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  • The Year's Top Economic Themes

Editor's Note: As always, we close our year with a handful of essays on the top stories we covered during the last 12 months. Please accept our warmest wishes for the holiday season, and we hope you and yours have a happy, healthy and prosperous 2020.

You Can Go Your Own Way

For decades, multilateralism – when three or more countries’ governments work together – has served the world well, making significant contributions to global economic growth and standards of living. But the world is increasingly becoming more polarized amid rising nationalistic and protectionist sentiment. Important international institutions are facing existential challenges. All of this creates risk for the current global expansion.

The United States led the way in establishing institutions such as the United Nations (UN), the International Monetary Fund (IMF) and the World Trade Organization (WTO), which form the core of the international economic order. But support for these entities is waning. The United Nations has been hindered because member nations are delinquent in their dues. This could impair peacekeeping and development activities the UN undertakes.

The WTO has reached a breaking point, as its appellate body no longer has enough members to adjudicate trade grievances. Ironically, it is the United States that precipitated this outcome by blocking new appointments to the panel, even as the WTO has many claims pending. Trade disputes are now being settled on the frontier with tariff battles.

The IMF, which provides financial assistance to struggling countries, prevents local problems from affecting global markets. It, too, is struggling with a heavy caseload and light resources

Multilateralism is not just about trade or investments. It is also about developing and maintaining rules-based economic and social relations among countries. Large-scale, critical issues like income inequality, climate change, human rights, poverty and conflict call for large-scale international solutions. Undermining international cooperation will inexorably harm everyone, and not just economically.