Global Governance – Shaping Globalization

B20-Conference in Berlin © Christian Kruppa

B20-Conference in Berlin © Christian Kruppa

Germany is one of the world’s most globalized countries. Its prosperity depends largely on international trade and investment. Never before has global governance been more important to ensure open and rules-based markets and fair competition, as multilateral rules of trade are under attack.

Few other countries in the world are as globalized as Germany. The trade-to-GDP ratio (exports and imports of goods and services) was 87 percent in 2017. Foreign trade is one of the country’s most important engines of growth, competitiveness, and employment. About one in four jobs in Germany depends directly or indirectly on exports. In the manufacturing sector, the figure is even one in two jobs. Germany is also one of the countries with the highest number of foreign students; it benefits from the exchange of research, ideas, and cultures.

Germany’s Prosperity Depends on the World Economy

Globalization creates opportunities but also vulnerabilities. The future of the German economy decisively depends on how global challenges such as cyber risks, climate change, epidemics, and geopolitical conflicts are managed. No country can master these challenges alone. The globalized world economy needs global governance, and Germany must play an active role in shaping it.

The Globalized World Needs Global Governance

Global governance is a continuous process of balancing different interests and initiating cooperative action. The basis for this is the coordination of national policies and identification of shared norms and rules. Examples include financial market regulation through the Bank for International Settlements and the guidelines for multinational enterprises set by the Organization for Economic Cooperation and Development (OECD). Furthermore, global governance must also initiate joint action and bring resources together, as is the case in the International Monetary Fund (IMF) and the World Bank Group.

Forms and Formats of Global Governance

Global governance manifests itself in various forms: International agreements (such as the trade rules of the GATT and GATS) comprise one aspect of global governance, and international organizations such as the World Trade Organization (WTO), the World Bank, and the International Monetary Fund (IMF) comprise another. Furthermore, loose groupings (such as G7 and G20) and informal discussion fora (like the World Economic Forum) also contribute to effective global governance.

The actors of global governance are as diverse as the forms and formats. Besides governments and international institutions, relevant actors also include civil society and businesses. Their participation ranges from simple consultation in the OECD to decision-making powers in Internet governance.

German Business in Global Governance

BDI participates in various global governance fora. In order to strengthen the voice of business in the G8, BDI played a key role in setting up the G8 Business Summit (B8) in 2007. After Russia’s suspension from the G8 in 2014, the B8 became the B7. In the B7, the leading business and industry associations of the G7 nations support the G7 process through consolidated business recommendations and analyses.

The Business 20 (B20) offers a similar format for the G20 process, where representatives of global business support the G20 with concrete proposals for action. Leading business and industry associations of the G20 members have also formalized their cooperation in the Global Business Coalition (GBC): this forum supports the B20 process and ensures continuity of dialogue as the G20 presidency rotates annually.

BDI is also actively engaged in the Business and Industry Advisory Committee to the OECD (Business at OECD, BIAC) that advises the OECD in its work.

The International Chamber of Commerce (ICC), established in 1919, remains another central forum of global governance. The ICC enjoys observer status in almost every relevant international organization and is closely involved in a wide range of global governance processes, from trade to Internet governance and the fight against money laundering. Companies as well as business associations can be members of the ICC.

B7, B20, GBC, BIAC, and ICC support global governance with expertise and consolidated representation. They, furthermore, play an important role in monitoring the implementation of international rules and agreements. Finally, they contribute to advancing international trust and understanding within the global business community.