The world's economy isglobal; its politics are national. This, in a nutshell, is the dilemma of globalgovernance.
Somehow policymakers must give private business activities security when making transactions that cross jurisdictional boundaries. They must deal with what economists call "cross-border externalities", of which greenhouse gas emissions and the threat of pandemic disease are the best known examples. They must prevent governments' policies from acting at cross-purposes, of which exchange-rate policies are a good current example.
How well do they do? The answer is: not as well as one might like, but better than one might have imagined a century ago.
The world has inherited much from the burst of creativity between the end of the second world war and 1960: the International Monetary Fund, the World Bank, the General Agreement on Tariffs and Trade (now the World Trade Organisation), the Organisation for Economic Co-operation and Development and the European Economic Community (now the European Union).
Some of these institutions - notably the WTO and the EU - have grown hugely in depth, as well as membership. Others - the IMF and World Bank - can also point to the great progress made by many of their clients.
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