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The Global Economy: Not on Autopilot

What must the global community do to ensure that worldwide economic growth continues unabated?

August 3, 2007

What must the global community do to ensure that worldwide economic growth continues unabated?

In the last few years, we have been living in a world of almost unbelievable (if it were not true) economic growth.

We have not seen such growth in 30 years. Best of all, it has been broadly and widely manifested — despite all sorts of political, security, financial or energy shocks.

It is particularly gratifying to see that emerging and developing economies have been growing at an unprecedented rate — nearly 8% in 2006.

All indicators and all reports point to a strong continuing fall in poverty rates, which is closely allied to the rapid growth in the volume of world trade — as well as strong capital flows to emerging markets.

This broad growth has been based on the integration of economies, on a multilateral global market economy, on the open flows of trade and investment — and above all, on the exchange of information, knowledge and technologies.

And yet, major challenges remain. Right now, we still see awful and unacceptable gaps of poverty that are appalling and must urgently be confronted. We also currently face a possible future economic downturn.

To guard against the pitfalls, what we need most is a strong framework of rules, institutions, political courage and cross-border cooperation.

This is also the time when we need most to be consistent and push this multilateral integration and cooperation even further. People all over the world have a very real stake in it.

Unfortunately, right now is also the time that we begin to sense the indicators of emerging systemic threats. The temptations that we see worldwide include resorting to short-sighted economic nationalism, mercantilism, protectionism and a unilateralism that is, yes, immoral and destructive.

Facing those challenges, we need to rally, to mobilize collective and individual commitment, as well as the vocal and active support of all elements and all partners in this current prosperity — particularly from the rich countries that have benefited the most.

We are definitely not on automatic pilot, and among our responsibilities in the global community is to be both vigilant in thought and analysis and fearless in personal action.

It won’t be enough to rely on individual political willingness to drive further this openness that is at the basis of the world’s economic — and social — progress. The global institutions that have provided us with a framework for this prosperity are both fragile and subject to fashionable waverings in policy.

International cooperation — and, more important, multilateral agreement — should be intensifying and deepening integration, with worldwide rules that keep governments honest in terms of markets opening and investment barriers falling.

And yet that cooperation is faltering — and weakening. There is a certain coyness, even wariness or nervousness, for actually doing anything in this direction. We see signs of retrenchment by most of the important players across the globe — from the United States, Europe, Russia, China and Latin America.

It is as if we are afraid of the messy, meshed world we have launched. People are worried and uneasy — and rightly so — about the monstrously uneven benefits of world prosperity. Great poverty anywhere, and increasingly within countries, is a blight on each of our lives.

But is the answer to revert to the very policies that exacerbate this poverty, that close down possibilities? In this respect, we are also not on automatic pilot.

The progress that we have seen these last years, in the world as we know it, could very well change. We all know the sorry state of that admittedly flawed system that is, however, the only bulwark against economic bullying: the rules-based international trade system.

The international trade agenda is in tatters, with ever more temptation to resort to preferential (or rather discriminatory) agreements. So this is definitely the time to exercise vigilance and courage.

But what about the other aspects of multilateral cooperation?

In recent years, according to the Human Security Report, we have actually seen a lessening in the number of conflicts, which many find astonishing.

But that broad survey and its conclusions point to the absolutely crucial role played by multilateral efforts.

In the world as we know it today, much is being done because of a relentless insistence by people, civil groups and some governments on making multilateral action count — sometimes without all of us being aware of the aggregate picture.

Despite some newsworthy failures, in this world as we know it, the power of cooperative action has been significant.

More and more governments are being obliged by their publics to provide to them the services — the common goods of progress — from stability to accountability to respect for the rule of law, decent governance, openness and freedom.

But this is never assured. Failure, failed states and terrible situations easily proliferate without joint vigilance and pressure.

We seem to be squeezed between two commonly held and contradictory ideas. First, “We are hopelessly trapped in national configurations.” And second, “We are helplessly subject to relentless globalization.”

We are neither! The world as we know it is unfairly complicated. We have to live with this complexity and learn to enjoy it, or at least to deal with it. We are neither “trapped” nor “subject.”

Each of us has to decide in what kind of world we want to live and to make sure that we have robust and cooperative ways and institutions that ensure we do not wake up one day and wonder how we ended up living in a world in which influence is exerted by something alien.