Global Economic Governance: A paradox

The global economy creates lots of opportunities in businesses. On the other hand interdependence exposes people to risks such as systemic risk. The spillover of financial crisis is evidence of economies’ dependency on each other.

Financial crisis make us question the effectiveness of regulations or do we need more regulation? Is monitoring done effectively? If we look at the IFM failing to do enough regulation monitoring on United States the governance becomes questionable.

Globalisation should work for people not profit and the big question is: Can we govern globalisation? How can the balance be restored? Usually people at the top are not representing everyone. Probably a bigger system can be needed but the risk can be like that of WTO where every nation will fight for its own benefit.

Rules and regulations are made but they seem to be flexible. If regulation is not effective or tested, loopholes can be identified and manipulated. One of the weaknesses is making the decision process longer, which makes the monitoring less efficient.

Do people realise where we are going with this globalisation? Can we trust the system which is created? Globalisation is pushing markets across the boarders and at the same time forcing the governments to adjust to the situation. The government is also getting pressure from the “lower governance” and the risk is that the government can end up these pressures from people even wrong ones.

Capitalisation is expanding massively and the governments are forced to adjust and sometimes they are caught in between decisions. For example South Africa’s textile industry has been exploited by China and the question is: Should the government stop China to export its cheaper clothes in the market? Should we tax them or subsidise? At the end the customer will pay more.

So much regional grouping have overlapped especially in Africa. Political tensions from governments and lack of leadership is hindering the continent in economic development. Financial crisis proved that markets alone are not enough to control the economic activities so governance is needed also. However, the influence of lower governance can change the future. It can be effective for young people to influence the governments through global polls and technology will make it effective without limitations of distance.

What matters is that globalisation is booming, but the system portrays to be unsustainable in terms of resources.

Author: Fortue Murambadoro

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