The world economy after the Ukraine-Russia war
The Ukraine-Russia world has precipitated and aggravated trends that were already evident before the conflict erupted, argues Adam Posen. He predicts that going forward:
- [T]he world economy really will split into blocs—one oriented around China and one around the United States, with the European Union mostly but not wholly in the latter camp—each attempting to insulate itself from and then diminish the influence of the other. The economic consequences for the world will be immense, and policymakers need to recognize and then offset them as much as possible.
- With less economic interconnectedness, the world will see lower trend growth and less innovation. Domestic incumbent companies and industries will have more power to demand special protections. Altogether, the real returns on investments made by households and corporations will go down.
- The more economic divisions are amplified by hard-power divisions, the more governments will align their financial systems with their primary military protector.
- There is one beneficial economic side effect to the increasing global divisions: the European Union is being galvanized to unify more of its economic policies. Stronger EU unity will also create new opportunities for growth.
The End of Globalization? What Russia’s War in Ukraine Means for the World Economy
By: Adam Posen – Peterson Institute
How to construct a new world order
This is an interesting commentary by Rodrik and Walt written before the Ukraine-Russia war erupted. They fear that there are two possible long-term scenarios for the world order : a world where more authoritative global institutions address the destructiveness of modern weaponry or the risks of catastrophic climate change; or a world where there is a sharp contraction in global trade, an increased number of failed states, or even a great-power war.
So they propose a process, a “meta-regime” which will make it possible to have a global order that is largely peaceful and broadly beneficial yet leaves significant room for individual states to pursue their own interests and attend to their own needs.
This meta-regime is essentially a device for structuring a conversation around the relevant issues, and facilitating either agreement or accommodation, as the case may be. It is agnostic and open-ended about the specific rules to be applied in particular issue-areas. Where agreement proves impossible, as will often be the case, the objective of the meta-regime is twofold: to enhance communication among the parties and clarify the reasons for the disagreement, and to incentivize states to avoid inflicting unnecessary harm on others as they act autonomously to protect their interests.
How to construct a new global order
Authors: Dani Rodrik, Stephen Walt
From: Harvard University
