhere?)
Global Governance
“Global governance refers to the creation of rules and the exercise of
power on global scale […] Since there is no global government,
global governance entails strategic interaction among entities that are
not hierarchical distributed.”
Robert Keohane
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Economic perspective: global governance focuses on
providing global public goods:
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¿WHICH
No rivals in consumption
ONES?
Non excludible through prices
With positive externalities and trans boundary effects
In a multipolar world, without an hegemonic power,
international cooperation is needed
Problems and challenges (I)
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But since global governance is exercised from different
areas it raises problems:
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It can be democratic or not
Even if it is democratic, it will present accountability problems
and “democratic deficit”
Therefore, the challenge is to establish a global
economic governance that allows:
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Taking advantage of globalization and reduce its adverse
effects
Distribute more fairly its benefits as to avoid a backlash
against globalization
Problems and challenges (II)
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Resistance to the transfer of sovereignty to
supranational organisms
US (Climate change, ICC, ODA, etc.)
 Emerging countries (¿irresponsible position?)
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European Union as a supranationality model?
Problems and challenges (III)
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A more legitimate
 Long run perspective
leadership (and effective)
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What role for the G-20?
The global economic governance agenda
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Global Trade Governance – WTO
Reform of the international monetary system
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Global imbalances, reserve currency, adjustment
Development and fight against poverty (ODA,
ODG and food security)
Energy security and climate change
International Migrations
More equality in the distribution of income and
opportunities?