Geopolitical tensions, instability put brakes on global cooperation: Report

A new report indicated on Tuesday that international cooperation has "stalled" due to increased geopolitical tensions and instability. However, there has been some positive momentum globally in climate finance, trade, and innovation. The "Global Cooperation Barometer," released by the World Economic Forum, assessed the state of global cooperation, noting that the world is still grappling with competition and conflict.

The report also identified areas where leaders can drive progress through innovative collaboration. Released against a backdrop of current geopolitical, technological, and sociopolitical turbulence, the report highlights the urgency of addressing common challenges and provides guidance for how leaders can cooperate in a changing world. The report, prepared by the World Economic Forum in collaboration with McKinsey & Company, used 41 indicators to measure the current state of global cooperation, providing leaders with a tool to better understand the contours of cooperation and analyze it along five pillars: trade and capital flows, innovation and technology, climate and natural capital, health and well-being, and peace and security.

The second edition of the "Barometer" uses new data to update the overview of global cooperation, with a particular focus on the impact of the new technological era. "The Barometer is being released at a time of heightened global turbulence, with many new governments setting their agendas for the year ahead and their terms in office," said Børge Brende, President and CEO of the World Economic Forum. "The Barometer shows that cooperation is not only essential for tackling critical economic, environmental, and technological challenges but also feasible in today's more turbulent environment." Bob Sternfels, Global Managing Partner of McKinsey & Company, stated, "The second edition of the Global Cooperation Barometer focuses on the state of cooperation today and what it might look like in the new tech era. Driving global innovation, health, prosperity, and resilience cannot be done alone. Leaders need new mechanisms to jointly address key priorities, even when they disagree on other issues, and the past few years have shown that this balance is possible."

The latest report emphasizes that global cooperation is at a critical juncture. Analysis shows that overall cooperation has stalled after a decade of positive trends and surpassing pre-pandemic levels. This is primarily due to a sharp decline in the "Barometer's" peace and security pillar over the past seven years, with increased geopolitical tensions and competition severely undermining global collective security. In the past year, conflicts and related humanitarian crises have reached record levels, with roots including but not limited to crises in the Middle East, Ukraine, and Sudan. While the broadly stable cooperative order that defined the post-Cold War era is giving way to a more fragmented landscape, solutions to pressing challenges ranging from climate action to technology governance remain interdependent. Despite the global security crisis, new findings indicate that cooperation continues in several areas, including vaccine distribution, scientific research, and renewable energy development, providing models for future collaboration.

While peace and security have declined sharply in recent years, the other four pillars of the "Barometer" have remained resilient and revealed emerging opportunities for international cooperation. In innovation and technology, while geopolitical competition is increasing in certain cutting-edge technologies such as semiconductors, global cooperation in technology and innovation has generally progressed in 2023 due to the digitalization of the global economy. This has helped drive the adoption of new technologies, strong growth in the supply of critical minerals and a related decline in lithium battery prices, as well as a rebound in student mobility. However, rapid disruption from emerging technologies like artificial intelligence is reshaping the global landscape, increasing the potential for geostrategic competition and even an "AI arms race." In climate and natural capital, cooperation on climate targets has improved over the past year, with increased financial flows and trade in low-carbon technologies such as solar, wind, and electric vehicles. However, urgent action is still needed to achieve net-zero targets due to continued increases in global emissions. Strengthening global cooperation is crucial for scaling up technologies and ensuring the financing needed to achieve climate goals by 2030. In health and well-being, some health outcomes, including life expectancy, have continued to improve after the pandemic, but overall progress is slowing compared to before 2020. While cross-border aid and pharmaceutical R&D have declined, and cooperation on health product trade and international regulations has stalled, various health indicators, including child and maternal mortality, remain strong. In trade and capital flows, indicators related to the flow of goods and services, trade, capital, and people in 2023 were mixed. Affected by slower growth in China and other developing countries, merchandise trade declined by 5%, while global fragmentation continues to reduce trade between Western and Eastern blocs. Nevertheless, global flows of services, capital, and people showed resilience. Foreign direct investment surged, particularly in strategic areas such as semiconductors and green energy, while labor migration and remittances rebounded strongly, exceeding pre-pandemic levels.

The reports on our website are for informational purposes only. Content involving finance, investment, tax or legal matters should not be construed as financial advice or a recommendation. Please see our full disclaimer policy.