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Briefing: How Can Globalisation be Governed?

In this briefing, Peter Nicholson looks how at globalization plays out with problems like COVID-19 and climate change.

How can globalization’s benefits be increased and sustained while ensuring that its costs are kept within acceptable bounds? How, in other words, can globalization be governed?

Globalization is driven ultimately by the evolution of technologies of transportation, communications, and energy that shrink time and space and enable projection of human power. They have made the world into the metaphorical “global village.” The process is irreversible because technological innovation is cumulative.

The benefits of global trade and investment and the worldwide diffusion of technology and ideas have enabled stunning reductions in global poverty and created the potential for human flourishing among billions whose lives were formerly a struggle for subsistence. The problem is that globalization disrupts employment patterns, social structures, and environmental equilibrium. Such disruptions must be governed, or they will overwhelm the benefits.

History shows that as technology amplified the “footprint” of human activity, layers of geographically circumscribed jurisdiction—city, region, nation—developed to manage the spillover effects. Today this process of jurisdictional layering has stalled at the level of the nation state together with those transnational arrangements, like the UN, WTO, OECD and IMF, that states have voluntarily agreed to establish. Is this enough?

The answer depends on the capability of the existing transnational institutions to resolve global “collective action dilemmas.” These are situations where the incentives facing individual nations encourage behaviour that is damaging (or less than optimal) for the global collective—e.g., overfishing outside national marine jurisdictions; trade protectionism; establishment of tax havens; intellectual property theft; among many others. National interests have been sufficiently aligned in most such cases to delegate their management to international bureaucracies that implement formal agreements among nations. Unfortunately there remain unresolved collective action dilemmas that pose existential threats—climate change, nuclear war, financial collapse, pandemic disease, and cyber sabotage. These are cases where national interests have not been sufficiently aligned to reach durable agreement on collective resolution. What can be done?

In broad terms there appear to be three potential models—the multipolar Status Quo; a bi-lateral US-China Hegemony; and a new unipolar layer of Global Government. Each has significant attractions and serious defects.

The status quo has the enormous advantage of incumbency but has not (yet) been able to resolve the existential dilemmas, and the multilateralism of the post-World War II era now appears threatened by a resurgent nationalism.

The US and China, if they were to agree on collective action to resolve a particular global dilemma, probably have sufficient power and influence to bring the rest of the world along. But the prospects of US-China alignment on most of the big issues may seem remote.

An independent global layer of government—with its own taxing and enforcement power—could in principle be designed to deal with a limited set of presently intractable collective action problems. But how would accountability to the global population be established, and how could nation states be persuaded to cede elements of sovereignty to such an institution?

Consider, in light of these three models, the conundrums posed by controlling infectious disease and limiting greenhouse gas emissions.

The experience of COVID-19 will likely generate a global consensus on measures to minimize future pandemic risk—more surveillance; co-ordinated research into treatments; and robust mechanisms to assure emergency access to medical supply. These could, in principle, be implemented within the Status Quo model of governance based on the lessons to be learned from the pandemic.

Experience over the past 25 years has shown that the same model is unlikely to work for climate change, and time is running out. Creating a sovereign layer of global government is simply a bridge too far. Fortunately, both the US and China have powerful economic and geopolitical incentives to be the leaders in the inevitable transformation of the global energy system away from fossil fuels. Oddly enough, in this case, great power competition—motivated by specific national interest rather than a commitment to emissions reduction, per se— could push the entire world in the direction it needs to go.

As technology continues to shrink the world and increase the scope and scale of humanity’s footprint, a global layer of government that is not subservient to nation states will eventually need to be created. Almost certainly it will be born out of some future crisis and enabled by the new generations of technology that make it necessary.

This briefing note was prepared by Peter Nicholson in response to his webinar delivered on April 30, 2020. You can watch that webinar below.


Peter Nicholson

Peter Nicholson’s varied career has included senior executive positions in the banking, telecommunications and fisheries industries, as well as a number of public service positions. From 2003 to 2006, he was Deputy Chief of Staff for Policy in the Office of the Prime Minister of Canada. In 2002-03 he was Special Advisor to the Secretary-general of the OECD, and in 1994-95 was the Clifford Clark Visiting Economist with Finance Canada. Dr. Nicholson was the inaugural president of the Council of Canadian Academies from February 2006 through December 2009. The Council supports expert panels that assess the science that is relevant to issues of public importance. Educated in physics and mathematics, Dr. Nicholson received his PhD from Stanford University in 1969. He is a Member of the Order of Canada and of the Order of Nova Scotia.


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