The financial crisis and the ensuing global economic downturn have been the focal points of news coverage and policy analysis for over a year now. At one extreme are those who choose to shrug the episode off as a significant yet transient dent in economic development, with marginal repercussions for the global system. At the other end are those who tout it as the first stage in an epoch-making transition in which the redistribution of economic power in the world will allow fast-growth developing economies to move to the centre stage of world politics.
The economic crisis still lingers at a point of uncertainty, and the governments of countries hit particularly hard by recession have found themselves between a rock and a hard place, trying to maintain stable international relations while pressured to alleviate discontent at home. In states with fragile regimes, the government’s legitimacy is often greatly dependent upon economic growth, but even governments in robust democracies have come under fire for allowing their country’s economy to become so dependent on the global economy and so susceptible to its fluctuations. States are, for better or worse, dependent on other states.
This report is a compilation of analyses by researchers at the Finnish Institute of International Affairs. It takes the reader through a comprehensive overview of the dynamics of the global financial crisis and its challenges for governance across the board, followed by detailed accounts of how key international and institutional ties have been strained by the crisis, focusing on relations within the European Union, Russia’s relationship with the West, and China’s relationship with the United States.
Download all FIIA publications at www.upi-fiia.fi.