Multitrack world

STRATEGIC FORESIGHT FOR SUCCESSFUL NET-ZERO TRANSITIONS

Multitrack World A reversal of globalization and increased regionalization POSSIBLE 2030-2050 DISRUPTION Different systems and standards proliferate in different parts of the world, creating separate, parallel clusters of states. Each cluster has its own economic and digital ecosystem, as well as its own attitudes towards key determinants of well-being such as inequality, freedom of expression, and surveillance. Clusters rely on their own dominant currencies and largely equivalent corporate actors, which have adapted to unique regulatory and cultural standards. Few firms or civil society organisations are able to operate successfully across multiple clusters. Large-scale movement away from globalisation and distrust between clusters has led to diminished interest in and incentive for international cooperation. This is a world of diversity rather than universality, where ideas of what constitutes good policies, best practices and how to measure both vary significantly based on the value systems or politics of each clusters.

CONTEXT

A T E B

The future of globalisation and multilateralism is full of uncertainty.

Escalating tensions with Russia and/or China may lead to a more unified West.

However, different political realities on social justice and environmental issues, technology regulation and security may not be overcome. Notably, the IEA’s Net-zero 2050 Framework explicitly assumes international cooperation on climate will continue: “The pathway to net‐zero emissions (requires) an unprecedented level of international co‐ operation between governments… working together in an effective and mutually beneficial manner.” Unified, international cooperation is becoming more challenging and the global ordered more fractured.

Source: PIIE

This series is part of the Strategic Foresight for Successful Net-Zero Transitions toolkit which assists governments and organisations to develop forward-looking, adaptive and future-ready strategies for net-zero emission transitions.

Each part of the series showcases one “Possible Disruption” during the 2030-2050 period that could generate new opportunities or challenges for public policy. Each disruption was developed with foresight, academic and policy experts and represents a plausible extreme in a rapidly changing and uncertain future.

SIGNAL

SIGNAL

SIGNAL

Tensions between the United States and Europe have flared up over tariffs and technology policy in recent years.

Plans for a European carbon tariff drew accusations of protectionism from allies and a joint statement of “grave concern” about new trade barriers from Brazil, China, India and South Africa.

COVID-19 caused policymakers and business leaders to question the resilience of global supply chains and provide a new rationale for protectionism.

POTENTIAL IMPLICATIONS Significant economic restructuring might be necessary as countries withdraw into clusters and the global economy contracts. There could be localized gains due to reshoring of production, benefiting some domestic small businesses and boosting national pride. Each of the clusters would need to secure sufficient supplies of goods such as critical raw materials and services through in-cluster sources or become vulnerable to exploitation by those with control of vital resources. However, this could spur innovation as each cluster pushes themselves to develop new domestic solutions to the challenges they face. It could also present major skills shortages in key sectors throughout nearly all clusters. For products that are still traded between clusters, the cost of meeting multiple standards will likely be translated into higher prices.

A T E B

Each of the clusters may have different levels of exposure to climate change, and the dominant or wealthy states may become responsible for supporting the hardest hit areas within their cluster. However, international aid across clusters to the most vulnerable nations may be limited. Clusters may scapegoat noncluster members for global shortcomings on climate change. Cluster-specific media ecosystems will make it hard to challenge or present new narratives outside of a cluster.

The different prevailing sets of values and ideological approaches within clusters could make diplomacy far more complex. Transaction costs for doing business and maintaining or building ties would likely go up significantly. There could be a breakdown in stewardship and notions of global public goods if each cluster turns inwards and views inter-cluster relations as increasingly zero-sum. Tense negotiations could ensue over climate and environmental issues, and other areas where interactions between clusters are still necessary but compromise is difficult.

QUESTIONS FOR POLICYMAKERS

POLICY RESPONSES

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What can be done to build bridges and deepen ties between various country clusters?

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What are ways to promote well-being and protect global public goods in a world where governments may be pulling back from multilateralism?

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How could non-state actors maintain lines of communication and collective action?

The OECD is preparing Recommendations on International Regulatory Co operation to Tackle Global Challenges , drawing on the 2021 Best Practices Principles on International Re gulatory Co-Operation . The OECD recommends a paradigm shift from domestic-centric systems towards systematic consideration of the international environment.

Cooperation will increase regulatory effectiveness, economic efficiency, and administrative efficiency. The draft recommendations affirm and encourage an international approach to significant global challenges that minimizes costly divergences.

STRATEGIC FORESIGHT FOR SUCCESSFUL NET-ZERO TRANSITIONS www.oecd.org/strategic-foresight | foresight@oecd.org