Increasingly multipolar, the world is also becoming more “multiconceptual.” The further interstate relations deteriorate, the less countries agree to uphold common norms and take joint action. This is the conclusion of the World Economic Forum (WEF).
In The Global Risks Report 2019 – 14th Edition, the WEF explains that “[m]any political leaders and communities feel they have lost control—whether to internal divisions, external rivals or multilateral organizations—and, in response, they look to strengthen the state” in a world previously focused on globalization.
This goal pushes them to turn their back on multilateral compromises – an attitude that impacts international policy and the global economy.
Three trends that threaten the economy
In its report, the WEF highlights three trends with the potential to trigger disruptive economic change.
1) Isolated actions. Despite global consensus, the self-centredness of states makes it difficult to carry out joint actions in response to various key issues.
Among these major issues are ethical challenges. The Fourth Industrial Revolution is blurring the lines between the human, digital, and biological spheres, and innovative technologies are changing the world in many fields, including biotechnology. If these innovations threaten fundamental values, they “could have important implications for the future of humanity.”
The GEF cites the example of China which, in 2018, announced it had created genetically modified babies. This isolated incident was so far outside global ethical standards that it outraged the international research community.
2) Weakened multilateralism. States are intensifying pressure on multilateralism and international dispute-settlement mechanisms.
This pressure can be exerted in different ways. Some states withdraw from international agreements and institutions, intervene to block consensus, or adopt a selective approach to upholding norms and rules.
The United States offers a good example of this. In 2017, it withdrew from the Paris Agreement, the first global consensus on climate change, and, in June 2018, it quit the United Nations Human Rights Council. Finally, since August 2018, it has blocked the appointment of judges to the World Trade Organization’s appellate body.
3) Geoeconomic tensions. States increasingly develop political strategies around trade threats.
The United States is once again cited as an example. In early 2018, Donald Trump used national security as a justification for increasing tariffs on solar panels, washing machines, and steel. The U.S. president also launched a trade war with China by increasing tariffs on certain products. China quickly announced counter-measures.
Another source of pressure is the screening, or even blocking, of foreign investment. In December 2017, the European Commission proposed EU-wide measures to monitor non-European investment in EU companies. In 2018, the United States introduced legislation to improve the screening of investment into twenty-seven sectors, including telecommunications.
“As with trade, if the climate for cross-border investment flows continues to worsen, it will hamper global economic growth and risk creating a vicious circle in which economic and geopolitical tensions aggravate each other,” concluded the WEF.
The 7 articles in this series:
- The environment: the greatest risk to the economy
- The U.S. turns inward: a risk to the global economy
- Mental health: The social cost of poor mental health
- Bacteria and viruses: Future weapons of warfare
- Rising sea levels: An increasingly real threat to coastal cities
- Ten major future shocks
- Ever-intensifying threats
