An Introduction to Demand Management, Long-Run Growth and Global Economic Governance
Chapter 14: Global Peers: An Agenda
Global governance is in a tremendous flux. The financial crisis, the world trade collapse and the run-a-way public debt problems may be symptoms of a fundamental change in the division of economic power and reflect growing and unsustainable imbalances and increasing complexity of the international networks of nations, firms and citizens. The governance of the international system and the relationships between independent states are changing substantively and at an unprecedented speed. The financial crisis has revealed the costs of an absent overarching authority and this lack of effective governance is the inspiration for change that has led to an upgrading of the G20. In view of the previous chapter this may seem to be a step backward because we saw that the provision of global public goods such as the governance of the economic and financial system is best served by a small group of countries. This argument would seem to favour the G8 over the G20, but actually the G20 is an appropriate response to the success of the emerging markets and the disappointing performance of the rich countries. This is especially true in view of the still large political, economic and cultural differences between the countries that presently grow and the countries that stagnate – between the previous outs and the still ins. Some argue that the shift in economic power endangers the open multilateral systems that govern trade, finance and the division of labour.
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