Polyglobalisation: Debt, Trade and Geopolitics  

The final speech in the 2023 Development Matters series was given by Rebecca Grynspan, Secretary General of UNCTAD, the United Conference on Trade and Development.  

Michael Gaffey, Director General of Irish Aid, welcomed UNCTAD Secretary-General Rebecca Grynspan and complimented her on the impressive role she has played in highlighting UNCTAD’s priorities in multilateral forums. He remarked that UNCTAD was established in 1964 to link trade to development and to support inclusive and sustainable growth and that 2024 marks the 60th anniversary of UNCTAD. He mentioned that 2024 also marks the 50th anniversary of Irish Aid, which was established when Ireland joined the then EEC. One of the membership requirements was setting up a development programme, which also facilitated the growth of Ireland’s trade and development links. He acknowledged the importance of trade for small island states and noted that global trade is both part of the problem and the solution for developing countries. 

He pointed out that Irish Aid, in cooperation with Dublin, Cork and Belfast ports, runs an all-island programme for UNCTAD, which helps train people in developing countries to manage ports. He added that Ireland also supports UNCTAD’s development finance programme. He concluded by emphasising the increasingly important role UNCTAD plays as a global actor in the context of cascading crises, where trust and confidence between the Global North and the Global South are needed.  

New Era of Globalisation

Ms Grynspan then delivered a speech on Polyglobalisation: Debt, Trade and Geopolitics. She said we are in a new era of globalisation with objective and subjective reasons for it. These include (i) the return of industrial policy in the US with the Inflation Reduction Act (IRA), (ii) protectionism in other regions of the world, and (iii) an inward-looking focus on trade. The new era, which Callum Williams from the Economist has described as “an era of Homeland Economics”, is characterised by the deglobalisation of goods and the slower yet persistent globalisation of services. The Secretary-General referenced an article by Arvind Subramanian from the Peterson Institute, which posits that the halt in manufacturing’s shrinking share in global value-added was due to slowing income convergence, financial deglobalisation, and more restrictive trade policies, whereas the period of hyper-globalisation in the 90s saw some parts of trade de-globalising – global exports grew at 10% but global trade only at 6%.   

Ms Grynspan said that trade has grown slower than GDP since the global financial crisis. However, the data show trade has not declined but has slowed down in pace. In other words, due to the dematerialisation of trade, goods are growing slower than services, and finance has been de-materialised. 'Slow mobilisation' might be a better word than deglobalisation to describe the current situation, she said. Trade and investment, the two key pillars of trade for the Global South, have not recovered from the financial crisis, and the Global South is not receiving FDI. Trade is slowing down, so GDP is not growing.

Debt Crisis Inhibits Participation of LDCs in Industrial Policy

Professor Dani Rodrik of Harvard University argues that the best industrial strategy is the one that does not exist. Now, however, industrial policy is back with a vengeance, Ms Grynspan contended. Renewable energy and critical minerals have been the focus of this industrial policy. Japan, China, and Korea are redoubling investments, but all this is happening under a WTO without an appellate body and in a context where the fiscal space in developing countries is shrinking, the cascading crises have left the developing countries bare, and there is a divergent path both between the North and the South and within each bloc. She emphasised that developing countries cannot engage in industrial policy, as 3.3 billion people live in countries that spend more on servicing debt than on health and education. So, how will it be possible to achieve the Sustainable Development Goals, she queried. The reason that the debt-servicing issue is not called a debt crisis today, she opined, is because the markets are not in trouble, and the emerging countries have not been affected. 

Ms Gryspan observed that protectionism is rising again in geopolitics and focusing on renewables. The US IRA legislation affected the EU with its local content provisions, and the US has locked out solar energy from China; the EU, in turn, has instigated anti-dumping measures and introduced the Net Zero Industrial Act (NZIA) this year. Ms Grynspan concluded that re-globalisation, support for the WTO, and rising trade will lead to better growth in developing countries.  

She noted that we are at the midpoint of the 2030 deadline for the SDGs, with only 15% achieved due to the pandemic, climate crises and conflict. However, the SDGs are too big to fail; they are the world’s last common agenda. She cautioned that we must take this notion seriously and compare today's world with how it will look in 2030 if the SDGs fail. 

Poly-globalisation Requires Integration of the Global South into the Global Economy

She concluded by saying that poly-globalisation is a better-received concept than globalisation, which is perceived to be too Western-focused. Emerging countries want more globalisation but prefer a model adapted to 2023, not harkening back to 1945. Polyglobalisation, she said, is important for multilateralism itself, as there are two key features evident in the global economy today: regionalisation and competitive multilateralism. There used to be 75 regional trade agreements; now there are 321. It is not a question of participating in global trade, she said, but of integrating the Global South better into the global economy. Most of the minerals the world needs are located in the LDCs, and they need to be able to capitalise on that.

Trade Rules Review Necessary to Bridge Gap in Trust Between Global South and Global North

UNCTAD would like a review of the trade rules that do not allow the LDCs to add value, to give them assistance to help them diversify, to assist them in negotiations, and to push for greater transparency. She praised the AFTCA, which has had a great impact in Africa and where UNCTAD has been able to help with formulating their trade rules. Apart from regionalisation, the other feature Ms Grynspan identified as note-worthy is competitive multilateralism – multilateralism with competing poles, such as Europe’s Global Gateway, the US Build Back Better programme, and China’s Silk Road. Trade is not a fragmented sector; it is competitive. There is no deglobalisation in South/South trade – it is growing at 9.3%. Still, there is a reconfiguration of hyper-globalisation, global value chains, and a need for sustainability in trade, where the trust deficit between the Global South and the Global North is considerable. Polyglobalisation transcends traditional norms, as it could be an action for a more sustainable future with deeper global cooperation. Competition can help the global economy, she concluded, if we go beyond conventional Western paradigms. Debt relief for middle-income countries, realignment of the international financial architecture, better representation in governance structures, and a diversity of voices in multilateral fora were highlighted at the SDG Review Summit in September 2023 – issues which Ms Grynspan said merit close reflection. 

Disclaimer: The ideas, opinions and comments in this blog are entirely the responsibility of its author and do not necessarily represent or reflect Irish Aid policy.