The term ‘Kindleberger Trap’ was coined by Harvard-professor Joseph Nye and relates to the economic historian Charles Kindleberger. Kindleberger argued that the tragic nature of the 1930s, ending in World War 2, was caused by the failure of the United States to assume the international responsibilities that came with the status of being the world’s new hegemon. Not surprisingly he was one of the intellectual architects of the post-WW2 Marshall Plan.
The Kindleberger Trap reminds us of the challenges faced by the current global governance regime. The US as the descending power that retreats, and China as the rising power that needs to live up to the responsibilities world hegemony demands. One of those responsibilities is providing the necessary global ‘public goods’. As Joseph Nye writes: “At the global level, public goods –such as a stable climate, financial stability, or freedom of the seas– are provided by coalitions led by the largest power.”1
But what happens when the old hegemon is not up for the job anymore, and the new hegemon has not yet taken over? It seems only logical that in such a case both world powers work together or in parallel to provide the stability and public goods required for a sustainable, peaceful and prosperous world.
The Boston University Global Development Policy Center writes: “At the core of such an agenda should be a stepwise mobilization of public development finance aligned with the UN 2030 Sustainable Development Goals (SDGs) and the Paris Agreement.”2 Boston University professor Kevin P. Gallagher further argues that private markets fall short in providing long-run counter-cyclical financing and that public financial entities need to be established and coordinated on a global scale , in order to avoid the Kindleberger Trap.
And this is exactly what China is doing. It launched the Global Development Initiative or GDI. Some 130 countries in the world have become ‘friends of GDI’ to support the achievement of the 17 UN 2030 SDGs especially for those countries who are well behind others. Together they form a global community to make the UN goals successful.
Want to know more about the Kindleberger Trap? Watch this: https://youtu.be/RIFftby_sow
1 Joseph S. Nye, ‘The Kindleberger Trap’, Project Syndicate, January 09, 2017.
2 Working to Avoid the Kindleberger Trap: China-US Collaboration on Development Finance, Boston University Global Development Policy Center, December 13, 2021.