I would like to begin by thanking the Rajaratnam School of
International Studies and in particular its Dean, Barry
Desker, for the invitation extended to me to address the
Singapore Global Dialogue.
In my intervention, I will discuss what I think is the key
issue of our time: the proper governance of the common house
of humanity. My view is that the question of governance
cannot be dissociated from the deep changes in the global
system of the recent past and the challenges of the near, and
not so near, future. So, let me start from there.
In the last 20 years, we have witnessed two radical changes,
with which we have not quite learnt to deal. The first is the
rise of emerging economies and the second is the growth in
2011 marked the 20th consecutive year that exports of
developing economies have grown faster than those of
developed ones. The share of world trade of advanced
economies fell from 75% in 1990 to just above 50% today.
Inflows of foreign direct investments in developing countries
have increased from 20 to 50% in the last decade only.
The shift in comparative advantage and economic weight that
the world economy is facing today mirrors past experiences in
the 19th and 20th centuries. But what is unique about the
current transformation is the fast pace at which change is
taking place and the immense number of people involved.
China's economy, for instance, was less than 2% of the
world economy 20 years ago. Today, it accounts for 10% (in
current dollar terms) and, according to some projections, it
is likely to more than double that in 20 years.
The rise of emerging economies was set in motion by the
changes in technology, transportation costs and regulatory
environment. This swing in economic power has profound
geopolitical consequences that will hardly be reversed in the
The second big change of the past few decades has been the
dramatic increase in interdependencies. I use the plural
because the growth of interdependency is not only an economic
phenomenon, but it encompasses also relations in the social,
environmental and technological sphere.
In the economic domain, increased interdependency has
certainly been the by-product of the rise of trade and
financial linkages. Globalization first de-nationalized
consumption, allowing consumers to buy goods and services
from places where they are produced more efficiently. More
recently, we have also witnessed a new phenomenon: the
de-nationalization of production. The advent of new
technologies and reduced trade costs makes it feasible to
separate stages of production geographically, leading to the
formation of value chains that span across borders. World
trade in parts and components of manufactured goods, a rough
measure of the importance of cross-border value chains, has
doubled between 2000 and 2010, rising from 1.4 to 2.7
trillion dollars. But economics is hardly the only
domain where interdependence across countries has increased.
Migration is a powerful vector of social interaction across
diverse cultures. In the past ten years, the total number of
international migrants has increased by over 40%, reaching
214 million people worldwide. This means that migrants today
would constitute the 5th most populous country in the world.
With the advent of the ICT revolution, technical and
managerial know-how have become more firm-specific and less
nation-specific. This has led to an unprecedented surge in
the international mobility of technical knowledge, the
positive impact of which we still may not fully appreciate.
But societies have also become more interdependent through
"risk sharing" in areas such as health and the environment.
Pollution and communicable diseases clearly know no national
boundary as we saw with SARS or with the H1N1. The shift in
economic power from the West to the Rest is also reshaping
the geography of environmental degradation and gas emission.
Challenges and institutions
In light of these deep social, economic and technological
changes, the policy and governance challenges that we face
today are certainly more complex than they used to be.
We are all familiar with the issues that our societies will
have to confront in the decades to come. There are five broad
areas where action is needed:
First, in the social domain, key challenges include
population growth in the South and ageing population in the
North, management of growing migratory flows, rapid rates of
urbanization in developing economies and the rising incidence
of non-communicable and infectious diseases.
The second area concerns the tasks that we face in the
economic sphere: achieving sustainable and balanced economic
growth, addressing the rising inequality and unemployment
that endanger social inclusion in both developing and
advanced countries, and managing an increasingly
interdependent global economy.
Third, and as history has taught us, environmental problems
can lead to the collapse of civilizations. Climate change and
biodiversity loss, food and water scarcity, energy security
and the unequal distribution of resources will seriously test
the peaceful co-existence, if not the very existence, of our
Fourth, welcome developments in democracy, education and
human rights but also more individualism, acquired rights and
vested interests have complicated the task of coalescing
constituencies and made more difficult the task of managing
change. The sense of belonging is more diverse, free riding
easier and solidarity more elusive.
Finally, science and technology can offer solutions to
address many of the global challenges of our time. But they
also bring new risks, such as the threat caused by nuclear
proliferation, bioterrorism or cybercrime, as well as a
complex array of ethical and legal questions such as those
associated to genetic research. Many of these issues are not
new. Climate change, for example, has been on the global
agenda since the 1972 United Nations Conference on the Human
Environment in Stockholm. Disarmament negotiations have been
dragging on for decades. The key question then is: why has so
little political energy been spent to solve the critical and
impending challenges of our future?
A first answer comes from a question that Dante asked in his
Now who art thou, that on the bench wouldst sit In
judgment at a thousand miles away, With the short vision of a
Short-termism, as we would call today Dante's concept, is
first of all an anthropological problem. Short-termism acts
as a huge break to the exercise of leadership. But, I
believe, it is the role of government to guide, to regulate
and to educate. In a word, to correct the collective myopia
that affects our societies. The failure to act is, at least
in part, a failure of our institutions.
Short-termism, however, is not the only cause of inaction.
Three other problems limit our collective ability to respond
to the global challenges of our time.
First, the political structure that we have inherited, the
Westphalian order, is based on the notion of full sovereignty
of nation states. The inconsistency between the extent of
interdependencies, on the one hand, and the fragmentation of
the political structure, on the other, is often a cause of
inefficient policy. The tragedy of this discord is that
national governments find it (individually) rational to
choose policies that, in the attempt to increase the welfare
of their constituency, may actually reduce it. The temptation
of protectionism is just one of the many examples of this
The second problem is what I call a "coherence
gap". One often overlooked dimension of interdependency
is the interdependency across issues. The increase in biofuel
production to address energy security concerns was an
important driver of the spike in food prices in 2008, because
both biofuels and food competed for scarce land and water.
Similarly, climate change will have a huge impact on
migratory flows; while the inability to address inequalities
in developing countries will continue to affect global
imbalances. We need a holistic view, but this often collides
with the purely sectoral nature of our international
The third problem is that, while new economic and political
trends have emerged, the rules and institutions governing
multilateral cooperation have not kept pace with these
changes. In fact, we are to a large extent living on the
global rules created in the 1990s, the last period of
improvements in global governance. From climate change to
trade negotiations, the difficulty in finding a new balance
between advanced and emerging economies in a muted context
has certainly played an important role in holding back
Conclusion: a new model of governance
In concluding my talk, let me turn to the following question.
If one looks at the reform of global governance from a
practical perspective, what are the essential principles? I
would point to six elements:
First, global actions require political will, clear projects
and common institutions. But these three pillars can only be
held together by a system of shared values: a sense of common
The second principle is multilateralism. A system based on
the centrality of a single economic and political hegemon, or
some form of directorate of two or three countries, is in
contradiction with the emerging structure of economic power
and the nature of interdependencies.
Third, public institutions can only be effective if they are
articulated according to the basic principle of subsidiarity,
which is the ideological basement of federalism. Policy
should be allocated at the lowest level of government
(national, regional or global) encompassing all benefits and
The fourth element is policy coherence. This means to ensure
that international institutions do not function as vertical
silos in strict isolation from one another.
Fifth, commitments need to be enforceable. Global governance
must be anchored in laws and regulations accompanied by
mechanisms for their enforcement, including binding dispute
The final element is legitimacy. This means finding ways to
give citizens greater ownership of common institutions and
greater say in their direction. This also means we need to
foster greater solidarity by nurturing a sense of global
belonging built on a set of common values. This can only be
constructed bottom up, starting from the local level and
hence the importance of an active civil society.
Shared values, multilateralism, subsidiarity, coherence,
enforceability, legitimacy: our task in the years to come is
to re-invent a system of global governance founded on these
Thank you for your attention.