Topic 1: The G-Minus-2 Threat

July 26, 2019 Project Syndicate

By Arvind Subramanian , and Josh Felman

The US-dominated G1 world is long gone, and the G2 system in which America and China shared
hegemonic responsibilities is now fading into memory. In today's G-minus-2 world, US and Chinese
policies threaten to have devastating consequences for the global economy.

CAMBRIDGE – For an all-too-brief period between the late 1980s and the late 2000s, the world was
characterized by convergence, both ideological and economic. The West and the Rest agreed that an
open liberal order was the best way to increase prosperity. Now, however, this ideological order
threatens to unravel, with adverse consequences for the world economy.

The two-decade-long “golden age” was one of trade hyper-globalization, reflected in an unprecedented
increase in the ratio of world exports to GDP. It was also an era of economic convergence: for the first
time in centuries, living standards in a broad cross-section of developing countries started catching up
with advanced-economy indicators. Moreover, globalization and convergence were handmaidens: open
markets enabled developing countries to prosper by building up modern, efficient, export-based
industries. And no country benefited more from hyper-globalization than China.

The liberal order underpinning this era was largely created by the United States. Exactly 75 years ago,
when both the economic turmoil of the 1930s and World War II were fresh in the collective
consciousness, the US was able and willing to supply three vital global public goods through the postwar
institutions created at Bretton Woods. Emergency finance would come from the International Monetary
Fund, and long-term lending from the World Bank. Above all, open markets would flourish under the
General Agreement on Tariffs and Trade (and its successor, the World Trade Organization). It was a G1
world, and America was the unchallenged hegemon.

Today, we have neither a G1 world nor ideological convergence. Because of its spectacular growth since
1978, China has become the second dominant economic power alongside the US (Europe is still too
decentralized and beset with internal problems to wield strategic influence). And the consensus about
what constitutes good economics has broken down.

In the West, and especially the US, a series of negative economic trends – including slower growth, rising
inequality, declining mobility, and greater concentration of economic power – have called into question
the benefits of globalization. In addition, the 2008 global financial crisis and its aftermath have
undermined faith in American-style capitalism.
China’s rise, and the perceived consequences for America, has also stoked US skepticism about
globalization. A broad swath of US elite and public opinion believes that China has abused America’s
largesse, via currency manipulation, intellectual-property theft and espionage, and forced technology
transfer. Furthermore, China’s recent tilt toward statism and political repression adds to a broader US
sense of betrayal, and of an investment in shared prosperity that has gone badly wrong.

This discordant G2 world and the end of ideological convergence now threaten economic convergence,
and thus developing countries’ prospects. The “golden age” of convergence had, in any case, already
started to face headwinds. First, climate change poses risks to developing countries’ agriculture.
Problems in this sector will reverberate throughout these economies, because high and rising
agricultural productivity has been the key to successful structural transformations from farming to
manufacturing. In addition, the spread of technology-enabled automation is replacing unskilled labor
with machines, directly threatening the ability of poorer countries to lift incomes through labor-
intensive manufacturing.

But the biggest threat comes from an ideological decoupling between the West and the Rest. The G2 of
China and the US, instead of supplying the key global public good of open markets that the economic
historian Charles Kindleberger saw as the responsibility of hegemons, is now providing global public
“bads.”

As the US and China impose tariffs and trade restrictions on each other’s goods, and as the US
undermines multilateral trade rules and institutions, world trade is slowing markedly, threatening
developing countries’ export sectors and the viability of their overall development strategies. At the
same time, the US and other Western governments are clamping down on migration. As a result,
developing countries are boxed in, and will find it increasingly difficult to export their products or their
excess labor. American repudiation of the Paris climate agreement does not bode well for the poorer
countries who will bear the brunt of the consequences of global warming.

That situation is dire enough. But perhaps the most critical “bads” provided by the US and China are the
most subtle. America’s unilateral measures, which flout the global rules that it helped to devise, have
begun to damage the Bretton Woods institutions and the associated system of international
cooperation. China, meanwhile, is a hobbled hegemon, having become dominant without acquiring
genuine international appeal. Undemocratic and repressive, the country lacks the “soft power” that
would give it the additional legitimacy to assert its dominance: effective leadership, after all, requires
willing followership.

Moreover, hegemons need to provide open markets. Yet China is not offering enough export
opportunities for poorer countries, even though it previously benefited greatly from deeper trade links
with more advanced economies. The Chinese government’s recent turn toward self-sufficiency and
promoting domestic champions is contributing to the rapid decline in the country’s imports.

To be clear, China is entitled to pursue a development strategy that has aided its extraordinary rise. But
the country cannot be a benevolent hegemon if it insists on maintaining a protectionist stance that
deprives the global system – and other developing countries – of key public goods.

The US-dominated G1 world is long gone, and the G2 system in which the US and China shared
hegemonic responsibilities is now fading into memory. Instead, we live in a G-Minus-2 world in which
the two hegemons, instead of providing the Kindleberger global public goods of cooperation, are doing
exactly the opposite.

Understandably, developing countries have begun to ask some pointed questions. What will happen to
the global economic system? Will the current system last long enough to enable us to prosper? How will
we weather the next round of global turbulence? And does it even make sense to talk about
cooperation when the two leading global protagonists are undermining multilateralism and the
institutions that sustain it?

Consumed by their quarrel, the US and China have so far provided no answers to these questions. There
is an old African proverb that says “when the elephants fight, it is the grass that suffers.” Right now, the
rest of the world is very afraid.

Josh Felman is Director of JH Consulting.

Arvind Subramanian, a former chief economic adviser to the government of India, is a senior fellow at
the Peterson Institute for International Economics and a visiting lecturer at Harvard’s Kennedy School of
Government. He is the author of Eclipse: Living in the Shadow of China’s Economic Dominance.

Topic 2: After Neoliberalism

May 30, 2019, Project Syndicate

BY Joseph E. Stiglitz
For the past 40 years, the United States and other advanced economies have been pursuing a free-
market agenda of low taxes, deregulation, and cuts to social programs. There can no longer be any
doubt that this approach has failed spectacularly; the only question is what will – and should – come
next.

NEW YORK – What kind of economic system is most conducive to human wellbeing? That question has
come to define the current era, because, after 40 years of neoliberalism in the United States and other
advanced economies, we know what doesn’t work.

The neoliberal experiment – lower taxes on the rich, deregulation of labor and product markets,
financialization, and globalization – has been a spectacular failure. Growth is lower than it was in the
quarter-century after World War II, and most of it has accrued to the very top of the income scale. After
decades of stagnant or even falling incomes for those below them, neoliberalism must be pronounced
dead and buried.

Vying to succeed it are at least three major political alternatives: far-right nationalism, center-left
reformism, and the progressive left (with the center-right representing the neoliberal failure). And yet,
with the exception of the progressive left, these alternatives remain beholden to some form of the
ideology that has (or should have) expired.

The center-left, for example, represents neoliberalism with a human face. Its goal is to bring the policies
of former US President Bill Clinton and former British Prime Minister Tony Blair into the twenty-first
century, making only slight revisions to the prevailing modes of financialization and globalization.
Meanwhile, the nationalist right disowns globalization, blaming migrants and foreigners for all of today’s
problems. Yet as Donald Trump’s presidency has shown, it is no less committed – at least in its American
variant – to tax cuts for the rich, deregulation, and shrinking or eliminating social programs.

By contrast, the third camp advocates what I call progressive capitalism, which prescribes a radically
different economic agenda, based on four priorities. The first is to restore the balance between markets,
the state, and civil society. Slow economic growth, rising inequality, financial instability, and
environmental degradation are problems born of the market, and thus cannot and will not be overcome
by the market on its own. Governments have a duty to limit and shape markets through environmental,
health, occupational-safety, and other types of regulation. It is also the government’s job to do what the
market cannot or will not do, like actively investing in basic research, technology, education, and the
health of its constituents.

The second priority is to recognize that the “wealth of nations” is the result of scientific inquiry –
learning about the world around us – and social organization that allows large groups of people to work
together for the common good. Markets still have a crucial role to play in facilitating social cooperation,
but they serve this purpose only if they are governed by the rule of law and subject to democratic
checks. Otherwise, individuals can get rich by exploiting others, extracting wealth through rent-seeking
rather than creating wealth through genuine ingenuity. Many of today’s wealthy took the exploitation
route to get where they are. They have been well served by Trump’s policies, which have encouraged
rent-seeking while destroying the underlying sources of wealth creation. Progressive capitalism seeks to
do precisely the opposite.
This brings us to the third priority: addressing the growing problem of concentrated market power. By
exploiting information advantages, buying up potential competitors, and creating entry barriers,
dominant firms are able to engage in large-scale rent-seeking to the detriment of everyone else. The rise
in corporate market power, combined with the decline in workers’ bargaining power, goes a long way
toward explaining why inequality is so high and growth so tepid. Unless government takes a more active
role than neoliberalism prescribes, these problems will likely become much worse, owing to advances in
robotization and artificial intelligence.

The fourth key item on the progressive agenda is to sever the link between economic power and
political influence. Economic power and political influence are mutually reinforcing and self-
perpetuating, especially where, as in the US, wealthy individuals and corporations may spend without
limit in elections. As the US moves ever closer to a fundamentally undemocratic system of “one dollar,
one vote,” the system of checks and balances so necessary for democracy likely cannot hold: nothing
will be able to constrain the power of the wealthy. This is not just a moral and political problem:
economies with less inequality actually perform better. Progressive-capitalist reforms thus have to begin
by curtailing the influence of money in politics and reducing wealth inequality.

There is no magic bullet that can reverse the damage done by decades of neoliberalism. But a
comprehensive agenda along the lines sketched above absolutely can. Much will depend on whether
reformers are as resolute in combating problems like excessive market power and inequality as the
private sector is in creating them.

A comprehensive agenda must focus on education, research, and the other true sources of wealth. It
must protect the environment and fight climate change with the same vigilance as the Green New
Dealers in the US and Extinction Rebellion in the United Kingdom. And it must provide public programs
to ensure that no citizen is denied the basic requisites of a decent life. These include economic security,
access to work and a living wage, health care and adequate housing, a secure retirement, and a quality
education for one’s children.

This agenda is eminently affordable; in fact, we cannot afford not to enact it. The alternatives offered by
nationalists and neoliberals would guarantee more stagnation, inequality, environmental degradation,
and political acrimony, potentially leading to outcomes we do not even want to imagine.

Progressive capitalism is not an oxymoron. Rather, it is the most viable and vibrant alternative to an
ideology that has clearly failed. As such, it represents the best chance we have of escaping our current
economic and political malaise.

Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief
Economist at the Roosevelt Institute. He is the author, most recently, of People, Power, and Profits:
Progressive Capitalism for an Age of Discontent.

Topic 3: Can Multilateralism Survive the Sino-American Rivalry?

July 8, 2019 , Project Syndicate
Ngaire Woods

The US-China trade and technology war has invited comparisons to the Cold War. For international
organizations, the lesson of great-power rivalries is to focus on facilitating cooperation toward
specifically defined goals, rather than attempting to establish new broad-based rules.

OXFORD – The strategic rivalry between the United States and China poses a sharp challenge to
international organizations, which are now at risk of becoming mere pawns of either power. Whether
multilateral institutions can retain a role in facilitating desperately needed international cooperation
remains to be seen.

The Sino-American conflict is already replacing globally agreed rules with the exercise of raw power, as
each side wrestles for access to resources and markets. The US is eschewing long-standing trade
agreements in favor of unilaterally imposed measures. China is carving out its own economic and
geostrategic sphere through bilateral partnerships and aid, trade, and investment packages under its
transnational Belt and Road Initiative (BRI).

The two rivals are also competing for control of new technologies and the data that enable them.
Among the top 20 technology companies in the world, nine are Chinese and 11 are American. On the
Chinese side, the tech giants enjoy access to a wealth of data, because they are backed by a government
that is bent on collecting it for the purpose of surveillance and establishing a social-credit system.
Equally, Chinese companies are expanding their reach and access to data, such as China’s CloudWalk
deal to build facial-recognition software in Zimbabwe. On the US side, the tech giants are being
supported through provisions in trade agreements like the US-Mexico-Canada Agreement (USMCA),
which requires cross-border data flows without restriction.

The strategic rivalry is a battle not just for control over resources, access to markets, and technological
domination, but also, more broadly, for control over the rules of the game. In 2015, when China created
the Asian Infrastructure Investment Bank as a new multilateral institution, the US refused to join and
pressured others not to do so, either. Earlier this year, when China and the US disagreed over who
would represent Venezuela at the IDB meeting (the US pressed China to accept a representative of the
opposition to the government, and China refused), the institution’s Board in Washington, DC, canceled
the meeting in Chengdu just one week before it was due to take place.

This is not the first time that a great-power rivalry has threatened to marginalize international
institutions. After its founding in 1944, the World Bank was soon sidelined in the reconstruction of
Europe. With the Cold War came heightened strategic competition in Europe, leading the US to pursue
more direct means of engagement through the Marshall Plan. In the event, the World Bank was
relegated to a different job: lending to poorer countries.
Some commentators describe the BRI as “China’s Marshall Plan.” Yet the new strategic rivalry differs
from the Cold War in many ways, starting with the fact that the US and China are economically
interdependent to a degree that the US and the Soviet Union never were. Still, the principle of “mutually
assured destruction” created its own kind of interdependence, leading to cooperation on nuclear-arms
control despite the intense rivalry.

One lesson of the Cold War may be particularly relevant today: attempts to establish broad rules, such
as US President Richard Nixon and Soviet leader Leonid Brezhnev’s Basic Principles Agreement in 1972,
proved less effective than narrower arrangements such as the 1955 Austrian State Treaty conferring
neutrality on Austria, or the 1962 agreement establishing Laotian neutrality. By the same token, formal
multilateral treaties and organizations worked best when they addressed specific dangers, as in the case
of the 1971 Berlin Quadripartite Agreement, the 1972 Anti-Ballistic Missile Treaty, the Strategic Arms
Limitation Talks (SALT), and the 1972 Incidents at Sea Agreement. All of these agreements were highly
contested, but each played a role in managing the rivalry.

In the case of the Sino-American conflict, the challenge is to contain the trade war, which could have
devastating consequences on other countries. Unfortunately, the current system of rules is already
being eroded. The World Trade Organization’s dispute-settlement mechanism is being paralyzed by the
Trump administration’s refusal to allow any appointments to its Appellate Body.

Breaking the impasse will require creative thinking and perhaps a series of narrower agreements to
breathe life back into the system. For example, countries with trade disputes could make better use of
the WTO’s 60-day bilateral consultations requirement to reach a settlement on their own. WTO leaders
could be far bolder and more creative in finding ways to support rule-based trade. They should recall the
way leaders in the United Nations initiated “peacekeeping” (which is not mentioned in the UN Charter)
and expanded the use of the office of the Secretary-General to advance peace at the height of the Cold
War.

Other multilateral organizations will also need to rethink their strategies. Regardless of whether larger
powers are locking horns, the world desperately needs mechanisms to facilitate cooperation on issues
such as climate change, biodiversity, cross-border infrastructure, and the regulation of new
technologies. International organizations can provide a forum for debating such matters, sharing
information, and arriving at common solutions. They can also play a crucial role as neutral monitors of
previously agreed rules, reducing the temptation for any one country to cheat or pursue zero-sum,
unilateral action.
China, the US, and the rest of the world have shared interests across a wide range of issues. But to
facilitate cooperation toward common objectives, international organizations will need to be renovated.
The World Bank, for example, could create new instruments to address regional and global challenges,
instead of remaining locked into single-country loans, and it could shed the ideological baggage
preventing some countries from embracing its Country Policy and Institutional Assessment approach.
Rather than lending to poor countries in ways that amplify the biases of the world’s largest bilateral
donors, the Bank should identify neglected areas and ensure balance in global development financing. It
will also need to overhaul its governance structure to give both China and the US a sense of ownership
and influence.

It is imperative that the Sino-American rivalry stops short of war. We know from history what can
happen when national leaders define rivals as enemies and exploit national grievances for personal
political gain. Right now, this tendency is on display in both China and the US.

To contain the new strategic competition, the rival powers, along with the rest of the world, should
emulate the Cold War-era focus on narrowly defined, specific agreements rather than attempting to
craft new broad-based rules. Multilateral organizations such as the WTO and the World Bank could play
an important role in brokering such accords, but only if their respective leaderships are bold and
creative, and if their stakeholder governments allow it.

Ngaire Woods is Dean of the Blavatnik School of Government at the University of Oxford.

Topic 4: Farewell, Flat World

July 1, 2019, Project Syndicate

BY Jean Pisani-Ferry

The single most important economic development of the last 50 years has been the catch-up in income of
a large cohort of poor countries. But that world is gone: in an increasingly digitalized global economy,
value creation and appropriation concentrate in the innovation centers and where intangible
investments are made.

PARIS – Fifty years ago, the conventional wisdom was that rich countries dominated poor countries, and
it was widely assumed that the former would continue getting richer and the latter poorer, at least in
relative terms. Economists like Gunnar Myrdal in Sweden, Andre Gunder Frank in the United States, and
François Perroux in France warned of rising inequality among countries, the development of
underdevelopment, and economic domination. Trade and foreign investment were regarded with
suspicion.

History proved the conventional wisdom wrong. The single most important economic development of
the last 50 years has been the catch-up in income of a significant group of poor countries. As Richard
Baldwin of the Geneva Graduate Institute explains in his illuminating book The Great Convergence, the
main engines of catch-up growth have been international trade and the dramatic fall in the cost of
moving ideas – what he calls the “second unbundling” (of technology and production). It was Thomas L.
Friedman of the New York Times who best summarized the essence of this new phase. The playing field,
he claimed in 2005, is being leveled: The World is Flat.

This rather egalitarian picture of international economic relations did not apply only to knowledge,
trade, and investment flows. Twenty years ago, most academics regarded floating exchange rates as
another flattener: each country, big or small, could go its own monetary way, provided its domestic
policy institutions were sound. The characteristic asymmetry of fixed exchange-rate systems was gone.
Even capital flows were considered – if briefly – to be potential equalizers. The International Monetary
Fund in 1997 envisaged making their liberalization a goal for all.

In this world, the US could be viewed merely as a more advanced, bigger country. This was an
exaggeration, to be sure. But US leaders themselves often tended to play down their country’s centrality
and its correspondingly outsize responsibilities.

Things, however, have changed again: from intangible investments to digital networks to finance and
exchange rates, there is a growing realization that transformations in the global economy have re-
established centrality. The world that emerges from them no longer looks flat – it looks spiky.
One reason for this is that in an increasingly digitalized economy, where a growing part of services are
provided at zero marginal cost, value creation and value appropriation concentrate in the innovation
centers and where intangible investments are made. This leaves less and less for the production facilities
where tangible goods are made.

Digital networks also contribute to asymmetry. A few years ago, it was often assumed that the Internet
would become a global point-to-point network without a center. In fact, it has evolved into a much more
hierarchical hub-and-spoke system, largely for technical reasons: the hub-and-spoke structure is simply
more efficient. But as the political scientists Henry Farrell and Abraham L. Newman pointed out in a
fascinating recent paper, a network structure provides considerable leverage to whoever controls its
nodes.

The same hub-and-spoke structure can be found in many fields. Finance is perhaps the clearest case.
The global financial crisis revealed the centrality of Wall Street: defaults in a remote corner of the US
credit market could contaminate the entire European banking system. It also highlighted the
international banks’ addiction to the dollar, and the degree to which they had grown dependent on
access to dollar liquidity. The swap lines extended by the Federal Reserve to selected partner central
banks to help them cope with the corresponding demand for dollars were a vivid illustration of the
hierarchical nature of the international monetary system.

This new reading of international interdependence has two major consequences. The first is that
scholars have begun reassessing international economics in the light of growing asymmetry. Hélène Rey
of the London Business School has debunked the prevailing view that floating exchange rates provided
insulation from the consequences of the US monetary cycle. She claims that countries can protect
themselves from destabilizing capital inflows and outflows only by monitoring credit very closely or
resorting to capital controls.

In a similar vein, Gita Gopinath, now the IMF’s chief economist, has emphasized how dependent most
countries were on the US dollar exchange rate. Whereas the standard approach would make, say, the
won-real exchange rate a prime determinant of trade between South Korea and Brazil, the reality is that
because this trade is largely invoiced in dollars, the dollar exchange rate of the two countries’ currencies
matters more than their bilateral exchange rate. Again, this result highlights the centrality of US
monetary policy for all countries, big and small.

In this context, the distribution of gains from openness and participation in the global economy is
increasingly skewed. More countries wonder what’s in it for them in a game that results in uneven
distributive outcomes and a loss of macroeconomic and financial autonomy. True, protectionism
remains a dangerous lunacy. But the case for openness has become harder to make.
The second major consequence of an un-flattened world is geopolitical: a more asymmetric global
economic system undermines multilateralism and leads to a battle for control of the nodes of
international networks. Farrell and Newman tellingly speak of “weaponized interdependence”: the
mutation of efficient economic structures into power-enhancing ones.

US President Donald Trump’s ruthless use of the centrality of his country’s financial system and the
dollar to force economic partners to abide by his unilateral sanctions on Iran has forced the world to
recognize the political price of asymmetric economic interdependence. In response, China (and perhaps
Europe) will fight to establish their own networks and secure control of their nodes. Again,
multilateralism could be the victim of this battle.

A new world is emerging, in which it will be much harder to separate economics from geopolitics. It’s
not the world according to Myrdal, Frank, and Perroux, and it’s not Friedman’s flat world, either. It’s the
world according to Game of Thrones.

Jean Pisani-Ferry, a professor at the Hertie School of Governance (Berlin) and Sciences Po (Paris), holds
the Tommaso Padoa-Schioppa chair at the European University Institute and is a senior fellow at
Bruegel, a Bad News for the World’s Poorest.
Topic 5: Bad News for the World’s Poorest
June 25, 2019, Project Syndicate

By Ceyla Pazarbasioglu

The weak state of the global economy conceals an even gloomier story: the worsening plight of the
world’s poorest people. Slower growth will make their climb out of poverty even harder, which is why the
world must support a range of bold policies to help them.

WASHINGTON, DC – The global economic mood is souring. At their meeting in Fukuoka, Japan, earlier
this month, G20 finance ministers and central bank governors warned that economic growth remains
weak, with risks still tilted to the downside. Just a few days before that gathering, the World Bank had
lowered its 2019 global growth forecast to 2.6% – the lowest rate in three years – and predicted that
growth would remain tepid in 2020-2021.

These headlines conceal an even gloomier story: the worsening plight of the world’s poorest people.
With a weaker global economy making their climb out of poverty even harder, the world must support a
range of bold policies to help them.

We know from recent experience what needs to be done. Between 2001 and 2019, the number of low-
income countries – where annual per capita income is below $995 – fell by almost half (from 64 to 34),
as 32 low-income countries attained middle-income status, whereas only two new countries joined the
group of low-income countries. This remarkable progress in just one generation – the result of strong
growth, better policies, and in some cases plain luck – lifted millions of people out of poverty.

Faster growth is crucial to reducing poverty. From 2001-2018, the 32 economies that moved from low-
to middle-income status grew by an average of roughly 6% per year. That was about 60% faster overall
than growth in middle- and high-income emerging market and developing economies in that period, and
some 25% faster than in countries that remained stuck in the low-income bracket.

A favorable external environment supported rapid growth prior to the global financial crisis, while the
commodities boom of 2001-2011 fueled heavy investments in exploration and production in many low-
income countries. The resulting increase in export earnings improved their governments’ finances.

Furthermore, nine low-income countries in Eastern Europe and Central Asia rebounded from deep
recessions in the 1990s as they moved from planned to market economies. Separately, multilateral
debt-relief initiatives in 2001 helped some low-income countries to stabilize their budgets and
economies. Conflicts in some African countries eased, leading to a steady decline in violence-related
casualties. And further trade integration boosted exports, attracted foreign investment, and spurred
reforms. Low-income countries were thus able to invest more in their people: since 2001, secondary
education enrollment rates have doubled, and the investment-to-GDP ratio has increased by five
percentage points in low-income countries since 2001.

Some countries got a bigger boost than others. Those that moved up the income ladder also had better
policy frameworks, governance, and business environments. They had more developed infrastructure,
greater improvements in human capital, and more abundant fiscal resources.

Finally, geography was another key advantage. Only about one-third of the countries that moved out of
the low-income group in 2001-2019 were landlocked, and those that did often had wealthier neighbors.
By contrast, almost half of the remaining low-income economies have no access to the sea.

Rapid economic expansion helped to reduce the number of people worldwide living in poverty (living on
$1.90 or less per day) by one-third between 2001 and 2015. However, these declines were mostly in
countries that progressed to middle-income status. The number of people living in poverty in the
remaining low-income economies was broadly unchanged.

Today’s low-income countries must jump higher than their predecessors did to escape poverty. Their
per capita incomes are further below the middle-income threshold, and most of these countries are
fragile states, marked by conflict or political instability. They rely heavily on agriculture, making them
vulnerable to extreme weather. And demand for their commodity exports is weakening as major
emerging markets grow more slowly and shift toward less resource-intensive industries.

Moreover, many poorer countries are saddled with heavy debt burdens. Debt service absorbs revenues
that could otherwise finance growth-enhancing infrastructure projects, or expenditures on health and
education.

Because the world’s remaining low-income countries have poverty rates above 40%, their projected per
capita income growth is highly unlikely to be sufficient to help reach the United Nations Sustainable
Development Goal of reducing extreme poverty worldwide to 3% by 2030.

These countries therefore need a bold agenda for boosting growth to generate more and better jobs.
They need to become more integrated into global trade flows, diversify their exports, and attract more
foreign direct investment. Their governments could improve skills and technologies by investing in
human capital and infrastructure (but must do so within tight budget constraints).
Measures to enhance financial inclusion and strengthen financial systems would also help. So would
mobilizing domestic revenues to make government finances more sustainable.

Other priorities should include improving governance and the business climate, enhancing competition
policies to raise productivity and international competitiveness, and supporting private-sector activity.

This challenging agenda is necessary in order to lift today’s low-income countries out of poverty. Yet
they cannot and should not do it alone. The rest of the world has a responsibility to help – not least
because of the impact of entrenched poverty and unfulfilled aspirations on global security and
migration.

The global economy may be struggling, but that is no excuse to ignore the world’s poorest people. On
the contrary, it is the most important reason to do more, and the Osaka summit provides a good
opportunity.

Ceyla Pazarbasioglu is World Bank Group Vice President for Equitable Growth, Finance, and
Institutions.Brussels-based think tank.
Topic 6: The World’s Next Big Growth Challenge
May 1, 2019 , Project Syndicate

By Michael Spence

The economic performance of lower-income developing countries will be crucial to reducing poverty
further. Although these economies face significant headwinds, they could also seize important new
growth opportunities – especially with the help of digital platforms.

MILAN – The global economy is undergoing very large structural shifts, driven by three megatrends. One
is the digital transformation of the foundations on which economies are built and run. Another is the
growing purchasing power and economic strength of emerging economies, and China in particular.
Lastly, there are broad-based political-economy trends, which include rising nationalism, various forms
of populism, political and social polarization, and a possible breakdown of the multilateral framework
within which the global economy has functioned since World War II.

The media devote most of their attention to the economic, social, and regulatory challenges arising from
these megatrends, and to the trade, investment, and technology tensions between China and the United
States. Yet a significant share of the world’s population lives in poor countries, or in poorer parts of
developing countries. Furthermore, the rapid reduction in global poverty over the past three decades is
primarily the result of sustained growth in developing economies.

The future growth prospects of today’s early-stage (that is, lower income – some growing and others
not) developing countries will be of huge importance in reducing poverty further. Although these
countries face significant headwinds, they could also seize important new growth opportunities –
especially with the help of digital platforms.

The headwinds are certainly considerable. For starters, advances in digital technologies – robotics,
machine learning, sensors, and vision – directly threaten the labor-intensive manufacturing and
assembly upon which lower-income, non-resource-rich economies have traditionally relied.

Moreover, climate change has had its greatest economic impact in the tropical and subtropical regions
where most lower-income countries are located. The effects of global warming are highly disruptive in
fragile economies, and, taken together, constitute a major new obstacle to growth.

Fertility rates, meanwhile, remain astonishingly high in some countries, especially in Sub-Saharan Africa.
In a few of the poorest – Niger, Mali, and the Democratic Republic of Congo – the rate is 6-7 children per
female. The resulting flood of new entrants to the labor market is far outstripping the number of jobs
available.
No known growth model can accommodate or keep up with this kind of demographic surge. Even
sustained economic growth of around 7% per year won’t be enough. And although fertility tends to
decline as incomes rise, that does not happen immediately. Empowering women, therefore, may be the
most effective way of starting to address the challenge.

Conflict also disrupts growth. Although many conflicts appear to have a religious or ethnic basis, some
scholars believe that their root cause may be economic, with ethnic divisions serving as a way to exclude
other groups from access to scarce resources and opportunities. Whatever its source, inequality of
opportunity has a highly disruptive effect on governance and hence growth.

But these obstacles are not insurmountable. For one thing, developing countries now have huge
potential export markets in middle-income countries, and no longer depend entirely on advanced
economies for access to global markets.

There is also a renewed awareness of the importance of infrastructure in enabling growth. In addition to
roads, railways, and ports, electricity and digital connectivity are crucial. In this regard, the rapid
expansion of cellular wireless technology, combined with the installation of high-capacity undersea
broadband pipes around Africa, represents major progress. Meanwhile, China’s “Belt and Road
Initiative” – though criticized by much of the West, and the United States in particular – could bring
dramatic improvements in physical and digital connectivity to Central Asia and parts of Africa.

Further advances in critical infrastructure will create important growth opportunities for developing
countries via e-commerce, mobile payments, and related financial services. The experience of China
strongly suggests that these digital platforms, and the ecosystems that develop around them, are
powerful engines for incremental, highly inclusive growth.

China, of course, is a very large, homogenous market. If smaller, lower-income developing countries are
to benefit from equally rapid inclusive growth, the digital platforms will have to be regional and
international in scope.

Some are starting to emerge. Jumia, a Nigeria-based e-commerce platform covering 14 African
countries, recently went public on the New York Stock Exchange, amid considerable excitement. True,
the company faces similar obstacles to those that Asian and Latin American platforms previously had to
overcome, including a lack of reliable payment systems, low trust between buyers and sellers, and
logistics and delivery bottlenecks. But the experience of other regions shows that these shortcomings
can be addressed over time.
The bigger risk to these platforms stems from the inevitable and necessary increase in regulation of the
Internet around the world. In particular, diverse national regulatory regimes may inadvertently or
deliberately disrupt or block the international development of e-commerce ecosystems, hurting lower-
income countries in the process. Avoiding the creation of such unintended obstacles should therefore be
a high priority for the international community.

Today’s lower-income countries already face a tough task in trying to emulate the impressive growth of
developing economies before them. An underperforming global economy, and rising national and
international tensions, will make that task even harder. If the world is serious about reducing poverty
further, it must pay far more attention to their progress.

Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern
School of Business and Senior Fellow at the Hoover Institution. He was the chairman of the independent
Commission on Growth and Development, an international body that from 2006-2010 analyzed
opportunities for global economic growth, and is the author of The Next Convergence – The Future of
Economic Growth in a Multispeed World.
Topic 7: Seven Fallacies of Economic Sanctions
May 7, 2019 , Project Syndicate By

Hassan Hakimian

Despite the pain now being inflicted on Iran's economy by Trump's sanctions, the success or failure of
such sanctions depends on whether they bring about regime change, or change a government’s
behavior. Given the prevailing misconceptions about their rationale, it is not surprising that economic
sanctions so often achieve neither goal.

LONDON – The sanctions imposed on Iran by US President Donald Trump have begun to bite the
country’s economy hard. Inflation, seemingly defeated by President Hassan Rouhani, has returned with
a vengeance, hitting 31% in 2018. According to the International Monetary Fund, the economy is poised
to shrink by 6% this year, and inflation could reach 37%. Many industries are experiencing severe
difficulties, and unemployment is mounting. Aiming to cut Iranian oil exports to zero, Trump is
threatening to sanction countries – like China, India, and Japan – that continue to buy Iranian oil.

Given the pain that Trump’s unilateral sanctions are causing Iran, are they really the “silver bullet” policy
that his administration hopes they will be?

Since World War I, governments have increasingly used economic sanctions to achieve their
international political objectives. Despite a century of experience, however, the rationale for such
measures remains far from compelling.

Economic sanctions have become even more popular in recent decades. In the 1990s, for example,
sanctions regimes were introduced at an average rate of about seven per year. Of the 67 cases in that
decade, two-thirds were unilateral sanctions imposed by the United States. During Bill Clinton’s
presidency, it is estimated that around 40% of the world’s population, or 2.3 billion people, were subject
to some form of US sanctions. In fact, the great majority of sanctions are imposed by large countries
against small countries. Currently, the US has nearly 8,000 sanctions in place worldwide, with Iran by far
the largest state target.

In addition, since the 1960s, the United Nations Security Council has established 30 multilateral
sanctions regimes under Article 41 of the UN Charter. The most successful of these arguably played a
key role in ending the apartheid regimes in South Africa and Southern Rhodesia (today’s Zimbabwe). In
addition to targeting specific countries, the UN has also imposed sanctions on non-state entities such as
al-Qaeda, the Taliban, and, more recently, the so-called Islamic State (ISIS).
But it remains highly doubtful that Iran will change its policies, let alone its regime, in the face of
Trump’s sanctions. The simple truth about economic sanctions is that, though widely used, they often
fail. A comprehensive study of 170 twentieth-century cases in which sanctions were imposed concluded
that only one-third of them attained their stated objectives. Another study estimates the success rate of
sanctions regimes to be lower than 5%.

Such a high failure rate suggests that governments often use flawed arguments to justify imposing
sanctions, tainting our understanding of their rationale and effectiveness. Seven misconceptions or
fallacies stand out. Each needs to be debunked.

First, sanctions are justified as a gentler and more humane alternative to war. But this underestimates
the potential for international diplomacy to resolve conflicts. And in reality, sanctions often pave the
way for wars rather than averting them: 13 years of international sanctions against Iraq were followed
by the 2003 US-led invasion, for example.

A second argument is that “if sanctions are hurting, they must be working.” But this criterion of
effectiveness fails to define what would constitute success. Worse, it flies in the face of evidence
suggesting that – even when essentials such as food and medicine are excluded – sanctions hurt large
swaths of the civilian population. They stymie economic growth, undermine production, and cause
businesses to fail, resulting in higher unemployment. Sanctions can also fuel inflation by restricting
imports and fueling currency crises.

Third, sanctions are often said to be “smart” and “targeted.” In practice, however, comprehensive
economic sanctions are collective punishment. They squeeze the middle classes and impose a
disproportionate burden on the poorest and most vulnerable, who are arguably the biggest victims of
the very regimes that sanctions are designed to punish.

Fourth, some governments justify sanctions as a way to uphold and promote human rights. But evidence
suggests that civil-society entities and NGOs are generally among the biggest losers under sanctions. By
portraying sanctions as foreign aggression and economic warfare against their country, authoritarian
regimes often accuse human-rights activists of being allied with the enemy. From there, it’s a short step
to a national-security crackdown on such organizations.

Iran is following that pattern. Trump’s withdrawal of the US from the 2015 Iran nuclear deal last May,
coupled with the imposition of a new round of sanctions, has emboldened Iran’s hardliners, who now
claim that their distrust of the US was justified and are pushing back against Rouhani’s centrist
administration. Similarly, sanctions against Saddam Hussein’s Iraq in the 1990s led to the wholesale
destruction of civil society there, helping to stoke the identity politics and sectarianism that continue to
bedevil that country and the wider region.

A fifth claim is that sanctions are necessary and effective in bringing about regime change. The cases of
South Africa and Zimbabwe notwithstanding, this is probably the weakest of the seven arguments – as
the longevity of sanctioned regimes in countries such as North Korea, Cuba, and Myanmar indicate. Even
the blockade imposed on Qatar by Saudi Arabia, UAE, Bahrain, and Egypt since June 2017 has boosted
the emir’s popularity and led a significant part of the population to rally behind him.

Sixth, sanctions are said to weaken the targeted governments. But by worsening the business and
investment climate, economic sanctions take their toll primarily on the private sector. If anything, power
becomes more centralized and concentrated as governments increasingly control supplies of strategic
commodities given the shortages they cause.

Finally, sanctions are supposedly effective in containing nuclear proliferation. Here, too, their record is
demonstrably poor. Since the Non-Proliferation Treaty entered into force in 1970, four countries have
acquired nuclear weapons: Israel, India, Pakistan, and North Korea. Three of them did so while under
sanctions.

Ultimately, the success or failure of economic sanctions is judged by whether they bring about regime
change or change a government’s behavior. Given the prevailing misconceptions about their rationale, it
is not surprising – as we are likely to see again in Iran – that they so often achieve neither goal. What is
more certain is that destabilizing Iran will make the region more dangerous than ever.

Hassan Hakimian, Director of the London Middle East Institute and Reader in Economics at SOAS,
University of London, is a co-editor of Iran and the Global Economy: Petro Populism, Islam and Economic
Sanctions.
Topic 8: Why Capitalism Needs Populism
May 6, 2019, Project Syndicate

By Raghuram G. Rajan

Globalization, digital technologies, and other factors have allowed competitive US corporations to
achieve market dominance. If the past is any guide, it is only right that these "superstar" firms should
now be challenged by grassroots political movements protesting against an unholy alliance of private-
sector and government elites.

CHICAGO – Big Business is under attack in the United States. Amazon canceled its planned new
headquarters in the New York City borough of Queens in the face of strong local opposition. Lindsey
Graham, a Republican US senator for South Carolina, has raised concerns about Facebook’s uncontested
market position, while his Democratic Senate colleague, Elizabeth Warren of Massachusetts, has called
for the company to be broken up. Warren has also introduced legislation that would reserve 40% of
corporate board seats for workers.

Such proposals may seem out of place in the land of free-market capitalism, but the current debate is
exactly what America needs. Throughout the country’s history, it has been capitalism’s critics who
ensured its proper functioning, by fighting against the concentration of economic power and the
political influence it confers. When a few corporations dominate an economy, they inevitably team up
with the instruments of state control, producing an unholy alliance of private- and public-sector elites.

This is what has happened in Russia, which is democratic and capitalist in name only. By maintaining
complete control over commodity extraction and banking, an oligarchy beholden to the Kremlin has
ruled out the possibility of meaningful economic and political competition. In fact, Russia is the
apotheosis of the problem that US President Dwight D. Eisenhower described in his 1961 farewell
address, when he admonished Americans to “guard against the acquisition of unwarranted influence” by
the “military-industrial complex” and the “potential for the disastrous rise of misplaced power.”

With many US industries already dominated by a few “superstar” firms, we should be glad that
“democratic socialist” activists and populist protesters are heeding Eisenhower’s warning. But, unlike in
Russia, where the oligarchs owe their wealth to the capture of state assets in the 1990s, America’s
superstar firms have gotten to where they are because they are more productive. This means that
regulatory efforts have to be more nuanced – more scalpel than sledgehammer.

Specifically, in an era of global supply chains, US corporations have benefited from enormous economies
of scale, network effects, and the use of real-time data to improve performance and efficiency at all
stages of the production process. A company like Amazon learns from its data constantly to minimize
delivery times and improve the quality of its services. Confident of its superiority relative to the
competition, the firm needs few favors from the government – one reason why Amazon founder Jeff
Bezos can back The Washington Post, which is often critical of the US administration.

But just because superstar firms are super-efficient today does not mean they will stay that way,
particularly in the absence of meaningful competition. Incumbents will always be tempted to sustain
their positions through anti-competitive means. By supporting legislation such as the 1984 Computer
Fraud and Abuse Act and the 1998 Digital Millennium Copyright Act, the leading Internet firms have
ensured that competitors cannot plug into their platforms to benefit from user-generated network
effects. Similarly, after the 2009 financial crisis, the big banks accepted the inevitability of increased
regulations, and then lobbied for rules that just so happened to raise compliance costs, thereby
disadvantaging smaller competitors. And now that the Trump administration has become trigger-happy
with import tariffs, well-connected firms can influence who gets protection and who bears the costs.

More generally, the more that government-defined intellectual-property rights, regulations, and tariffs –
rather than productivity – bolster a corporation’s profits, the more dependent it becomes on
government benevolence. The only guarantee of corporate efficiency and independence tomorrow is
competition today.

The pressure on the government to keep capitalism competitive, and impede its natural drift toward
domination by a dependent few, typically comes from ordinary people, organizing democratically in
their communities. Not possessing the influence of the elite, they often want more competition and
open access. In the US, the late-nineteenth-century Populist movement and the early-twentieth-century
Progressive movement were reactions to monopolization in critical industries such as railroads and
banking. These grassroots mobilizations led to regulations like the 1890 Sherman Antitrust Act, the 1933
Glass-Steagall Act (albeit less directly), and measures to improve access to education, health, credit, and
business opportunities. By supporting competition, these movements not only kept capitalism vibrant,
but also averted the risk of corporatist authoritarianism.

Today, as the best jobs drift to superstar firms that recruit primarily from a few prestigious universities,
as small and medium-size companies find the path to growth strewn with impediments laid by dominant
firms, and as economic activity abandons small towns and semi-rural communities for megacities,
populism is emerging again. Politicians are scrambling to respond, but there is no guarantee that their
proposals will move us in the right direction. As the 1930s made clear, there can be much darker
alternatives to the status quo. If voters in decaying French villages and small-town America succumb to
despair and lose hope in the market economy, they will be vulnerable to the siren song of ethnic
nationalism or full-bore socialism, either of which would destroy the delicate balance between markets
and the state. That will put an end to both prosperity and democracy.
The right response is not revolution, but rebalancing. Capitalism needs top-down reforms, such as
updated antitrust regulation, to ensure that industries remain efficient and open to entry, and are not
monopolized. But it also needs bottom-up policies to help economically devastated communities create
new opportunities and maintain their members’ trust in the market economy. Populist criticism must be
heeded, even if the radical proposals of populist leaders are not followed slavishly. This is essential to
preserving both vibrant markets and democracy.

Raghuram G. Rajan, Governor of the Reserve Bank of India from 2013 to 2016, is Professor of Finance at
the University of Chicago Booth School of Business and the author, most recently, of The Third Pillar: How
Markets and the State.
Topic 10: Closing the Global Governance Gap
May 29, 2019, Project Syndicate

By Kemal Derviş

The current wave of new technology is likely to transform the world, perhaps more deeply than ever
before, and will potentially accelerate economic growth. Finding effective ways to govern in this digital
milieu will be the biggest global challenge of the twenty-first century.

WASHINGTON, DC – Technological waves have always driven social and political change and progress,
along with economic growth. Gutenberg’s printing press democratized communications, which had long
been monopolized by church scribes. The Ottoman Empire’s long ban on printing presses may have
been a key reason for its eventual decline. Later on, the steam engine, and then railways, revolutionized
production, transport, and trade, and electricity changed almost all aspects of our lives.

Contrary to the view of Northwestern University’s Robert Gordon that current advances in technology
are small by historical standards, I believe that today’s technological wave will be at least as
transformative as previous waves. Finding effective ways to govern this new technology and its social,
political, and economic consequences will be the biggest challenge of the twenty-first century.

At the center of the new technological wave is artificial intelligence (AI) and the Internet, complemented
by cyber applications, biotechnology, and big data. These technologies have helped to expand
globalization by facilitating the establishment of global value chains, the rapid spread of information,
and increased financial flows. They have also contributed to large economies of scale in many sectors,
producing revenues corporations such as Amazon, Huawei, and Facebook that are an order of
magnitude larger than most countries’ gross output.

Political institutions have not kept pace with technological change and the resulting growth in markets.
When ordinary Egyptians, having organized themselves via social media, rallied in Cairo’s Tahrir Square
and toppled former President Hosni Mubarak in 2011, it seemed that technology would necessarily
boost democracy. But it soon became clear that these digital platforms could easily be co-opted by
authoritarian governments or terrorists, and used to spread false news, influence electoral processes,
and create deep divisions and confusion in societies.

In the business world, global corporations’ quasi-monopoly and monopsony power, and their ability to
shift profits to low-tax jurisdictions, continues to allow them to largely escape the purview of national
regulators and governments, despite G20-sponsored work to prevent corporate-base erosion and profit
shifting. And biotechnology will pose huge challenges, as human cloning and genetic screening enable
parents to “choose” embryos with desired characteristics.
Many of the technology-related challenges in politics, business, and science arise from the “weakest-
link” nature of the public goods with which these technologies are associated: the non-compliance of
just one or a few countries could undermine collective efforts to address problems that affect all. This is
true, for example, of corporate tax avoidance, cybercrime, nuclear proliferation, terrorism and its
financing, and infectious diseases. Should one country be allowed to go ahead with programs designed
to “enhance” human beings while others ban such efforts? Global governance that can tackle the
“weakest links” in these areas would be a valuable public good.

Or consider an “additive global good” such as climate safety: what matters is the sum of all countries’
efforts to reduce greenhouse-gas emissions. The provision of this sort of public good faces “prisoner’s
dilemma”-type problems. Each country may hope to be a free rider, avoiding the short-term costs of
cutting emissions, while benefiting from other countries’ emission reductions. Global governance can
facilitate an outcome where all countries comply with agreed emission targets, and are better off.

There is no magic solution to these problems. But there is a framework that can help us: multilevel and
multi-channel governance.

Multi-level governance refers to the various territorial levels of formal government: municipal, regional,
national, and global. The European Union, for example, includes all but the global level of government.
More than half of the bloc’s legislation is initiated at the Union level, while in many areas, such as water
quality and education, national or subnational agencies implement their own policies, subject to
supranational oversight.

Despite the recent rise of nationalist and Eurosceptic populism, this month’s European Parliament
election showed that a Europe-wide political space is emerging. Turnout was above 50% for the first
time in decades. And while nationalist parties did well in many countries, pro-EU parties together won
more than two-thirds of the vote.

There is also strong demand for subsidiarity, however: policy decisions should be taken at the lowest
level of government consistent with effective implementation. The pro-EU Greens, who performed very
well in the election, embody this principle: climate protection, their first priority, should be addressed at
the EU and global levels, while local governance should be strengthened. This double emphasis on the
continental/global and the local narrows the purview of the nation-state.
On their own, small countries outside of a larger multinational structure will have a tough time
navigating a world of global powers and mega-corporations. The EU example of supranational
government should thus inspire other bodies, such as the African Union.

At the global level, countries cooperate to various degrees, but without sharing sovereignty. Delivering
global public goods effectively requires both strengthening multilateral cooperation – through
institutions such as the United Nations, the International Monetary Fund, and the World Trade
Organization – and ceding some national sovereignty to appropriate international bodies, while strictly
respecting the subsidiarity principle, as the EU has done at the continental level. These institutions will
continue to be governed by their member states, which will nominate their leaders. But if every
application of a globally agreed principle requires its own multilateral negotiation, global governance
will be slow and cumbersome. Shared sovereignty would prevent this.

Existing multilateral institutions engender a supranational mindset quite different from that of national
bureaucracies. Their staff are often criticized for being “remote” or “elitist,” but they provide the
necessary human complement to the continental and global levels of territorial governance. They tend
to propose solutions that overcome the “weakest link” and “prisoner’s dilemma” problems more
instinctively than national bureaucrats.

This multilevel approach to formal governance – shared sovereignty at the continental and global levels,
combined with the principle of subsidiarity – should be complemented by multi-channel governance,
which is non-governmental and increasingly non-territorial. In fact, some argue that modern technology
will allow for virtual as well as national democracies. Liav Orgad, who leads a research group on global
citizenship governance at the European University Institute, advocates the establishment of “cloud
communities,” including at the global level, in which each citizen would have a unique digital identity
and vote electronically. Moreover, “blockchain technologies,” Orgad says, “can help in achieving the UN
goal of granting an ID to everyone” largely independently of governments.

This global digital identity would complement national citizenship and enable global voting: “one
person, one vote” would replace “one country, one vote.” Nation-states would not give up their
sovereignty, because the electronic voting would be only indicative; but the outcome of votes would put
significant pressure on governments.

Orgad’s proposal has some important weaknesses. If the cloud communities were not universal, they
could self-select in a way that sharpened differences and antagonisms, without there being a nation-
state to facilitate compromise. And while giving a lot of weight to population size is an inescapable
requirement of democratcy, citizens of small and medium-size countries are unlikely anytime soon to
accept a “one person, one vote” mechanism at the global level.
Nonetheless, Orgad cites a 2016 BBC World Service poll in which 51% of respondents said they regarded
themselves more as global than national citizens. The result may partly reflect the questions’ wording
and survey sample. But it also suggests that the rise of neo-nationalism in recent years may be a
reflection more of authoritarian leaders’ political strategies than of grassroots sentiment. While it may
also reflect a defensive reaction by older people seeking security, young people all over the world show
a readiness to connect with each other and think globally. This will make it easier to build multi-level and
multi-channel forms of governance in the future, as supranational problems become more acute.

“Embedding” technology and markets in a system of multilevel and multi-channel governance offers the
best chance of managing the coming changes. This system should complement the nation-state and
include an element of global governance that can respond to the issues posed by greater economies of
scale and interdependence. It is also necessary to preserve the most valuable of all public goods: peace.

For that reason, I am skeptical of the “responsible nationalism” proposed by former US Treasury
Secretary Larry Summers. To accommodate the rhetoric of neo-nationalists and authoritarian leaders is
to give in to a false realism. While citizens will continue to love their country, nationalism should not be
the starting point of our reflections on governance. One never wins by allowing opponents to frame the
debate. Instead, we must overcome identity politics and its avatars’ attempts to divide humanity, and
put “responsible internationalism” at the heart of our efforts to govern ourselves well.

Kemal Derviş, former Minister of Economic Affairs of Turkey and former Administrator for the United
Nations Development Program (UNDP)S, is Senior Fellow at the Brookings InstitutiSon.