INSOR Russia: Institute of Contemporary Development
Updated June 28, 2019

N.Maslennikov. Global Governance as a Challenge

February 24, 2014

Global Governance as a Challenge

By Nikita Maslennikov,

Institute of Contemporary Development (INSOR)

Analytical Bulletin of INSOR, #1 (20), January 2014

The expected improvement of the global economic situation in 2014 (in January the International Monetary Fund (IMF), World Bank, and United Nations (U) made upward corrections to their growth projections) has introduced a number of new issues to the agenda of the expert community. In the process of recovering from the crisis of 2008-2009, the global economy has been moving toward a qualitatively new structure for several years at varying speeds.

Progress toward the establishment of rules for supporting a new structural balance in the global economy away from the chaos of the Great Recession is fundamentally altering the perception of global risks. On the one hand, looking at global risks through the lens of fiscal consolidation and cycles of economic turbulence, one sees a clear shortage of mechanisms for managing exogenous factors of interdependency. On the other hand, the growing number of such factors leads us to conclude that the current transition of the global economy to its new and relatively balanced structure will not be successful without establishing mechanisms to facilitate  civili development in other areas.

As a result, the focus of global governance changes. The World Economic Forum (WEF) listed the top 10 global risks for 2014 as follows:

1. Fiscal crises in major economies (economic risk)

2. Structurally high unemployment/underemployment (economic risk)

3. Water crises (environmental risk)

4. Severe income disparity (social risk)

5. Failure of climate change mitigation and adaptation (environmental risk)

6. Greater incidence of extreme weather events (environmental risk)

7. Global governance failure (geopolitical risk)

8. Food crises (social risk)

9. Failure of a major financial mechanism/institution (economic risk)

10. Profound political and social instability (social risk)

It is important to bear in mind that the interconnectivity of these threats is growing. At the same time, their priority is often subjective to one’s point of view. In terms of their impact on current global, the top 5 risks are numbers 1, 5, 3, and 2 (in order of importance) from the list above plus “critical information infrastructure breakdown.” If the order is based on the probability of risk realization in the near future, the top 5 includes numbers 4, 6, 2, and 5 from above plus cyber-attacks.

The retrospective changes in the assessment of global risks by WEF experts allow us to outline several trends. Firstly, in terms of actual influence, the leading position over the past 8 years has been clearly held by so-called economic risks, largely stemming from the condition of financial systems and high unemployment.

Secondly, environmental risks, which were reclassified and placed in a separate category in 2011, have become second in terms of their actual impact on the world. In 2014, climate change and the water crisis ranked second and third respectively.

Thirdly, social risks (“unemployment and underemployment” have been moved to a different category in the new classification) are gradually subsiding in the rating of factors directly impacting the global economic map of current events. At the same time, these factors (first and foremost income inequality) have for the past three years remained firmly in the top positions among risks with a high probability of realization. In essence, we see an already established second echelon of systemic global risks whose significance and influence will only increase over time, thus requiring targeted and large-scale efforts in global governance.

Fourthly, the world agenda at present has seen a burst of risks related to the proliferation of high technologies, such as cyber-attacks, database theft, and collapse of critical links in information infrastructure. These risks have come to overshadow geopolitical risk factors. In our view, this is probably not a sign that the world has become a safer place in general. In managing geopolitical risks, there exists a substantial number of traditional mechanisms, albeit of various degrees of effectiveness, for balancing the interests of major international players. However, in the other risk categories, the lack of management mechanisms is quite obvious. For this reason, the low effectiveness and glitches in global governance on the whole should now be viewed as a systemic geopolitical risk.

Of course, there have been breakthrough achievements in the economic agenda, primarily thanks to the G20 and the Financial Stability Board. However, in other areas – environmental, social and information technologies – the situation remains concerning. Moreover, the manifestation of these risks promises to become even more critical in the near future.

In these circumstances, the current state of global governance begins to erode his substance  The first step toward responding to this challenge could be efforts by the G8, G20, United Nations, and other international organizations to clearly outline their own agendas and delegate tasks amongst themselves. This would substantially ease the search standards for “developing rules for establishing new rules,” which in essence is the point of global governance.