Rules-based International Order

Baroness Moyo Excerpts

Thursday 16th January 2025 Lords Chamber

[Baroness Moyo (Non-Afl)]

My Lords, the rules-based international order exists to support two primary goals. The first, as indicated in the title of this debate, is to offer global cohesion, stability and security. The second, I believe, is to provide a foundation for the global economy to grow and prosper. I am speaking in this debate because I believe that economic growth ought to be explicitly part of this conversation.

The ability of the rules-based international order to drive global economic growth rests on globalisation. However, as we know, since the 2008 global financial crisis, economic growth has slowed and globalisation has stalled. According to Bloomberg, globalisation peaked in 2009. Since then, the world has continued to fracture, through the 2020 pandemic and the rise in geopolitical conflicts, both kinetic and ideological.

We see widening fissures in the five key pillars of globalisation. The first is trade in goods and services. According to the World Trade Organization, the volume of global trade slumped in 2023. Looking ahead, estimates suggest that the growth in worldwide trade volumes will flatline. This reflects both the slowdown in global economic growth and a more siloed world, as the world order is replaced with a proliferation of bilateral agreements and the reconstitution of regional trading blocs—think, for example, of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The threat of higher tariffs by the incoming US President, Donald Trump, will only accelerate this trend.

The second pillar is capital flows. Global investment is being hampered by growing protectionism and regulatory bans on the flow of capital. According to UNCTAD, global foreign direct investment fell by 2% to $1.3 trillion in 2023, partly because of rising geopolitical tensions. Investment restrictions, such as the US ban on investment in Chinese technology, have contributed to weak global FDI since 2021.

The third pillar, the free movement of people across borders, has been interrupted by national Governments looking to stem the flow of disorderly migration into their countries. The United Nations estimates that there are now over 120 million refugees and displaced people globally—the highest figure on record.

The fissure in the fourth pillar is the “splinternet”, which refers to the fierce competition between technology leaders, such as the United States and the West versus China. A more geopolitically and economically balkanised world with competing factions must surely make the world a less safe place. This is particularly worrisome at a time when innovation in AI and quantum computing are leaping ahead. Technological fissures heighten the risk of cyberwarfare in a way that can only destabilise the world order.

The fifth and final pillar, multilateralism and global co-operation, is being undermined on two fronts: via growing economic nationalism across developed countries, and through the rise of competition from new configurations of countries such as the BRICS, which is a group of 10 of the largest emerging countries, representing 45% of the world’s population and 35% of world GDP. These new groupings reroute and reprice global trade and commodities, and can often be dominated by nations which have stark ideological differences with the West. The worry here is that such differences make it more difficult to tackle or confront global pandemics, climate challenges or financial crises in a unified way.

Clearly, based on the reversal of globalisation’s important pillars, the rules-based international system is at breaking point. It should come as no surprise that with a hobbled rules-based system and deglobalisation comes slower and lower economic growth.

As an example, here in the United Kingdom, annual GDP growth averaged 3% in the era of globalisation between 1993 and 2007. Since globalisation peaked, between 2009 and 2023, average GDP in this country has halved to 1.5%. This deglobalising world slows human progress and impedes improvements in living standards. At this time of deglobalisation, the International Monetary Fund already predicts that the world’s leading economies will struggle to reach 3% per year—the minimum required to double per capita incomes in a generation, which is 25 years.

I know that it has become unfashionable to promote globalisation. However, the United Kingdom must remain steadfast as an advocate for global institutions and treaties that can defend and sustain the rules-based system. There are efforts to step up and reinvigorate multilateralism. In 2024, the UN General Assembly adopted the pact for the future, pledging a new beginning in multilateralism that focuses on peace and stability, sustainable development and digital co-operation. However, there was no mention of action on global economic growth. Yet, actively supporting a global economic growth agenda is a pre-requisite for global cohesion, stability and security.