Progressive Governance and Globalisation: The Agenda Revisited

Jean Pisani-Ferry
Executive summary The Progressive Governance agenda on globalisation and the responses to it was formulated in the late 1990's. It highlighted opportunities offered by globalisation, and therefore the need to embrace it. But at the same time it perceived that accelerated transformations in the world economy were bound to give rise to adjustments of unprecedented magnitude. In a kind of two-handed strategy, it advocated a combination of bold domestic reforms and a strengthening of global
more » ... g of global governance to make the most of economic globalisation. Developments over the last decade have brought confirmations and surprises. Key facts presented in this paper are: • Unprecedented integration through trade and foreign direct investment • A worldwide propagation of macroeconomic stability • Uneven and lopsided financial globalisation • Stable global inequality and a rise of within-countries inequality • An increasing tendency of opinion in rich countries to blame globalisation for economic insecurity Against this background, the underlying philosophy of Progressive Governance is in no need for revision. Most of its key choices continue to be valid. However the speed and magnitude of the transformation affecting the world economy are larger than initially envisaged, while domestic policy reforms and redistribution have often been insufficient to cope with this adjustment challenge. Some of the features of globalisation are also disturbing, especially as regards the pattern of capital flows, and international institutions have been facing both a crisis of legitimacy and a crisis of effectiveness. In other words, the two-handed globalisation strategy has not been invalidated by events, but has not been fully implemented. Furthermore, the years ahead risk being less auspicious. The return of scarcity and mounting concerns over economic security; the re-emergence of state capitalism and the rise of Sovereign Wealth Funds; and financial instability represent new challenges to address. The continuing development of an open, multilateral world economy is less able to be taken for granted today than it could a decade ago. Against this background, the definition of a renewed agenda that builds on the success of the initial one should be a priority for progressive governments.