Institutional arrangements and international agreements consolidated and created since 1945 for global economic governance are facing new challenges and opportunities in the light of newly industrialised and emerging economies. This paper examines how the governance of global economic institutions might develop in the years to 2020 given the entrance of these new actors into a system that used to be dominated by Western European and North American interests. It also examines the new roles of the EU in this.
In some cases existing structures are being challenged as a direct result of the food, fuel and financial crises which erupted in 2008, the ramifications of which are still ongoing. In other cases, we draw attention to how new forms of global economic cooperation are arising, and existing governance structures being reinforced with new actors making full use of the rights provided to them. We discuss the evolution of the G20, the IMF, WTO, and the UNFCCC.
New forms of cooperative relationships towards global economic governance are unlikely to evolve unless the structures, objectives and norms of these institutions are better aligned with the preferences of emerging powers. This provides the EU, which also accommodates divergent economic interests across its member states, with a role to facilitate the progress towards a multi-polar world that seeks cooperation in order to advance its own interests.
We discuss the extent to which changes in the governance of global economic institutions are currently reflective of shifts in economic power, which are likely to accelerate in the years between now and 2020. We argue that the extent to which existing institutions are able to incorporate new actors and accommodate their interests effectively within them will determine how they might be retained, strengthened or weakened by 2020.
There are risks of continued perceptions of illegitimacy, if the new emerging actors and their interests are not effectively included within existing institutions. In addition, there are risks of potential redundancy if existing institutions are unable to adapt and deal with the challenges posed by both the level, pace and shifts in the drivers of globalisation expected up to 2020.
Instability and insecurity would damage the weakest countries most. But the effective inclusion of the new emerging powers could also assist such countries better advance their own developmental interests. The structure of this paper is as follows. Section two provides a brief overview of the growing wealth and distribution of power across the newly industrialised and emerging economies in the international political economy, emphasising China’s status as a major new power alongside Europe and the US. The possibility that other developing states will become major powers is also considered.
Section three proceeds to contrast these developments with the governance role of the new emerging powers within global economic decision making bodies such as the G20, IMF, WTO, UN and UNFCCC. Where appropriate it distinguishes between new emerging actors and their interests, so as to avoid making generalisations about objectives, and to assist in the sensible articulation of potential alignments of spheres of influence with the EU.
Section four explores the implications for the EU and its role within global economic governance and identifies potential synergies with and strategies for collaboration with the new emerging actors up to 2020. Distinct strategies are articulated for different types of interests with new emerging powers and related institutions so as to facilitate the transition towards a peaceful multipolar order during the coming two decades. Section five concludes.