Project Syndicate: The Risk of a New Economic Non-Order

The current global economic order is under strain, and the World Bank and the International Monetary Fund could pursue reforms and take steps to adjust to new economic realities, preventing disintegration and disorder, argues Mohamed A. El-Erian for Project Syndicate. The current order is rooted in “an economic paradigm that aimed to promote win-win interactions among countries, emphasizing trade liberalization, relatively unrestricted cross-border capital flows, free-market pricing, and domestic deregulation,” he explains. Economic crises combined with structural changes and growing inequality, uncertainty and distrust suggest a need for reforms including recognition of emerging economies. “With too many people feeling marginalized, forgotten, and dispossessed – and angry at the leaders and institutions that have allowed this to happen – domestic policy pressure has intensified, causing countries to turn inward.” Ongoing fragmentation and protectionist tendencies are eroding prosperity and stability and eventually might lead to outright conflicts. El-Erian concludes that cross-border economic cooperation is vital for security of all types. – YaleGlobal