The rare confluence of geopolitical, economic, and technological forces now confronting the world may reverberate for generations.
The war is thrusting us into a fraught period of geopolitical realignment, supply disruptions, food and energy insecurity, and more volatile financial markets. These shocks could shake social and political stability in some countries while weakening the ability of the world as a whole to confront its foremost long-term challenge, climate change.
Pierre-Olivier Gourinchas, the IMF’s chief economist, describes a sudden geopolitical shift that reveals hidden underlying fault lines. He warns of a world fragmenting into “distinct economic blocs with different ideologies, political systems, technology standards, cross-border payment and trade systems, and reserve currencies.”
Accordingly, with this issue of F&D we convene respected thought leaders to help us understand these trends—all playing out amid a slowing global recovery, rising inflation, deglobalization, and shrinking policymaking space—and how we can best respond.
The war in Ukraine poses the most immediate risk. Nicholas Mulder argues that sanctions against Russia have unprecedented consequences that should prompt a rethink of their use as a weapon of economic warfare. Giovanni Peri discusses the economic impact of refugees fleeing Ukraine. Our “Picture This” series depicts the food crisis that threatens millions with hunger. Other contributors see soaring war-induced energy prices as a chance to spur the transition to green energy. And while some predict that geopolitical competition and new technologies will end the dollar’s dominance of international finance, Eswar Prasad argues the opposite: the dollar will become more entrenched as the global go-to currency.
A more fragmented world, says Singapore’s Tharman Shanmugaratnam, makes greater investment in global public goods even more urgent—an effort he argues will require unprecedented public-private collaboration and a stronger, more effective multilateralism.
There is hope. As historian Patricia Clavin reminds us, turbulent times can energize actors and ideas that can lead to new and better modes of cooperation. The overriding priority, as Shanmugaratnam explains, is to “accommodate a multipolar world without becoming more polarized.”
Elsewhere in this issue, Raj Chetty and Nathanial Hendren discuss how to increase the upward economic mobility of low-income youth; Barry Eichengreen and others write on the erosion of trust among the young; Noam Angrist talks about learning lost during the pandemic; and Eric Hanushek and Ludger Woessmann discuss why the basic skills gap means meeting the SDGs is still a faraway goal. We also profile Harvard’s Melissa Dell.
Thank you, as ever, for reading us.
GITA BHATT, F&D editor-in-chief.
Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.
