Global Economic Governance: Between a New Compromise or Integration

Abstract

Globalization moves within the limits of the set of governance mechanisms and institutions function. The market has a tendency to exceed the limits of the nation-state but also need global institutional arrangements to ensure sustainable operation. There is an inherent paradox in globalization. It is what Dani Rodrik has named as “trilemma” of modern times. Three key elements defining globalization are free markets, national sovereignty, and democratic legitimacy. But they cannot combine all three resultants parallelly, creating the “political triangle of incompatibility.” The imbalances of the modern system of economic governance are not only due to the wrong policies but mainly in combination weakness that can provide all three objectives simultaneously. Currently, globalization is trapped between this combination, in an unfinished selection, leading to instability. In order to overcome this problem, the world community should either choose a new compromise, like that of Bretton Woods, or to complete its institutionalization, going to an “international economic association.” In this paper, we will study the opportunities and challenges of these prospects. © 2018, Springer International Publishing AG, part of Springer Nature.