The global economy is strongly integrated, and domestic economic policies are strongly… well, domestic.
A landmark report by Chatham House and the Centre for International Governance Innovation (CIGI) argues that the way in which nations design their economic policies is woefully inadequate to prevent financial and economic crises.
Entitled “Preventing Crises and Promoting Economic Growth: A Framework for International Policy Cooperation“, the report is the outcome of a nine-month international research project. Authors Paola Subacchi and Paul Jenkins consulted with finance and foreign affairs ministries, multilateral institutions and research institutes in Europe, Asia and North America.
They call for national policy-makers to recognize the spillover effects of their policies on other countries as well on the wider economic system. In practice, this would mean accompanying internationally relevant domestic policies by “international impact assessments”.
The report also proposes a new framework for G20 policy cooperation. Indeed, cooperation tends to be “only feasible when interdependencies are made clear by incidents of instability and volatility as happens during crises, i.e. when the costs of non-cooperation are painfully evident“.