The Speaker
Thursday, 13 June 2024 – 09:27

Is economic global governance failing where it is needed most?

NOTE: This is an opinion article – any views expressed in this article are those of the author and not necessarily those of The Speaker or any members of its team.

Economic global governance refers to the efforts by governments, international organisations, and other stakeholders to coordinate and regulate economic activities at the global level. It aims to promote economic stability, reduce inequality, and enhance the well-being of people around the world. However, there are growing concerns that economic global governance is failing to achieve these goals and is instead contributing to global economic instability, inequality, and environmental degradation. Most importantly, economic global governance is failing where it is needed most.

One of the main criticisms of economic global governance is that it is heavily influenced by the interests of powerful countries and transnational corporations, and often ignores the needs and concerns of poorer and smaller countries. For example, decisions made by the World Trade Organisation (WTO) have been accused of prioritising the interests of developed countries over those of developing countries, leading to imbalances in global trade and economic development.

Another issue is that economic global governance mechanisms, such as international financial institutions, have been criticised for imposing neoliberal policies that prioritise economic liberalisation and deregulation over social and environmental protections. These policies have been linked to rising inequality and environmental degradation, as well as economic instability and crises.

There are also concerns about the lack of accountability and transparency in economic global governance. Decision-making processes often take place behind closed doors, with little input or scrutiny from the general public or civil society. This has led to a lack of trust in global governance institutions and a perception that they are not accountable to the people they are meant to serve.

Despite these challenges, economic global governance is still an important tool for addressing global economic issues and promoting stability and prosperity. There have been efforts to reform and improve global governance mechanisms, such as calls for more inclusive and participatory decision-making processes and for greater accountability and transparency. However, it remains to be seen whether these reforms will be sufficient to address the underlying problems facing economic global governance and ensure that it is effective in promoting the well-being of people around the world.

One specific example of the failure of economic global governance is the case of Greece during the European debt crisis. In the aftermath of the global financial crisis, Greece was hit hard by a combination of economic recession, high levels of debt, and structural problems within its economy. As a member of the European Union (EU) and the eurozone, Greece turned to international financial institutions, such as the International Monetary Fund (IMF) and the European Central Bank (ECB), for assistance. However, the terms of the bailout package imposed by these institutions, which included austerity measures and structural reforms, had a severe impact on the Greek economy and society. Unemployment and poverty rates soared, while public services such as healthcare and education were cut. These measures were widely criticised as being overly harsh and not taking into account the specific needs and circumstances of Greece.

The case of Greece highlights how economic global governance can fail to take into account the needs and concerns of individual countries, and instead impose one-size-fits-all solutions that can have negative consequences. It also illustrates the lack of accountability and transparency in global governance processes, as decisions about the bailout package were made behind closed doors with little input from the Greek people or civil society. In a time and place where the world needed to offer an attractive package to support Greece, financial global institutions failed.

Another example is the case of India, which has experienced growing economic inequality and environmental degradation in recent years. India has embraced globalisation and liberalisation, and has attracted significant foreign investment and trade. However, these policies have also led to the concentration of wealth in the hands of a few, while the majority of the population has seen little benefit.

In addition, India’s rapid economic growth has come at a high environmental cost, with air and water pollution reaching dangerous levels in many parts of the country. The Indian government has been criticised for not doing enough to address these issues, and for prioritising economic growth over the well-being of its citizens and the environment. These examples demonstrate how economic global governance can fail to promote economic stability and well-being where it is needed most, and instead contribute to inequality and environmental degradation.

Despite the challenges and criticisms outlined above, economic global governance can also be successful in promoting economic stability, reducing inequality, and enhancing the well-being of people around the world.

One example of successful economic global governance is the International Monetary Fund (IMF), which was established after World War II to promote international monetary cooperation and provide financial assistance to countries facing balance of payments problems. The IMF has played a key role in helping countries stabilise their economies and achieve long-term economic growth.

For example, the IMF provided financial assistance to countries affected by the Asian financial crisis in the 1990s, helping them to stabilise their economies and recover from the crisis. It has also provided financial assistance to countries facing economic crises or natural disasters, such as Haiti after the 2010 earthquake and Puerto Rico after Hurricane Maria in 2017. Another example of successful economic global governance is the World Bank, which was established to provide financial assistance and support for development projects in poorer countries. The World Bank has supported a range of projects and initiatives, including infrastructure development, education, and healthcare, which have contributed to economic growth and poverty reduction in many countries.

In addition, regional economic organisations, such as the EU and the North American Free Trade Agreement (NAFTA), have also contributed to economic stability and prosperity by promoting trade and cooperation among member countries. For example, the EU has facilitated the free movement of goods, services, and people within the bloc, contributing to economic growth and integration.

Overall, economic global governance can be successful in promoting economic stability and prosperity when it is inclusive, accountable, and transparent, and when it takes into account the specific needs and circumstances of different countries and communities. Especially considering the necessity for worldwide economic in the aftermath of COVID-19 and in the face of ongoing global recession, it is important to continue to reform and improve global governance mechanisms to ensure that they are effective in achieving these goals and not continue to fail where it is needed most.

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