UNCTAD released its Trade and Development Report 2018 noting that the pressures are building around escalating tariffs. This affects financial flows, but behind these threats to global stability is a wider failure to address the inequities and imbalances.
According to the report, the increasing mountain of debt, more than three times the size of global output, is indicative of that failure. While the public sector in advanced economies has been obliged to borrow more since the crisis, the rapid growth of private indebtedness needs to be monitored closely.
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This growing indebtedness is closely linked to inequality. These two are connected by more weight and influence of financial markets, as a result of hyperglobalization.
Namely, banks have become too big to fail, showing the reckless neglect of regulators before the crisis. However, the ability of financial institutions to rig markets has survived the early rush of reform in the aftermath of the crisis and efforts are underway to push back even on the limited regulations that have been put in place.
In addition, imbalance in power is not unique to financial markets, as the global trade landscape is dominated by big players. Lead firms are leading global production networks to capture more of the value added, causing unequal trading relations.
On the other hand, the digital world has resisted the ugly post-crisis trend and is opening up new growth opportunities for developing countries. However, the worrying spirit of monopoly risks negative outcomes.
All these pressures are putting pressure on multilateralism.
In our interdependent world, inward looking solutions do not offer a way forward; the challenge is to find ways to make multilateralism work for all and for the health of the planet. There is much to be done.
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