Building the Markets We Need

The greatest challenge of the current global financial crisis is the seeming impossibility of comprehending and managing its diversity. As governments move into uncharted territory, all assumptions will need to be assessed and reassessed, starting points found and re-found, and new tools developed and perfected.

VIENNA – The greatest challenge of the current global financial crisis is the seeming impossibility of comprehending and managing its diversity. Indeed, the way problems are proliferating appears almost uncontrollable. Plans to meet the crisis, in country after country, have been revamped and restructured time and again. The old models about how to understand the economy have had their day. Across the globe, governments are facing fundamental decisions about the future nature of their economies and societies.

The sub-prime crisis in the early summer of 2007 developed first into a financial crisis and ultimately into a recession. New economic problems soon rushed in to add to the existing ones: energy and food prices rose and then fell like a yo-yo; the dangers of climate change became ever more clear; and the mal-distribution of global political power demanded action.

The recent social unrest in Greece, Latvia, and Lithuania has shown that political stability is now vulnerable even in the European Union. Indeed, around the world, from Mexico to Indonesia and even China, the social fabric is being stretched to the point of fraying. This anxiety is reinforced by the general lack of funds among large groups of people who had nothing to do with creating today’s crisis but are bearing the pain of it.

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    China in the Lead?

    For four decades, China has achieved unprecedented economic growth under a centralized, authoritarian political system, far outpacing growth in the Western liberal democracies. So, is Chinese President Xi Jinping right to double down on authoritarianism, and is the “China model” truly a viable rival to Western-style democratic capitalism?

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    Whither the Multilateral Trading System?

    The global economy today is dominated by three major players – China, the EU, and the US – with roughly equal trading volumes and limited incentive to fight for the rules-based global trading system. With cooperation unlikely, the world should prepare itself for the erosion of the World Trade Organization.

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    The Globalization of Our Discontent

    Globalization, which was supposed to benefit developed and developing countries alike, is now reviled almost everywhere, as the political backlash in Europe and the US has shown. The challenge is to minimize the risk that the backlash will intensify, and that starts by understanding – and avoiding – past mistakes.

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    A Better British Story

    Despite all of the doom and gloom over the United Kingdom's impending withdrawal from the European Union, key manufacturing indicators are at their highest levels in four years, and the mood for investment may be improving. While parts of the UK are certainly weakening economically, others may finally be overcoming longstanding challenges.

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    The UK’s Multilateral Trade Future

    With Brexit looming, the UK has no choice but to redesign its future trading relationships. As a major producer of sophisticated components, its long-term trade strategy should focus on gaining deep and unfettered access to integrated cross-border supply chains – and that means adopting a multilateral approach.

  6. The Year Ahead 2018

    The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.

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