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Middle Powers Can Punch Above Their Weight, by Jongryn Mo

Middle Powers Can Punch Above Their Weight, by Jongryn Mo

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Published by Hoover Institution
Appeared in the Wall Street Journal Asia November 4, 2011.
Appeared in the Wall Street Journal Asia November 4, 2011.

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Published by: Hoover Institution on Nov 04, 2011
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04/06/2014

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 Jongryn Mo
 
 
Middle Powers Can Punch Above Their Weight 
Hoover Institution
Stanford University
by Jongryn MoNovember 4, 2011As the G20 summit unolds in Cannes, France this week, global economic policy makingmight appear solely to be the preserve o the very large. The pressing issue o the day isthe debt crisis in the euro zone, one o the world’s biggest economic blocs and home to amajor currency. Europeans are turning or help to China, the secondlargest economy andclearly a rising power.But, as obvious as it sounds, the G20 has more than a handul o members. The originalimpetus or the grouping was that many o the world’s large economies need to beinvolved in policy discussions, not only a ew. Sure enough, G20 members such as Koreahave a potentially important role to play, i Seoul and other similar capitals choose to doso.Underneath the preoccupation with scrambling to stymie the European debt crisis andensure nancial stability lies a proound struggle at the G20 to shape the uture o theinternational economic system. Large emerging market economies seem determinedto use these new stages o global nancial troubles as an opportunity to change theembedded multilateral rules.In return or investing in the European bailout und, or example, China is trying toextract political concessions rom Europe on trade issues such as the treatment o Chinaas a market economy and Europe’s cooperation in easing international pressure or therevaluation o the yuan. India equally views the current multilateral system o tradeliberalization and nancial regulations as constraining its drive to catch up with the Westin economic development. Traditional economic powers such as the United States and Europe are justiablyconcerned about growing mercantilism in major emerging economies. These developedcountries have taken actions such as World Trade Organization suits and bilateraltradesaeguards to deend the basic rules o the liberal international economic order such assubsidy rules and marketdetermined exchange rates.Yet those oldline powers also suer credibility gaps. While they say they support tradeliberalization, in reality they both regularly impose antidumping duties and othersanctions on trading partners. Washington only belatedly ratied three major reetradeagreements with strategic allies last month.A WALL STREET JOURNAL OP-ED
Middle Powers Can Punch Above Their Weight
 
 Jongryn Mo
 
 
Middle Powers Can Punch Above Their Weight 
2 Hoover Institution
Stanord University
 This creates an opening or socalled middle powers, such as Korea, in orums such asthe G20. These countries orm a natural constituency or a liberal global economicorder, having beneted so much rom one in the past. They have the credibility todeend those principles now rom assaults on all sides by the big players.Korea’s growth today is a result o its ability to tap into global export markets, andSeoul increasingly embraces trade liberalization or imports at its own borders. Koreaemerged rom its own nancial crisis in 199798 the way the large economies shouldbe healing themselves now, reducing the role o government and pushing orwardwith structural reorms to make the economy nimbler and more resilient. Thisdevelopment model is at least as compelling as the alternative “Beijing consensus”some purport to see in China.Canada and Australia also are middle powers. Both are liberalism success stories,having grown wealthy on the back o ree trade and relatively open domesticmarkets. Both also avoided the nancial excesses that led to crises in the U.S. andEurope, showing that liberalism and economic collapse do not, ater all, go hand inhand as large developing economies have grown ond o arguing.Mexico, Indonesia and Turkey all into the same category and have a stake inadvancing liberal priorities. All three are regional anchor economies and havelong led the integration and development o their regions. Turkey in particular is abeacon o hope or secular liberalism in the Middle East. Their global roles have alsoexpanded in recent years. Ater its successul chairmanship o the UN climate changenegotiations in 2010, Mexico will have another chance to leave its mark on globalgovernance as the chair o next year’s G20 summit. The great benet o the G20 is that it brings such voices to the table. They can nolonger aord to be ree riders, contenting themselves with lending support to bigeconomy champions o liberalism. Instead, the middle powers need to start doingwhat the big powers themselves increasingly are unwilling to do: stick up or liberalprinciples.Such advocacy could take several orms. Above all, these governments need todeend the principles that are making their countries prosperous rom rhetoricalattack. On a more practical level, the structure o the G20 is such that the middlepowers can mediate disputes between the bigger players. They should use theinfuence this lends them to press the largest economies in a more liberal direction.I that doesn’t work, the middle powers also have the option o orming a morepublic bloc o their own. Working as a loose coalition, they could be in a position tobreak any gridlock among the biggest economies by oering credible alternatives.

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