The Asian century is a bitter reality and it is undermining other economic powers in this world order. A diminishing influence of the institutions of Washington consensus gives room for another economic actor to open wings in the competitive world. And this revisionist economic power is balancing out the sole dominancy of the US in economic affairs by the inclusion of regional states under its shadow and challenging the existing global economic order.
New world order
The dictionary.com defines “the post-Cold War organization of power in which nations tend to cooperate rather than foster conflict.”
The New World Order is a term used to describe a global system of socio-economic, political, and spiritual principles that promote universal peace, justice, and cooperation. It is based on the principles of freedom, equality, and unity among all people, cultures, and nations. The New World Order seeks to create a world where all humans are treated with respect, dignity, and justice regardless of their gender, ethnicity, religion, nationality, or any other factor. It is a movement to bring about a more equitable, sustainable, and prosperous global society (Bahai teachings)
Overview of existing global economic governance
Global economic governance is a process by which governments, international organizations, and other stakeholders collaborate to shape global economic policies, regulations, and outcomes. Established in the aftermath of World War II, global economic governance has become increasingly complex as the global economy has grown and diversified.
Today, the global economic governance system consists of a variety of institutions, processes, and initiatives. At the top of the system is the United Nations (UN), which is responsible for setting out general guidelines and principles. The UN is supported by several specialized agencies, including the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO).
These organizations are responsible for developing, negotiating, and implementing international economic policies and regulations. In addition, they also provide financial assistance to developing countries and resolve disputes between states.
At the regional level, there are several economic groupings, such as the European Union, the African Union, and the Association of Southeast Asian Nations, which each have their economic objectives and institutional mechanisms.
Finally, there are several international initiatives and forums, such as the G20, the OECD, and the Bretton Woods institutions, which have been established to improve global economic governance and promote economic integration.
US economic governance
The US model of economic governance is based on free-market capitalism and open global markets. This model promotes economic efficiency by allowing businesses to compete for customers and resources. It also encourages innovation by providing incentives for investment and risk-taking. The US government is committed to maintaining an open and competitive global economy and has been a strong advocate for policies that support free trade and open access to global markets. The US government also works to ensure that the global economic environment is stable and secure and that countries follow sound fiscal and monetary policies that promote economic growth, job creation, and investment. Additionally, the US is committed to a fair and equitable international economic system, where countries are free to pursue their economic policies while respecting the rights of others. The instruments for controlling global economics are the US-based institutions that create liberal institutional order.
The Washington Consensus refers to a set of economic policy prescriptions that developed countries, such as the United States, have sought to promote to foster economic growth and development in developing countries. The consensus emphasizes fiscal discipline, openness to foreign investment and trade, market-based macroeconomic policy, and the privatization of state-owned enterprises. The three institutions are the IMF, the World Bank, and the U.S. Department of the treasury. It is sometimes referred to as the “Bretton Woods Consensus” due to its close association with the Bretton Woods system of international monetary management, which was established in the aftermath of World War II.US also surrounded the WTO by Washington consensus.
WTO and global governance
The World Trade Organization (WTO) is an international organization that works to promote global governance of trade and to establish rules, regulations, and agreements to govern global trade. The WTO works to ensure that countries abide by trade commitments and to create a fair and equitable system of global trade, while also working to reduce trade barriers and promote economic development. The WTO provides a forum for countries to negotiate and resolve trade disputes and to work together to promote economic growth and development. The WTO also works to promote global economic integration by promoting free trade and the liberalization of markets. The WTO also works to ensure that all countries have access to markets, protect intellectual property rights, and ensure a level playing field for trade. In addition, the WTO works to promote transparency and to ensure a level playing field for all countries. Finally, the WTO works to ensure that countries comply with their trade obligations, and to provide technical assistance to countries in need.
WTO has been criticized for not adequately representing the interests of developing countries and for lacking effective enforcement mechanisms.
Overview of the emergence of an “Asian century”
The concept of an “Asian century” has been gaining attention in recent years due to the rapid economic growth in some Asian countries, such as China and India. This growth has enabled many of these countries to become economic and political powerhouses, and the region is increasingly seen as a viable alternative to the West for economic and geopolitical dominance. This has been further bolstered by the rise of Asian companies such as China’s Alibaba and India’s Reliance Industries, which have become major players in the global economy. This has led to an increased focus on the region, and many experts have predicted that Asia could become the dominant economic and geopolitical force in the 21st century. In addition, the rise of new technologies, such as mobile and digital payments, has further enabled the region to become a major player in the global economy. As such, the emergence of an “Asian century” is likely to continue in the years ahead.
The article discusses the potential of the “Asian century,” in which the region is set to become the leading global economic force. It points to the increased economic growth and integration of Asia, as well as the rise of the Chinese and Indian economies, as key drivers of the shift. It also outlines the various challenges the region will face to fully realize the potential of the Asian century, such as infrastructure, education, and health systems, as well as the need to foster greater trust and cooperation between countries. The article concludes by noting that the Asian century is still in its early stages and that creating a successful narrative for the region will be crucial for its success.
Fall of Washington Consensus
The Washington Consensus was a set of 10 economic policy prescriptions developed in the late 1980s by a group of economists and policymakers in response to the Latin American debt crisis. It emphasized the need for fiscal discipline, the liberalization of markets, and the strengthening of the rule of law. However, by the early 2000s, the Washington Consensus had come to be seen as inadequate for addressing the needs of developing countries. In response, China proposed the Beijing Consensus, which emphasized the importance of state-led development, a focus on economic growth, and the gradual liberalization of markets. The Beijing Consensus was an important alternative to the Washington Consensus and is credited with helping to propel Asia to a position of global leadership in the 21st century. However, the Beijing Consensus has also been criticized for its lack of transparency and its focus on economic growth at the expense of other issues, such as human rights.
Rise of the Beijing Consensus
The Beijing Consensus is a term coined to describe the development strategies and policies employed in China since the late 1970s. The term is often used to contrast the Western-style, neoliberal model of development with the more state-centric, authoritarian model pursued in China. The Beijing Consensus has been credited with helping to lift millions of people out of poverty and providing a viable alternative to the Washington Consensus. The brief outlines the main elements of the Beijing Consensus, including central government control over the economy, a focus on human capital development, and a commitment to long-term economic growth.
Beijing Consensus gave a set of policy guidelines under the United Nations and these guidelines are implemented through BC institutions, which are considered regional institutions.
Shanghai Cooperation Organization (SCO), Conference on Interaction and Confidence Building Measures in Asia (CICA), Asian Infrastructure Investment Bank (AIIB) Special Reserve Fund (SRF).
Challenges to existing economic governance structures
It is a well-known fact that since 1945, the economic governance structures were designed in such a way that they were West-centric. The introduction of the Bretton woods system in 1944 was designed in such a way that it ensured the interests of the West and the United States. For example, in recent times International Monetary Fund (IMF) and World Bank strengthened the economic governance structures of the West. Because the structure of economic hegemony is linked directly with the political hegemonic structure. But, in the last few decades, the existing economic structures are facing numerous challenges that would be highlighted.
The rise of China is the latest and the most lethal challenge to the existing economic structure. The making of Shanghai Cooperation Organization (SCO) and Asian Infrastructure Investment Bank (AIIB) are thought to be replacements for IMF for developing and Third World Countries. In simple words, the next clash would be Beijing Vs Washington.
Similarly, the Rise of India along with China in the Asian region as contenders of upcoming hegemons, supported by resources and workforce can surely challenge the existing economic structures of governance. The rise of India and China in terms of economy and geo-strategic importance has questioned the “Euro-centrism” of every aspect whether it is economy, power, or decision-making ability.
Moreover, the rise of Eastern Europe along with the Central Asia n region has massive potential to challenge these governance structures, Russia had been a great power but if it cooperated with Beijing then Beijing with the support of Moscow can challenge as well as replace the existing economic governance structures.
Impact of an Asian century on global economic governance
Overall, the emergence of the Asian century has had a significant impact on global economic governance. This has been seen in the increased influence of Asian countries in international trade and investment, the emergence of new regional economic organizations, and the increased recognition of the importance of regional integration.
First, the emergence of the Asian century has led to the increased influence of Asian countries in international trade and investment. As Asian economies have become increasingly integrated and open, so too have their interests in international markets. This has led to an increase in the number of Asian countries involved in the World Trade Organization (WTO) and other international trade and investment agreements. For instance, China and India have become major players in the WTO, while other countries such as South Korea, Vietnam, and Indonesia have also become more active in international trade.
Second, the emergence of an Asian century has also led to the emergence of new regional economic organizations. Examples of these include the Association of Southeast Asian Nations (ASEAN) and the Shanghai Cooperation Organization (SCO). These organizations have allowed for increased economic integration within Asia, as well as increased cooperation between Asian countries and the rest of the world.
Third, the emergence of an Asian century has also led to increased recognition of the importance of regional integration. This has been evidenced by the creation of the Asia-Pacific Economic Cooperation (APEC) forum, which has helped to facilitate increased economic ties between Asian countries. Additionally, the establishment of the Regional Comprehensive Economic Partnership (RCEP) agreement has helped to further integrate the economies of Asian countries.
Potential implication for global economy after Russian invaded Ukraine
The Russian invasion of Ukraine created a significant impact on the global economy. ‘As the war between the two major agricultural states, has various negative socio-economic impacts that are now being felt all across the world, the food and energy crises will worsen the situation for countries especially in Middle East, North Africa and Europe’ (Ben Hassen 2022). ‘Earlier in February and March, the Russian annexation to the Crimea has led Europe to one of deadliest crises after cold war’ (Russia’s latest land grab: How Putin won Crimea and lost Ukraine 2014). ‘The main supplier of gas to Europe is Russia. In 2019, it met 34% of the gas needs of the EU27 plus Great Britain. These shipments might be stopped as a result of Russia’s invasion of Ukraine, posing a threat to Europe’s energy supplies’ (Pedersen 2022). ‘Multiple international sanctions were placed on Russia as a result of the Russia-Ukraine war in order to persuade Russia to de-escalate the issue, although the sanctions imposed on Russia were designed to harm Russia, they had a negative impact on the global economy, primarily through disrupting global supply chains’ (Ozili 2022). ‘Russia’s invasion of Ukraine has caused a horrific humanitarian disaster and jeopardized the stability of geopolitical connections, also the battle has heightened fears of a significant slowdown in global economy, an increase in inflation and debt, and a spike in poverty. The economic impact of violence has reverberated across different worldwide channels, including commodities and financial markets, trade and migration linkages, the economic impacts of the war on the Globe is affecting the three main channels including financial sanctions, hike in the products prices, and disturbance in the supply chains’ (Orhan 2022). ‘On the day of the invasion, the worldwide stock market index fell and the Euro zone manufacturing purchasing managers’ index (PMI) fell in the month of the invasion. Furthermore, the transportation component of the consumer price index climbed in the month of the invasion due to a scarcity of energy and fuel supplies, which resulted in a spike in the price of gasoline for transportation throughout the Euro zone, also Ukraine was hit worse by the invasion than Russia and the rest of Europe’ (Ozili 2022). This crises have also impacted environment, war has affected the water soil and agricultural land along with the ecosystem. ‘This crises would lead to inflation all across the globe, Reduced household consumption due to higher prices (for oil, gas, wheat and minerals), supply chain disruptions, unpredictability, impediments to economic growth, declining investment and stock market volatility globally and particularly in Europe Nations are heavily exporting to this continent. It is therefore crucial that decision-makers in these countries, which are heavily dependent on Russia for importing basic goods, begin to discuss alternative livelihoods should Russia decide to punish and support the West with export restrictions in “Own” Manufacture of such essential products when this is a viable option’ (Mbah 2022). ‘This scenario’s wide consequences are reminiscent of the 1970s energy crisis, when OPEC countries effectively hiked the price of oil, and subsequent oil price shocks. Rising pricing and supply constraints significantly affected global economic activity, leading to higher inflation, which increased the cost of living and might further compress family spending. US asked KSA to produce more oil but King Salman refused to produce more oil, as KSA is a member or OPEC plus. UK is facing huge energy crises. Not only UK the whole Europe is facing the energy problems, due to shortage of gas and energy, European markets have started woods in the malls’ (Liadze n.d.). The consequence of sanctions over Russia is felt by the whole world especially by the Europe. Due to economic linkages and huge dependency of Europe on Russian gas and oil Europe is most affected region of the world due to this war According to a report published by National Institute of Economic and Social research the economic cost of Russia Ukraine conflict might cut global GDP by 1% roughly 1 trillion by 2023. Both countries are the suppliers of rare earth metals like Titanium, Palladium, also the wheat and corn and supply chain issue will further increase the problem for the user around the world. Russia on the other hand increased the prices of oil and gas to recover its economy affected by the sanctions. The war in Ukraine not only impacted the Russian economy but also it has affected the other countries especially European countries. The potential implications of Russia Ukraine war on the local economies and the global economy that war leads to the economic consequences such as inflation, supply chain disturbance, and energy crises. In this way this war not only impacted regionally but also affected the global economy.
Will this shift in economic governance and the rise of the Asian century lead to the creation of new world order?
A world order is a set of ideas, and rules about how the world should be and a roadmap for any country’s foreign policy. If we take a step back to the era of empires, according to Henry Kissinger there were different world orders in the form of empires and civilizations. Globalization has flourished under the umbrella of colonialism and mutual trade. After the cold war, there is the American world order which is a liberal order, and institutions play important role in predicting a country’s behavior under the supreme UN. The critics of Dependency theory and World system theory on this world order, that this system produced classes and core countries exploit peripheral countries. Therefore, they suggested trade within the region will ultimately make developing countries progress. The enormous innovation in science-tech makes it possible to decentralize globalization which ultimately breaks the hegemony of one country and this lead to regionalism.
Waltz contends that this decentered globalization is beneficial because it allows countries to pursue their own interests without having to rely on any single power. This increased autonomy has enabled countries to establish stronger bonds with their neighbors and to collaborate more effectively in areas such as trade and security. Additionally, it has allowed countries to develop more freely and pursue their own paths toward economic and social development.
Barry Buzan’s view on decentered globalization is that the world has become increasingly interconnected and complex, with the emergence of new technologies, economic structures, and political power. He argues that this process of globalization has created a new type of global governance, which is characterized by a more decentralized, networked, and cooperative system of international relations. This system is marked by a proliferation of multiple centers of power, with states, international organizations, and non-state actors all contributing to global governance. According to Buzan, this new form of global governance is more effective than the traditional Westphalian system of international relations, as it allows for more flexibility and responsiveness in the face of global challenges. Buzan believes that the decentered model of global governance provides a more effective way of managing global issues, as it allows for greater flexibility and responsiveness, while also recognizing the different interests of all actors.
Kawakita, looks at the history of Asian nations and their growing influence in international affairs, citing the increasing economic power of countries such as China and India in particular. He also looks at the potential political implications of an Asian Century, arguing that the region could soon become a major force in international security and diplomacy. Kawakita concludes by noting that while an Asian Century is a distinct possibility, it is still too early to tell whether the region will be the dominant power in the coming decades.
The international order under the United Nations institutions is going to be decentered and the power shifting from sole liberal institutions influenced by democratic values to emerging Asian economic giants, which leads to an increase in the importance of regionalism once again. By which regions compete with each other, the Asian region might challenge the west, and the Asian century could be the regional economic hegemony but not create a separate world order.
The current world order in which America enjoys its hegemony through institutions in all spheres of life is now under challenge from the Asian century, especially in China, Japan, and India, now this Asian region is influencing global economic decision-making through the development of new institutions. These institutions replaced the American order and set themselves in a new institutionalization process, which not only focused the economic development but also on environmental sustainability, poverty eradication, and improving infrastructure. In this century china is taking lead through the Beijing consensus and becoming an active member of regional organizations. Hence by seeing the arguments of different social science experts, we can deduce that the world is once again going from unipolar to multipolar and this time it is regionalism and regions cooperating for common regional good, EU, ASEAN, etc. are examples of it but in economic means, Asian century is emerging as an economic global hegemon.