Overall global cooperation barometer declined by two percent from 2020 to 2022 after posting resilience in multiple dimensions from 2012 until 2020, according to the World Economic Forum (WEF).
The latest Global Cooperation Barometer, which tracks dynamics of global cooperation, was launched by the WEF on Monday, Jan. 8, in Geneva, Switzerland. The Global Cooperation Barometer, developed in collaboration with McKinsey & Company, uses 42 indicators to measure five pillars of global cooperation between 2012 and 2022: trade and capital; innovation and technology; climate and natural capital; health and wellness; and peace and security.
Based on the report, the WEF said that the barometer indicates that global cooperation was resilient in multiple dimensions from 2012 until 2020 but overall cooperation declined by two percent from 2020 to 2022.
The new barometer showed that since 2020, global cooperation has started to decline due to weakened cooperation in peace and security, as well as health and wellness, WEF said.
The barometer indicates that global cooperation showed signs of strength during the years measured in pillars such as trade and capital, innovation and technology, and climate and natural capital. However, it also reflects the significant challenges the world has faced in the past three years, including reversals in global health cooperation and sharp increases in violent conflict, shown through declines in the barometer’s health and wellness and peace and security pillars.
On the trade and capital pillar, which looks at cooperation in promoting global growth, development and resilience through global economic integration, WEF said that the barometer reflects the interconnected nature of the modern global economy through dynamics in trade, capital and people flows, all of which are an essential driver of global growth.
From 2012-2020, cooperation in the form of global trade and capital flows rose moderately, but experienced significant volatility during the pandemic and years immediately after.
Based on the barometer, global cooperation in the trade and capital pillar increased at an average annual rate of 0.9 percent between 2012-2020, driven by growth in the stock of foreign direct investment (FDI) positions across many countries. Globally, FDI stock rose from 30 percent in 2012 to 49 percent in 2020, as a share of GDP. Trade presents a more mixed story in this period. Services flows (as a percentage of GDP) rose steadily between 2012-2019, when a collapse in travel triggered a fall in services from 13.7 percent of GDP in 2019 to 11.8 percent in 2020. Goods flows declined from 49.3 percent of GDP in 2012 to 41.9 percent in 2020.
In a sign of what may come next, trade in 2023 grew more slowly than GDP, at an estimated 0.8 percent (nearly 2 percentage points lower than 2022) as compared to GDP growth of 2.6 percent. If barriers to trade continue to grow, some countries could suffer from slower economic growth and a decline in the diffusion of productivity and innovation.
WEF also noted that a recent examination indicates that advanced economies have been boosting trade with emerging market economies, and also increasing greenfield FDI perhaps in advance of larger increases to come. For example, the United States has been trading more with Mexico and Viet Nam, and China has increased trade and investment across South-East Asia.
In the innovation and technology pillar, which examines how global cooperation, through exchanges of knowledge and people, accelerates innovation and creates beneficial technological progress, showed that 2012-2020, cooperation maintained strong and significant growth across most barometer metrics.
While the pandemic drove widespread remote working for white-collar workers that supported continued growth in cross-border data flows and relatively robust IT services growth, other trends in global cooperation have experienced broad deceleration.
Perceived risks to national security have contributed to decelerate. From 2021-2022, restrictions on products in the IT goods sector grew five times faster than trade restrictions overall. And cross-border data flows declined by two percent.
The climate and natural capital pillar looks at the impact of cooperation on the remediation and resolution of challenges to the global climate and natural capital. The focus is on lowering emissions, preserving natural capital and preparing for the likely impact of climate change through shared global goals that increase humanity’s ability to limit and adapt to a changing climate. Notably, climate and natural capital is the sole pillar in which the majority of indicators rose across the entire period of 2012-2022, with sustained positive trends in financial commitments to mitigation and adaptation and a significant expansion of marine protected areas. But, emissions continue to increase and progress toward ecological outcomes is stagnant.
The period of 2012-2020 showed significant growth in financing commitments towards both climate mitigation and adaptation, with finance flows for mitigation nearly doubling and flows for adaptation rising by 56 percent as a share of GDP.
Companies representing over 34 percent of the global economy (by market capitalization) have set science-based targets for emissions reductions.
The health and wellness pillar, examines the impact of global cooperation in enabling people worldwide to lead longer and healthier lives, indicates that cooperation rose consistently from 2012 to 2020 and was essential in certain ways to navigate the COVID-19 pandemic.
As the immediate impact of COVID-19 subsides, global health cooperation appears to be decreasing but remains above 2019 levels for certain metrics.
The peace and security pillar, which looks at the impact of global cooperation in preventing and resolving conflicts, showed cooperation trends in peace and security demonstrated considerable decline starting in 2016.
Although the number of global conflicts declined in 2020, suggesting that peace and security had improved, other indicators show a deteriorating landscape. Forcible displacement has grown markedly, with the number of forcibly displaced people nearly doubling between 2012 and 2020 (from 42 million to 82 million).
A second development also lowered the score for global cooperation on peace and security – cyberspace became a new theater for conflicts. Between 2012 and 2020, significant cyberattacks quadrupled in number and became more costly. It is estimated that global cybercrime cost the world economy $1 trillion in 2020.