The paradigm of top-down globalization in the past decades has encountered limitations on multiple fronts. Financial crises that erupted with increasing frequency were complemented by cracks in the global governance foundations, including the increasing strains experienced by such global organizations as the WTO. The rise of regionalism in the world economy offers a gateway to overcoming these limitations by involving a wider scope of countries into launching and leading global initiatives. There are indeed signs that the regional blocs and development institutions are starting to cooperate more systemically with the global institutions such as the World Bank and the IMF. What is needed going forward is closer horizontal coordination among the regional institutions – something that could facilitate the launching of new global initiatives bottom-up via such regional platforms.
The essence of a “bottom-up” globalization approach is that the creation of platforms that are global in scope is not limited to the largest economies or international organizations. Global platform formation can be undertaken by smaller countries from different parts of the world economy that can serve as the focal points of leading the global platform formation in their respective regions. In other words, rather than a group of large economies leading the formation of global platforms and initiatives, the regional paradigm would widen the scope for other economies to participate in the launching of global initiatives. In effect, global initiatives such as environmental/green financing platforms or platforms targeting digital development may be led by 4-5 economies (not necessarily the largest ones) in various parts of the globe and scaled up by these countries via their respective regional blocs and regional institutions.
Such a bottom-up globalization technology that is predicated on the horizontal coordination among regional blocs and institutions allows for a greater variability in the composition of national economies and regions that launch global platforms and initiatives. The great thing about the role of the “regional layer” is that it connects and mutually reinforces all of the main components and instruments of international economic policy: bilateral alliances, regional agreements, global and multilateral accords. Within such a format, there is more scope for international alliances both at the “region-to-region” level as well as across national economies. In effect, a “regions-driven globalization” offers the world economy a range of wider possibilities:
- Less scope for Realpolitik due to the greater role of regional blocs where the effects of narrow national interests are attenuated
- A wider array of alliances and economic policy communication lines on the international stage
- A wider reserve for trade and investment liberalization – inter-regional platforms can coordinate the lowering of barriers both within regional blocs and across the regional integration arrangements – contrary to the WTO the effect is not only on individual national economies, but also on regional blocs (in fact a growing number of countries are delegating their trade policy to their respective regional arrangements)
Importantly, the operation of platforms of regional arrangements through which global initiatives may be launched should seek to maximize optionality, i.e. it should not strive to ensure universal participation and should allow for plurilateral platforms and agreements to be forged. In this vein, the multiplier effect of greater inclusiveness in the bottom-up globalization process is unlocked in several stages:
- At the level of individual countries: a far wider scope of countries, including small and medium-sized economies, can advance global initiatives
- At the level of regional groups: the regional blocs and their development institutions drive and propagate the initiative to the global level
- At the global level: the multilateral institutions and global organizations that support the regional platforms in further enhancing the scope and the depth of the global initiative
Perhaps the most vivid example of the limitations of a top-down approach to globalization and the possibilities of a more open-ended framework for trade liberalization is the discussion on the future of the World Trade Organization (WTO). The organization has been plagued for decades by the inability to launch new rounds of trade liberalization – a top-down approach that was predicated on the attainment of a full consensus among all members. What is being proposed now by the likes of the World Economic Forum (WEF) is to shift gears into a plurilateral mode (plurilateral agreements), whereby the launching of new liberalization initiatives can be undertaken by a limited number of members rather by full consensus of all member states. Similarly, the bottom-up paradigm of globalization may open up the possibility of multiple formats for international initiatives, even if incomplete in terms of all countries and regions of the international community being on board.
In the end, short-cuts in the sphere of economic development have their costs. For individual economies this may be observed when episodes of high growth on the back of favourable terms of trade or increases in spending and debt are superseded by extensive periods of slowdown. In the case of global governance, the by-passing of the regional layer composed of regional integration arrangements severely constrains the scope for alliances and economic cooperation in the globalization process. For the global economy to fully realize its innovation and growth potential, the global governance framework needs to open up the entire range of possibilities for economic alliances to be formed across national economies and regional economic blocs. The regional layer of global governance may be the critical element that allows for a far more flexible, open, inclusive and innovative paradigm for globalization to advance. It is time to unlock the full potential of the combinatorics of global alliances by leveraging the tremendous potential harbored in regional blocs and institutions.
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