Managing a Changing World Economy

The world economy has been experiencing a period of great and dramatic change. In part this has been associated with the rapid emergence of China, the BRICs and other newly industrialising economies. Evolution in the world economy is quickly changing the structure of global output and trade. It is also having implications for the pattern of international capital flows. Alongside these evolutionary changes, the ‘shock’ of the global economic and financial crisis that erupted in 2008 has brought about further changes. Confidence in the efficiency of financial markets has been adversely affected, if not undermined, and consensus over the design of macroeconomic policy has been replaced by substantial areas of division and confusion. The changes have generated broad areas of uncertainty, which in turn have adverse consequences for global economic performance. This article explores these changes and goes on to analyse the issues they raise in terms of managing the world economy. It assesses approaches based on enhanced global economic governance, coalitions based on economic characteristics or regional proximity and economic nationalism.