The rationale for global governance is to control the individual power of nations and thus facilitate a collective influence and weight on the globes destiny through the establishment of a proper structure and guidelines that may be used in the regulation of international relations that extend beyond the broad horizons of state action. The establishment of world governance is also founded on the existing difficulties encountered in an attempt to attain equal development rate on a world scale.
Global governance should not be perceived as world government at any given instant. If the was a global government in place, then world governance could not be necessary. This is so because a single world government could adopt the frameworks of an ordinary domestic government in dealing with many governance issues. This is in itself contrary to the definition of global governance which prohibits the application of force, as enjoyed by domestic governments in its operations.
The primary objective for this essay is to discuss in details the various principles and issues concerning global governance and globalisation. The factors that justify the establishment of global world governance shall be briefly discussed. Finally, the several measures put in place by various world governments so as to cope with the global economic crisis.
Justifications for Global Governance
Global governance should be perceived as a purely consultative and commutative process that may be used in international conflict resolution and not an optimal system that enforces the laws of the land by use of any available means, whether force or diplomatic channels in averting crisis. A key factor that has led to the establishment of world governance is the ever increasing nature of global problems and challenges. A common example of the global challenges is the threats posed on the environment by many factors such as industrialization, deforestation etc. such challenges call for collective response and corrective measures at the global level to deal with the global crisis.
There is also a need to refer to global governance due to the endurance and heterogeneity of communal preferences regardless of the forces of globalisation. A good example of this factor is portrayed by the Europeans and Americans, who have failed to find a common ground in regard to the separation between the private and public spheres, demand for redeployments, lenience for inequalities, and attitudes to risk among other aspects.
Lastly, the increasing rates and levels of world civic awareness is also a factor that justifies the establishment of global governance. This is despite the fact that worldwide civic awareness is against the spirit of globalisation. Over the years, many organizations and civil movements have taken the initiative to bring forth several debates at international levels. Despite the many challenges facing such initiatives, this trend is demonstrably a reasonable response to the growing importance of global governance issues.
Effects of Globalisation on Global Governance
In order to understand and fully internalize the effects of globalisation on global governance, we need to start by defining globalisation. According to Pascal Lamy, the then Director General of the World Trade Organisation, globalisation is defined as the increasing interdependence of everyone on earth. This is achieved when the gap is closed between the objects, business activities, political and scientific concepts, among other activities geographically apart. Globalisation has been made possible through the adoption of modern information and communication technology (Lamy, 2005). Globalisation has been accompanied by several positive and negative effects by enabling corporations, businesses, nation-states and individuals to explore the world further in a more faster and efficient way than before (Lamy, 2005).
The current efforts that attempt to improve governance issues in a global economy are in most cases inclined towards the individual interests of governments in question. These inclinations and biasness in decision making and global governance are normally pushed through by the highly industrialized nations who hold a major stake in global governance. Some of the major share holders in issues of global governance include the US, Britain and the UK, Germany, Japan, China, and some developing nations such as South Africa. In most cases, global economies operate within political frameworks and guidelines set by internationally recognized governance institutions. Currently, these economic governance bodies and the global rules need thorough reforms and re-legitimization in order to meet the demands of the present society.
Under the auspices of globalisation, La Jolla (2000) notes that most national governments are gradually shifting their political power to lower i.e. local governments, higher corporate affiliates usually players drawn from the non-governmental organizations. By way of example, the processes of Monetary and Economic Union under the European Union apparently confirm this gradual shift in the goal posts. Another illustration of this trend is seen in the recent campaigns pushing for the establishment of a global central bank with a single world currency.
In addition, the recent extension in the powers and authority of the World Trade Organization is also a pronounced effect of globalisation. Although world trade may be regarded as the most perceptible element of globalisation, the structures of the World Trade Organisation play a critical role in the governance of intercontinental trade (Lamy, 2005). This global organization has a defined set of principles and values involving various players in global governance. The World Trade Organisation also has a set of procedures followed when arbitrating values and trade issues between countries and states (Lamy, 2005).
From Pascal Lamys (2005) point of view, in his capacity as the Director General of the World Trade Organisation, globalisation has also resulted in multilateral trading structures which are beneficial to global governance. These benefits are achieved from the increased efficiency resulting from the exclusion of world alterations in prices. This makes it possible for nations to embrace competitiveness and thus produce according their individual abilities ( HYPERLINK httpwww.wto.orgenglishnews_esppl_e.htm httpwww.wto.orgenglishnews_esppl_e.htm). As an instrument of global governance, the World Trade Organization needs to develop viable measures and strategies that favour all countries in matters related to trade.
The current policies of the global organization tend to economically favour the already established world powers at the expense of third world countries which may have the potential to effectively compete at international levels (Lamy, 2005) due to globalisation. These outdated policies therefore need to undergo a series of transformations and upgrading to fit in the current global demands and patterns in trade and governance.
According to Tea Collins (2003), globalisation of the general world economy has the effect of shaping the trends in global health, particularly in areas such as mortality and morbidity. This affects the ability of various countries to grow economically. In global governance, globalization of the public healthcare systems has remarkable repercussions in the accessibility to healthcare. The negative effect of globalisation on the accessibility of healthcare services is highly felt in nations experiencing transitional economies ( HYPERLINK httpwww3.interscience.wiley.comjournal4005home httpwww3.interscience.wiley.comjournal4005home).
Tea Collins (2003) further asserts that such cases of globalisation have led to the increased rates of inequalities within and among countries negatively impacted by the accessibility to health services. Globalization may only have a positive impact in nations where regulatory organizations are strong, with competitive domestic markets. In such circumstances, Tea Collins (2003) argues that the citizenry will fully enjoy the advantages of globalization in the provision and accessibility of healthcare services.
Challenges of Globalisation in reference to Global Governance
As discussed above, it is evident that globalisation has affected almost all aspects of human existence ranging from economic, social , cultural and political spheres and thus requires an improved and modern approach of internalising this phenomenon. The challenges to the already established order of doing business may be perceived as either practical or theoretical depending on their nature.
The greatest challenge of globalisation according to Fromm (1998) is its success in establishing an interconnected world by connecting nations and individuals and bringing them into regular business and personal contact. This has made those linked through globalisation to depend on one another when dealing or when faced by various circumstances. These interactions positively affect global governance in that they enable world governments to concentrate more on establishing international rapports and solve any arising global disputes.
The propensity of globalisation according to Fromm (1998) is to weaken existing territorial boundaries and allow those affected to develop their products in the liberal market and freely express their views is regarded as one of the most widespread practical challenge brought about by globalisation. A clear illustration of this argument is in the explosion of the internet in developing ridiculous video games accessible by any one. Many other analysts argue that globalisation has manifested itself into a virtual veracity controlled and managed by the invisible and all-powerful technologically advanced information networks.
Another practical effect brought about by globalisation in reference to global governance is the distortion of individual government systems which in turn result in institutional vacuums (Fromm, 1998). Such an effect may be seen when the authority or sovereignty of a given state to solve its internal problems is put into question by the demands or interference of the virtues of global governance. This in itself has weakened further states originally perceived as fragile and weak and added more power and authority to the already powerful nations (Fromm, 1998).
Conclusions
Based on the discussions above concerning globalisation, its effects and challenges with regard to global governance, it is evident that globalisation has both positive and negative aspects depending on the approach taken. The positive aspects which may lead to economic growth, improved healthcare, boosted international trade and improved standards of living should be pushed through.
On the other side of the coin, Fromm (1998) argues negative aspects of globalisation need to be resisted from penetrating further in to the society. Such negative aspects that may interfere with, or threaten the sovereignty of a given nation, challenge individual state security or trade should be opposed by all possible means.
Coping with the Global Financial Crisis
Though regarded as the worst financial crisis since the 1930s Great Depression, the 2007-2009 global economic meltdowns disapproved the initial perceptions that all-powerful and free- market forces were in position to correct the serious financial downturns on their individual capacities without relying on the interdependence of other economies.
Due to the inadequacies in transparency, global financial institutions have clearly shown their inability in dealing with the critical financial downturn. As an example, credit rating bodies and investors in the United States are said to have failed to accurately price the risks linked to mortgage and similar financial services to match the demands of the 21st century. Additional reports by the IMF in April 2009 indicate that this period was globally symbolised by a serious lag in the economic growth rates due to the alarming declines in international trade and hardened credit availability.
In order to effectively deal with the looming crisis brought about by the global economic crunch, most governments have put in place stringent measures that could effectively expand or reform the existing institutions of global governance such as the World Bank, the International Monetary Fund- IMF, the G8 and the United Nations Security Council. The global crisis is therefore being used as an incentive or a challenge for pushing through the long overdue reforms in global governance. From Slideskys (2009) point of view, the International Monetary Fund has to reform its current structures of operations and resume its original function as a reliable lender during financial crisis. Slidesky (2009) also notes that the recent resolution by the G-20 (in April, 2009) to extend the funds special drawing rights available to member states by 250 billion dollars is in itself a critical step towards the expected reforms. The IMF therefore should concentrate more on its mandates of offering technical assistance, coordination of exchange rates and macroeconomic policies, surveillance and financial crisis management (Slidesky, 2009).
Despite the fact that the world economy is gradually recuperating from the effects of the crisis, the poorest third world countries are still at pains with the consequences of the global recession. Such countries need urgent financial assistance in order to avert the crisis. Since such countries play a major role in boosting the global demand, they need more financial assistance in the coming years. To take care of this scenario, the World Bank has called for the establishment of a Crisis Response Facility aimed at providing quick assistance to susceptible nations following such financial instability.
In order to tackle the ongoing economic crisis, world governance reforms and overhauls in the financial spheres, specifically in the systems and roles of the multilateral financial and money lending institutions need to be carried out. While addressing the World Economic Forum in Davos early last year, Angela Merkel, the German Chancellor urged the G8 nations to establish new rules for the entire global economy and the international financial structures in order to minimize chances of future occurrence of a similar global crisis. The German Chancellor further proposed to the United Nations to urgently establish an Economic Council to monitor and oversee the world economy. This new council should be analogous to the Security Council which offers such services in dealing with global crisis arising from political situations, acts of terrorism among others.
To counter the impacts of the global economic and financial crisis, most countries globally are approaching this crisis from a tax and monetary perspective ( HYPERLINK httpwww.deloitte.comtax-response-global-crisis2009 httpwww.deloitte.comtax-response-global-crisis2009). The several strategies and measures taken broadly range from ad hoc measures, stimulus recovery packages, and temporary provisions etc. The budget acts for most countries in 2009 served as the centre stage for a number of provisions. Depending on the extent of the damage caused by the crisis, the measures taken were aimed at either dealing with the financial crisis andor mitigating some of the impacts brought about by the global crisis ( HYPERLINK httpwww.deloitte.comtax-response-global-crisis2009 httpwww.deloitte.comtax-response-global-crisis2009).
According to the analysis carried down by Yoishi Funabashi (2009) it is practically impossible to effectively establish new world governance. This is attributed to the fact that such reforms can only be sponsored by a stable global political economy. The shifting economic power from the East to the West also positions the eastern countries such as Japan in a better position to fight the global financial meltdown. In November 2009, Japan loaned the International Monetary Fund a loan of approximately one hundred million US dollars (Funabashi, 2009). This bridge loan to the International Monetary Fund was aimed at making nations worst hit by the financial crunch to cope up with the crisis and recover (Funabashi, 2009).
Due to the pressure exerted on them by the demands of global governance, countries such as the United States, Japan, and China have taken the incremental measures towards establishing a kind of trilateral deliberations and consultation on matters concerning the macroeconomic policies. However, the optimal strategy based on Funabashis (2009) opinions is to forge a bilateral approach in capital flow management and other aspects of the economy. This strategy if fully adopted would simplify the coordination between these countries and probably merge after the hostile economic conditions have subsided (Funabashi, 2009).
Another strategy, as advised by the various institutions of global governance in coping with the financial crisis is the embracement of economic migrations and company reorganisations. Based on such recommendations from such powerful international money lending and financial institutions, most multinational businesses in various sectors such as banking, manufacturing and even food processing had to close down some of their operations in regions hit hardest by the crisis and invest in other continents such as Asia and Africa where the impacts of the economic crunch were not very severe. By way of example, the Citigroup banking company ( HYPERLINK httpwww.wikiinvest.comwikiCitigroup_(c) httpwww.wikiinvest.comwikiCitigroup_(c)) ceased its operations in Germany in order to cut down on its operations costs during the crisis.
Due to the hard economic times, other companies were forced to shed off their labour force through retrenchments and early retirements. The most affected multinational companies include the General Motors and several other banks such as Barclays and the Citigroup. The latter had to close down some of its business divisions and retrench the affected staff in order to sail through and survive the dangers brought about by the financial storm.
Another strategy adopted in order to counter the effects of the recession was through increased government lending and bailouts. These financial recovery schemes and packages in most cases were supported and approved by the legislative organs of various countries such as parliaments, the senate, the congress, central banks and finance ministries. The global governance institutions on financial matters such as the World Bank and the International Monetary Fund also advocated for these recovery measures.
Individual governments had to develop bailout and recovery schemes to save the organisations from the looming collapse and or bankruptcy. A case illustration of this recovery strategy was the stimulus package of approximately 50 billion dollars by the United States government to the Citigroup Company made the government to control nearly a third of the bank. This acquisition by the government is believed to have led to an improvement in the groups equity to asset ratio. This is what made it possible for the business to effectively cope with the effects of the global financial meltdown.
Another possible strategy as suggested by Skidelsky (2009) that can be used to effectively avert the crisis is the pursuing of expansionary financial policies by rising market governments to encourage more private demand. In cases where the provision of commodities improves, private players end up having fewer incentives to sustain their precautionary saving rates. In addition, individual governments have to carry out financial reforms that would make it possible for them to fund raise using their own currencies and in turn minimize chances of exchange rate problems occurring. Markets dominated by foreign currency often have the difficulty in servicing their debts in n scenarios where there is a fluctuation in exchange rates (Skidelsky, 2009).
Conclusion
The recent global financial crisis led to various unforeseen circumstances for many industries. The institutions of global governance were not spared by this crisis and thus various world governments with assistance from these international organisations had to develop strategies and recovery policies so as to fully counter the crisis and minimize chances of future occurrences.
Several strategies developed in coping with this crisis worked to some extent and others did not yield the required or expected results. Through global governance, economic structures and mechanisms may be developed by institutions such as the United Nations, the World Bank, and the IMF in order to deal with such financial and economic issues.
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