Rethinking Global Economic Governance Amid Interconnectedness and Tech Disruption

Tokyo, 19 August 2024: Dr Lili Yan Ing, Senior Economist at ERIA and Secretary General of the International Economic Association, shared key insights from her forthcoming book, New Global Economic Order, during a discussion at the Asian Development Bank Institute (ADBI) in Tokyo on 19 August 2024. The event was chaired by Dr Daniel Suryadarma, Senior Researcher at ADBI.

Dr Ing began her presentation with three key observations. First, she noted that the global economy has expanded sixfold over the past half-century, growing at an annual rate of 4%. This growth, driven by increased trade and investment, has lifted half of the global population out of poverty. Second, she pointed out the dominance of the tech sector in the last decade, with seven out of the ten largest companies by market capitalisation (Apple, Microsoft, NVIDIA, Alphabet, Amazon, Meta, and TSMC) belonging to this industry. Third, she highlighted the stark rise in income inequality, where the top 1% of the global population now earns nearly twice as much income as the remaining 99% combined.

In her overview of the upcoming book, Dr Ing drew parallels with historical moments when global economic rules were reformed, such as the abandonment of the gold standard when it became too restrictive. She stressed the importance of striking a balance between national interests and global equity, advocating for a minimalist approach to global governance. This approach would allow countries the flexibility to pursue their own paths, provided they do not harm others.

Dr Ing also discussed the growing trend towards regional and plurilateral agreements, which are emerging as alternatives to increasingly ineffective global institutions like the World Trade Organization. While these agreements could help maintain economic interconnectedness, she cautioned that careful management is essential to prevent them from exacerbating global fragmentation.

Highlighting the urgency of developing new strategies focused on green transitions and labour-absorbing services, Dr Ing argued that traditional growth models may no longer suffice. She emphasised the need for inclusive artificial intelligence (AI) governance, particularly in light of the challenges posed by disruptive technologies such as AI. This governance should consider the needs of workers and developing countries to ensure that technological development aligns with social and democratic values.

Finally, Dr Ing underscored the critical need for international financial and tax reforms. She called for stronger roles for multilateral development banks and more inclusive global financial institutions to address global challenges and support sustainable development.

Dr Lili Yan Ing's Presentation

Publication: New Global Economic Order (eds. Lili Yan Ing and Dani Rodrik)