New power centres and new power brokers: are they shaping a new economic order?
Global integration through trade and finance is the defining feature of today's international economic order. As mature industrial economies and emerging market economies become more integrated and interdependent, countries that play a key role in the global supply chain increasingly shape the world economy and influence its dynamics. How is the world economy changing? This article argues that a multipolar structure is an accurate description of the pattern in which the world economy is organized and power is distributed among players. Power is now more diffused, but not equally distributed; new players have increased their capacity for action, but not necessarily their influence. The balance remains tilted in favour of the old poles, with the United States in the strongest, albeit less dominant, position. In particular, there is a misalignment between the new poles' role in the global economy and their ability, and willingness, to influence institutions and participate in rule-setting. This is where the major source of potential tension and conflict lies in today's economic order. The combination of global financial markets and national politics has created a lopsided system where political arrangements are still based on the sovereignty of states and where the development of international institutions that could promote collective goods has not kept pace with the development of markets. Looming changes and fear of systemic collapse, especially in view of the current economic turmoil that has the potential to weaken global growth and impose huge strains on the international order, may spur action. However, whether this will trigger renewed efforts to rethink existing arrangements, improve global governance and strengthen the rules-based framework that underpins the global order remains an open question.
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Document Type: Research Article
Publication date: May 1, 2008