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  Félix Peña

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TRENDS THAT IMPACT GLOBAL GOVERNANCE: The backdrop for navigating the new international reality

by Félix Peña
May 2012

English translation: Isabel Romero Carranza


We are transitioning into a different world. This transition will be characterized by a continuous dialectic tension between the forces that drive towards convergence and those that lead to fragmentation among and within nations. It is still not possible to forecast which forces will finally prevail in each region. It is a world in which nations will have to find their own direction and their own way of navigating if they aspire not to become losers. Because, unquestionably, at the end of the road there will be winners and losers.

The main reason behind this diagnostic is that in today's world and in that of next years no nation would seem capable, or even willing, to assume a collective leadership in an individual manner, such as some nations did in the past. This is a world in which, additionally, no club of nations (none of the"G"variations) would seem to suffice in order to face with effectiveness, efficiency and legitimacy the most pressing issues of the global agenda -or even those of the multiple regional or inter-regional agendas-.
The upcoming G20 Summit in Los Cabos faces precisely the challenge of demonstrating that it can gather the political impetus needed to confront the unbalances that have characterized world reality in recent years, both in finances and in trade. The fact that the Doha Round is still paralyzed after so many G20 Summits is quite significant.

More connectivity and diversity, more difficulties in providing public goods that guarantee reasonable global and regional governance guidelines, more involvement of non-state actors -for example, citizens and urban middle-class consumers; transnational social and production networks- will be other factors that will condition in the future the global economic competition and, thus, the international trade of goods and services.

Each one is on its own. This is a blunt way of describing the criteria that seems to prevail in the new international economic reality. That is to say, in the transition from a collapsing world order to one that may still take a long time to finally emerge and, above all, to consolidate.

Quite soundly Ian Bremmer points out right from the title of his book -listed as recommended reading of this Newsletter- this characteristic of a world in which each country must find its own direction and its own way of navigating it so as not to become a loser. Because, as also hinted by the title of the book, there is no doubt that there will be winners and losers at the end of the road. This is something that history has taught us well enough.

The main reason for such diagnostic is that in today's world no nation would be capable, or even willing for that matter, to exercise individually a collective leadership such as some nations did in the past.

This is the case of the U.S., a country that has not ceased to be a great power, indeed the main military power, and will probably continue to be so for a while. However, it is very likely that a heavily indebted Washington will have, for many years to come, an agenda dominated by local economic issues with the inevitable social consequences, many of them with clear implications in values and political behavior.

The same situation applies to Germany, France, the United Kingdom and other countries of the European Union. Everything indicates that in the next years their energies will be focused on preventing the collapse of a European construction that is showing evident signs of weakness. Additionally, it is a construction that has become vulnerable to the effects of disturbing trends towards the radicalization of the internal political front of some countries, which seem to be affected by an end of their illusions. The case of Greece illustrates this point. However, it might not be the only one and not even the most difficult to handle.

At the same time, as indicated by Bremmer, it is also possible that the great emerging countries -or re-emerging ones such as China and India- will be focused for a very long time on consolidating their own development and modernization processes, which sometimes show signs of economic, social and political weakness. It is very unlikely that these countries will have any interest in wasting their energies in their respective international fronts if there is no pressing need for it. Unless, as has happened before in history, their respective leaderships eventually yield to the temptation of seeking external factors that help them preserve -or so they imagine- the necessary national cohesion.

The abovementioned confirms the diagnostic by Jean-Claude Guillebaud in his book "Le Commencement d'un Monde" (Seuil, Paris 2008), where he observes a metamorphosis towards a decentralized world and towards what he calls a "crossbreed modernity", a world with all sorts of mixing. This same subject is tackled in a book by Amin Maalouf, "El desajuste del mundo. Cuando nuestras civilizaciones se agotan" (Alianza Editorial, Madrid 2009), a necessary read in order to understand current times.

Precisely, the notion of a polycentric and interconnected world is one of the main ideas of an in-depth report recently published by the European Union Institute for Security Studies (EUISS) chaired by the prestigious Portuguese intellectual Alvaro de Vasconcelos (see the reference in the Recommended Reading section of this Newsletter). This report analyzes in particular three main trends that are currently emerging and that would contribute to shape the global system towards 2030. These are: the empowerment, which contributes to the sense of belonging to a unique human community; a greater tension in relation to the objective of sustainable development; and the emergence of polycentrism characterized by shifts in power from the national states to individuals and different types of transnational networks and by growing governance gaps, in the measure that the institutional frameworks of inter-state relations fail to answer appropriately to global public demands.

Such governance gaps evoke the second part of the title of Ian Bremmer's book which we mentioned before. It is precisely a reference to winners and losers in a world he describes as "G-Zero". This would mean a world where no club of nations (G7 or G20, but also G2 or other possible combinations) can suffice to confront on its own, with effectiveness, efficiency and legitimacy, the most pressing issues of the global agenda -or of the multiple regional and inter-regional agendas-.

On this regard, the upcoming G20 Summit of Los Cabos (Mexico, June 2012) faces a great challenge since it needs to prove that it can still gather the necessary political impetus to deal with the unbalances that have characterized the reality of recent years, both in finances and world trade. The recent difficulties of the financial institutions of some of the countries that will be represented at the Los Cabos Summit and the fact that the Doha Round is still paralyzed after several G20 Summits are not irrelevant matters.

Additionally, at the interregional level, Latin American countries will have the opportunity to appreciate and demonstrate that the club's diplomacy expressed through summits still has the necessary validity to produce effective outcomes or, at the very least, media related ones. We are referring to the upcoming summits of the Ibero-American interregional space in Cadiz (Spain, November 2012) and the Euro-Latin American interregional space in Santiago (Chile, January 2013). At the moment and due to different reasons, certain skepticism seems to prevail regarding the outcome of each one of these summits.

With his usual brilliance, Philip Stephens from the Financial Times (in his article "The great middle class power grab" of April 26, listed as recommended reading of this newsletter) and inspired by the cited report conducted by Alvaro de Vasconcelos, approaches another of the factors that are surfacing in the new international reality. We are referring to the issue of the empowerment of individuals and, more specifically, of the middle classes. Some of the data he underlines are of great significance. From the 8 billion people that will inhabit the world in 2030 about 4.9 billion will be middle class in terms of economic income. In 2030, 74% of China's consumers will be middle class and in 2040, 90% of Indian consumers will be middle class as well. Two-thirds of Brazilians will be considered to be middle class by the end of 2030.

Moreover, these people will be middle class consumers and citizens that will live in cities and, in many cases, big cities of over one million inhabitants. They will be increasingly more educated and interconnected, even at a transnational scale. They will be completely aware of the power that they hold -or can hold- and it is logical to imagine that they will attempt to use it. With their actions and their demands they will sometimes surpass the deeds of governments. In some cases, they could become disoriented and "outraged" at the same time. This is why it can be considered that we are entering a stage of international relations in which, increasingly, the States could lose their role at least as the main actors.

South America as a region is no stranger to these trends. According to data from the United Nations, by 2030 the region will have about fifty cities with more than one million inhabitants and several cities with more than ten million citizens and consumers with expectations and consumption patters characteristic of the middle class. What is currently happening in Brazil is illustrative of this point. A recent book by Marcelo Neri, of the Getulio Vargas Foundation (see the reference listed under recommended reading at the end of this Newsletter) offers an interesting and well documented analysis of the trends towards a significant growth of the middle class -measured by the level of income- in the main economy of the region.
The EUISS-ESPAS report is bluntly clear as to what some of the mentioned trends reveal. So is the book by Ian Bremmer, among others. We have entered a phase of transition towards a different world that will be characterized by a continuous dialectic tension between the forces that drive towards convergence and, simultaneously, those that lead to fragmentation. It is still not possible to forecast which forces will prevail in each of the regions of the world. What is unforeseeable and unimaginable will be present for a long time. This will be a world full of uncertainties. It is necessary to keep in mind as well that these tensions will not exclude certain forms of violence, even innovative ones given the technological advances, enacted by very different protagonists and not necessarily by states.

More connectivity and diversity, more difficulties to provide public goods that guarantee regional and global governance guidelines, more prominence of non-state actors -middle class citizens and urban consumers; social and production transnational networks- will be some of the other factors that will condition global economic competition in the future and, as a consequence, the international trade of goods and services.

Moreover, it will be a competition marked by the rising of a third industrial revolution (on this regard refer to the report by The Economist listed as recommended reading at the end of this Newsletter) that will have an impact on new modalities of value chains of transnational scope. These will result from the multiple impacts of all kinds of technological innovations in the development of novel forms of orchestration of productive chains that will seek to satisfy a growing demand for personalized products and services -"made to order or to the consumer's taste" - (combining resources, technologies, creativity and highly qualified labor) coming especially from the urban middle-class consumers. The report by The Economist mentions a modality to be taken into account which is reflected, for example, on the Web page It is the case of an "online" manufacturing community that, as per the report, could be the equivalent of a virtual industrial cluster.

Within the newly emerging international context the quality of the strategy for the insertion in the global economic competition of each country and of its businesses will become increasingly important. This includes not only the right objectives, policies, instruments and roadmaps to navigate the world of the future but also the quality and the density of the connectivity with other nations and of the coalitions and alliances that are made. Such as has been pointed out repeatedly by Professor Dani Rodrik ( the quality of the domestic front is a key variable if the aim is to stay on the wining side in the world of the future.

Recommended Reading:

  • Adlung, Rudolf; Soprana, Marta, "SME's in Services Trade - A GATS Perspective", World Trade Organization, Economic Research and Statistics Division, Staff Working Paper ERSD-2012-09, Geneva, 27 April 2012, en:
  • Bartesaghi, Ignacio; Pérez, Sebastián, "La Ronda Doha. Evolución de las negociaciones y eventuales impactos en Uruguay", Universidad de Montevideo, Facultad de Derecho, Montevideo 2010.
  • Beltramello, Andrea; De Backer, Koen; Moussiegt, Laurent, "The Export Performance of Countries within Global Value Chains (GVCs)", OECD Science, Technology and Industry Working Papers 2012/12, DSTI/DOC(2012)2, Paris, 12 April 2012, en:
  • Berthoin, Georges; Éric Roussel, "L'héritage de Jean Monnet", Entretien, Revue de Deux Mondes, "L'Europe avec ou sans Frontières", Paris, Avril 2012, ps. 56-65.
  • Bioy Casares, Adolfo, "Quelques jours au Brésil (Journal de Voyage)", Christian Bourgois Éditeur, Paris 2012.
  • Bremmer, Ian, "Every Nation for Itself. Winners and Losers in a G-Zero World", Portfolio/Penguin, New York 2012.
  • Centro de Comercio Internacional, "Política Comercial para el Éxito de la Exportación", CCI, Ginebra, Enero 2012, en:
  • Davies, Norman, "Vanished Kingdoms. The Rise and Fall of States and Nations", Viking, New York 2011.
  • De Gucht, Karel, "Trading in Value and Europe's Economic Future", European Commissioner for Trade, Speech, Brussels, 16 April 2012, en:
  • EU-ISS-ESPAS, "Citizens in an Interconnected and Polycentric World - Global Trends 2030", European Union Institute for Security Studies-ESPAS, Paris, April 2012, en:
  • Fernández, Lamarra, Norberto, "Hacia una agenda de la educación superior en América Latina", Anuies, México 2010.
  • Ikenberry, G.John, "Liberal Leviathan. The Origins, Crisis, and Transformation of American World Order", Princeton University Press, Princeton-Oxford 2011.
  • Judt, Tony, "Ill Fares the Land. A Treatise on our Present Discontent", Penguin Books, London 2011.
  • Kagan, Robert, "The World America Made", Alfred A.Knopf, New York 2012.
  • Kupchan, Charles A., No One's World. The West, the Rising Rest, and the Coming Global Turn", A Council on Foreign Relations Book, Oxford University Press, Oxford-New York, 2012.
  • Mearsheimer, John, "Why Leaders Lie. The Truth About Lying in International Politics", Duckworth Overlook, Lomdon, 2011.
  • Mesa, Manuela (coord.), "Cambio de ciclo: crisis, resistencias y respuestas globales", CEIPAZ, Anuario 2012-2013, Madrid, Mayo 2012, en:
  • Neri, Marcelo, "A Nova Classe Média. O lado brilhante da base da pirâmide", Editora Saraiva, São Paulo 2011.
  • OECD-WTO, "Trade in Value-Added: Concepts, Methodologies and Challenges", Joint OECD-WTO Note, March 15, 2012, en:
  • Rojas Aravena, Francisco, "América Latina y el Caribe: Multilateralismo vs. Soberanía: La Construcción de la Comunidad de Estados Latinoamericanos y Caribeños", Teseo-FLACSO, Buenos Aires 2011.
  • Stephens, Philip, "Future will be transformed by rise of the middle class", Financial Times, April 26, 2012, en: Versión en español en El Cronista del 7 de mayo, en
  • The Economist, "The third industrial revolution", A Special Report Manufacturing and Innovation, London, April 21st, 2012, en:
  • WTO, "Trade Policy Review: Uruguay", Geneva 25 and 26 April 2012, en:
  • WTO, "WTO Public Forum 2011. Seeking answers to global trade challenges", World Trade Organization, Geneva, April 2012, en:
  • WTO, "Made in the World Initiative. Speech by Deputy Director-General Alejandro Jara", Brussels, April 16, 2012, en:

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information. |

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