Economy & Politics

A globalization surge with a new sign appears possible

IfW economist Dennis Görlich believes that pandemics or the consequences of climate change must not hit the international community unprepared.imago images / China Foto Press

The Covid-19 pandemic has dramatically demonstrated the interdependence of our economies and the fragility of international agreements. Global inequalities, the reduction of which had progressed in the past decades, are emerging again with force as a result of the global health crisis: Differences between rich and poor are growing again, trust in partner countries that has grown for a long time is destroyed again by travel and export restrictions or nationalist rhetoric. The EU’s Corona Pact in August was only a relatively small but important ray of hope.

Multilateral cooperation was under pressure even before the corona crisis. It is true that the international cooperation brought the hoped-for economic successes and increased the material prosperity of many people worldwide. In return, however, the social and ecological structures that are just as important for humans came under stress. Winners of globalization in one place stand against losers in another, who have not been sufficiently compensated. Dissatisfaction is breaking out as international institutions and globalization processes are rejected or hostile to them.

The pandemic revealed that the structures of international cooperation are not prepared for such an emergency and are not sufficiently stable. But it also makes clear the urgency to change this. Pandemics or the consequences of climate change must not strike the international community unprepared. Growing challenges from cross-border digitization, skepticism about globalization in its current form and changed power structures in the world need new solutions. The G20 have broken away from their economic focus and have developed into an important forum for preparing this new world and redefining international coordination processes, global governance.

New boost for international cooperation

There are some substantial reasons to assume that global cooperation could experience a new boost in 2021: On December 1, Italy will take over the rotating G20 presidency from Saudi Arabia, which will always involve the organization of a number of working groups, dialogue formats, ministerial conferences and finally linked to the G20 summit. Italy wants to align its presidency with the pillars “People, Planet and Prosperity” and thus direct the presidency’s focus on sustainability and well-being beyond material aspects. As a country hit particularly hard by the pandemic, Italy itself is faced with the task of rebuilding its economy “better than before”.

Rome’s G20 Sherpa Pietro Benassi recently emphasized that his country does not want to see sustainability in this process as a burden but as a plus point. As the leader of the G20 process, Italy is in a good position to turn this into a global strategy and thus to advance the transformation towards a more sustainable economy internationally. Especially since Italy has long been an advocate of multilateral processes and the government in Rome has gained support in its own country during the pandemic.

Italy’s G20 presidency will coincide next year with the G7 presidency of Great Britain, which will also host the international climate summit COP26. India (G20) and Germany (G7) follow in the following year. All of these countries have a tradition of international cooperation and are committed to transforming global economic developments. India’s Prime Minister Narendra Modi, for example, recently called for a “new form of globalization in the post-corona world” at a special G20 summit and emphasized that a humanitarian and not just an economic approach to globalization is needed.

A unique opportunity

During its EU Council Presidency, Germany called for multilateral action so that the current crisis can be used to better adapt to global challenges caused by climate change and digitization. According to the German government, the EU can set standards for a more sustainable and fairer future. Great Britain has set high standards for making the climate summit a success. After all, a future US government under President Joe Biden can be seen as a good prerequisite for achieving international agreements for better living conditions worldwide.

This leadership constellation in international fora in the next two years offers a unique opportunity to revitalize multilateralism and steer it on the right track. Over the past twelve years, the G20 have proven to be effective in providing political impetus at the highest level, setting international standards and initiating concrete political steps. Above all, by setting standards, the G20 can contribute to making the global sustainability goals agreed in the UN achievable. If sustainability is anchored more deeply in political action and the accompanying narratives through multilateral meetings and is increasingly also part of corporate strategies, the corona crisis can become a starting point for an actual economic transformation. Globalization can then turn from a bugbear into a promise of welfare.

Dr. Dennis Görlich heads the Global Governance department at the Kiel Institute for the World Economy (IfW Kiel). He is also the research director of the Global Solutions Initiative in Berlin, which advises the G20 and other international forums.


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