China’s rise has challenged America’s undisputed hegemony over the world economy – a status the United States has enjoyed since the Soviet Union’s collapse. While some American national-security elites seek continued US primacy, others seem resigned to an increasingly bipolar world. A more likely outcome, however, is a multipolar world where middle powers exert considerable countervailing force, thus preventing the US and China from imposing their interests on others.
Middle powers include India, Indonesia, Brazil, South Africa, Turkiye and Nigeria – all large economies with a significant footprint in the global economy or in their regions. They are far from rich and account for a significant share of the world’s poorest people, yet they also have large, consumption-oriented middle classes and considerable technological capabilities. The combined GDP (in purchasing-power-adjusted terms) of the six countries mentioned already exceeds that of the US and is projected to grow by 50 per cent by 2029.
Typically, these countries have distinctive foreign policies that reject clear alignment with either the US or China. Contrary to what many in the US believe, middle powers have no strong affinity for China, nor do they want to align with it at the expense of their relationship with the US. In fact, their closer ties with China have often been driven by US policy. America’s weaponisation of its trade and financial might has impelled them to hedge their bets.
The leaders of the middle powers do not want a world where they are forced to take sides. “We refuse to be a pawn in a new cold war,” said former Indonesian President Joko Widodo. Instead, they seek to build trade and investment relationships that are multidimensional, selecting from a range of options not restricted by great-power rivalry. Many believe, along with Rana Foroohar of the Financial Times, that “the US is not an anchor for stability, but rather a risk to be hedged against.”
With advanced economies increasingly focused inward, middle powers have become natural champions of global public goods. They are well-positioned to lead in advocating for climate action, public health, and debt distress relief. A good example is Brazil’s push for a global wealth tax on billionaires during its G20 presidency. The proposal could raise hundreds of billions of dollars to bridge the gap in climate finance for low-income countries.
The middle powers are unlikely to form a formidable bloc, primarily because their interests are too diverse for a common economic or security agenda. Even in formal groupings, their collective impact has been limited. The BRICS (originally Brazil, Russia, India, China, and later South Africa) was launched in 2009 with high expectations but has achieved little beyond providing photo opportunities for its leaders.
Recently, the BRICS expanded to include four more countries: Egypt, Ethiopia, Iran, and the United Arab Emirates, with others potentially joining. Yet, it is difficult to see how such a diverse group could act cohesively. The worst outcome might be that the grouping could reinforce autocratic tendencies among its members, even those who are democratically elected.
Many economists and political scientists hold that a stable global economy requires a hegemon, like the US after 1945 or Britain during the gold standard. According to the theory of “hegemonic stability,” a superpower is needed to shoulder the costs of running an open world economy, such as keeping sea lanes open or enforcing trade rules. Consequently, multipolarity is often seen as a path to chaos and economic disintegration.
But this view is increasingly outdated. Though the degree of openness will vary by country, no nation today has an interest in completely isolating itself from the global economy. Governments must balance the benefits of open trade with support for their industries to develop new capabilities. Each country is best suited to determine its own terms of engagement with the world economy.
An ideal scenario would be a world where the US, possibly with China, provided essential global public goods – such as concessional finance and technology access for climate mitigation. But this is not our current reality. The US and other major economies are poorly positioned to supply the global public goods the world needs, and the disposition in their capitals is unlikely to change soon.
Moreover, as many middle powers have observed, hegemonic power can be wielded coercively. It can be used to enforce self-serving rules or punish countries that do not align with the hegemon’s foreign-policy goals, as seen with the internationalisation of US sanctions against Iran and Russia.
The most crucial contribution of middle powers may be to demonstrate the viability of a multipolar world and diverse development paths. They offer a vision for the global economy that does not rely on the dominance of either the US or China. However, to be effective role models, middle powers must act responsibly – both in their interactions with smaller nations and in promoting political accountability at home.
@Project Syndicate, 2024
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