Global Economic Governance in a Fragmented World

International cooperation continues to be both necessary and possible to achieve, despite great power rivalry, nationalism, and the erosion of multilateral institutions. Regional and global hierarchies matter: the steeper the power asymmetry, the stronger the temptation for hegemonic domination; flatter hierarchies foster cooperation and inclusive governance. Secondary states (especially liberal middle powers) play a pivotal role in the legitimacy and effectiveness of international orders, as they can enable or withhold followership from great powers. Effective multilateralism depends on strengthening institutional output, and deepening cooperation in areas where global public goods are at stake.

The World Trade Organization’s (WTO) current crisis is primarily driven by US unilateralism and a paralysis of the dispute settlement system, compounded by rigid consensus-based decision-making. A US withdrawal from the WTO is possible but unlikely, as it would undermine core US economic interests while strengthening China’s relative influence. The gridlock has led members to pursue bilateral and plurilateral arrangements, which may provide temporary stability, but cannot replace the WTO as the central pillar of global trade governance. The WTO is wounded but not dying; it is widely acknowledged that meaningful reform is needed, yet effective leadership to drive such reform remains elusive, especially in the absence of consistent US commitment.

Since the global financial crisis of 2008, the G20’s agenda has become far more diverse. Today, the G20 addresses almost every global policy area. However, resolutions often remain vague and ineffective due to a lack of political alignment. Nevertheless, the G20 continues to be an indispensable format for global governance, particularly as a “reserve mechanism” for global crises and as a forum for dialogue without cumbersome bureaucracy. In order to secure its legitimacy, the G20 must focus on its core mandate, develop the Troika into a multi-year planning body and align its working methods more closely with achievable outcomes.

BRICS is using institutions such as the New Development Bank, BRICS Pay, and joint SEO ventures to build parallel infrastructures that reduce dependence on Western markets and the US dollar. The rapid expansion of BRICS reflects its appeal to emerging economies that seek strategic autonomy, multi-alignment, and protection from coercive trade and investment practices by major powers. China dominates BRICS’ agenda-setting and operational capacity, using the bloc to secure resources, technology pathways, and supply chains, while Russia’s role adds geopolitical weight and controversy. The rise of BRICS confronts the EU with structural challenges, whose regulatory models, reliance on private multinationals, and FTA-based strategies are poorly adapted to competing with a coordinated, state-capitalist economic bloc.

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