Unchecked globalization, once dominated by Western global governance and international institutions, is rapidly coming to an end. The United Nations, established to prevent future world wars and encourage international diplomacy, has been proven utterly ineffective in the face of the war in Ukraine, coups across Africa and ongoing conflict in the Middle East. The International Monetary Fund, designed to ensure sustainable growth and stable monetary policy, has been criticized for years for doing far more harm than help, especially in the Global South. The World Health Organization, designed to help prevent and manage epidemics and pandemics, had a spectacular failure during the COVID-19 pandemic due to infighting between Member States and a lack of communication and cooperation in the earliest stages of the outbreak in China.
It’s not that global institutions can’t be effective; when done well, international efforts such as the programs designed to eradicate Polio and reduce ozone layer deterioration have been outstanding successes, but international cooperation isn’t successful when the global leaders are more focused on gaining power and influence than actually solving the problem. We are currently seeing that lack of cooperation across the board on crucial issues like climate change, humanitarian crises and rising costs of living.
As the established international institutions lose more of their influence and efficiency on the global stage, there’s an opportunity for a new form of international aid and development, pioneered and run by those who need it the most. To do so, developing countries need to stay out of the squabbling between the United States, Russia, China and the other global powers and take matters into their own hands.
Historically, power–especially economic–has always been in the hands of traditional governments and those who rule them. Yet, the rise of corporations and individually wealthy individuals outside of politics and governance provides a remarkable opportunity for investment in specific individuals, companies and communities without the usual political and economic strings attached.
Foreign direct investment (FDI), emerges as a strikingly practical and effective alternative to the conventional approach of channeling trillion-dollar aid packages from one country to another. The efficiency of the market is a testament to its remarkable ability to make decisions that outperform government interventions. When corporations are motivated by the need to turn a profit, they tend to invest wisely, bypassing projects they know won’t work. By encouraging long-term FDI and corporate investment, we can empower communities to build businesses, educate their children and nurture their own growth.
The goal for corporations should not be to make money off developing countries, as it has been historically, but should be to make money with them. Given the right amount of capital, communities and individuals can make decisions that work best for their unique needs. In essence, FDI allows us to let the market do what it does best: efficiently allocate resources and spur sustainable development. Sustainable development in developing countries will work two-fold to increase each individual slice of the economic pie, but also to increase the size of the pie altogether.
With that approach, international governments need to take the passenger’s seat, not the back-seat. Without proper regulation, multinational corporations will have no structure or restrictions to prevent environmental damages, human rights abuses and other immoral or illegal actions. Local governments can step in to make those regulations and ensure that businesses truly invest in the communities and people who live there.
Governments like the U.S., Russia and China have a role to play as well and aren’t off the hook for the issues and damages they’ve caused around the world. Rather than provide multi-billion dollar aid packages that have largely gone to fund militaries and future conflicts, these countries can encourage businesses and corporations to make investments in riskier areas by providing foreign aid guarantees. This would mitigate some of the risks corporations would face by investing in countries with corrupt governments or histories of debt crises.
This may seem like an overly optimistic approach—and it probably is. It will be extraordinarily difficult to pass such policies when the political pendulum is swinging towards the other extreme. Since the era of global institutions and free trade, we have started moving back toward populism and protectionism. Countries are less likely to work for the benefit of the international community than 20 years ago.
History has shown us the consequences of such shifts with World Wars I and II as protectionism and cutting oneself off from the rest of the world causes more problems than it solves. Moderation is key—if the era of global free trade is coming to the end, the least we can do is encourage and nurture regional communities, like the European Union (EU), that work together for regional development. If nothing else, fostering free regional trade, if not possible on a global scale, will allow for the development of countries that have been lagging behind. Tariffs and other protections do have a benefit for countries that are still getting their industries and developments up and running, and expecting newly industrialized nations to compete with economic powerhouses without those protections was doomed from the start.
The global landscape is evolving, and international institutions are facing unprecedented challenges. The quest for power and influence often overshadows the pursuit of effective solutions to critical issues. As the next generation of politicians, business owners and leaders, we must recognize our pivotal role in shaping the future of international cooperation. Influence and loyalty on the world stage should be earned based on merit, not through economic or political coercion or manipulation. We have the opportunity to reform the way international aid and development work, prioritizing mutual benefit, sustainable growth and community empowerment. Our generation can be the catalyst for positive change, and we must remain aware of our responsibilities in addressing global issues.
