Multipolar or Fragmented World: An Economist’s View

“Multipolarity” has become a widely used term describing the current state of the world. Analysis of simple metrics such as distribution of global GDP and military expenditures, and reserve currencies’ role, was undertaken to demonstrate that despite China’s visible ascent the world is now hardly closer to multipolarity than in the beginning of XXI century. The reasons for delay in full-fledged multipolarity arrival include the often neglected difference between stocks and flows, institutional and psychological inertia, and partially reluctance of the new leaders to assume new responsibilities. It is stated that In the meantime as US power declines the world will become more fragmented rather than multilateral.

Author: Oleg Buklemishev, Head of Center for Economic Policy Studies, Faculty of Economics, Moscow State (Lomonosov) University, Russia


Multipolarity of the world we live in is so often stated by academicians and politicians that it is already taken for granted. As the usual story goes, the post-World War II bipolar rule ceased to exist in 1991 after the Soviet Union’s material and ideological collapse – to be continued by the period of the US sheer dominance as an “indispensable nation”[i]. Allegedly it has come to an end in the beginning of the new millennium when after rapid economic ascent China emerged as a contending power followed by India and Brazil, and the Russian leadership laid new claims to the Soviet Union’s untapped geopolitical heritage. In fact, on April 23rd, 1997, Russia and China signed the “Joint Declaration on a Multipolar World and the Establishment of a New International Order” and committed to promote the development of new balance and quality of international relations. “Multipolarity” has since mushroomed in the international vocabulary and even the top US politicians – from Madeleine Albright to Barack Obama – have chosen to use this cliché. Global financial crisis of 2007-2009 which mostly hit the Western countries and institutionalization of BRICS (Brazil, Russia, India, China and South Africa) in 2009-2011 vividly confirmed this trend.

Some authors claim that multipolarity should be a normative approach to international relations and security as it gives the world stability and/or fairness lacking under bipolar/unipolar scenario[ii], others, on the contrary, insist that it’s inherently unstable setting[iii]. Classic past example of peace time multipolarity is represented by the “Concert of Europe” – the international setting during the period between the Napoleonic wars and Crimean war – when leading European powers acting together tried to control the global scene.

With all due respect to the received wisdom, one might want to choose a positive approach and verify to what extent the declared standing have materialized so far and whether the recent material change in the world corresponds to intense multipolarity talk. Otherwise flawed perceptions leading to erroneous decision-making in international politics could cause a lot of harm.

This task is not simple because there is no universally established academic definition of different kinds of polarity. Usually this term describes such a distribution of global power when more than two (or three – if tripolarity is a separate option) leading nation-states (or “civilizations”) enjoy comparable amounts of international economic, ideological, military and cultural influence. There could be several sectoral metrics of power distribution applied but economic ones should credibly attach maximum importance as other forms of trans-border influence are heavily dependent on nation’s economic capacity.

Multipolarity check

The indicator of gross domestic product, despite its certain numerous flaws[iv], still lack credible alternatives in its role as the main measure of national economic capacity. For reasons of measuring mainly the external financial potential instead of relative domestic purchasing power we choose for international comparisons nominal GDP rather than its PPP-adjusted value (see Graph 1).[v]

Graph 1. Relative economic power (top 5 countries by GDP size, current prices).

Source of data: IMF


Indeed, the share of world GDP controlled by the United States (and EU, too) decreased during the initial 15 years of XXI century but, in fact, it didn’t lead to emergence of any major “pole” (contender) of comparable economic scale. Whereas China’s share grew significantly, it was approximately compensated by Japan’s decline (basically, Japan and China swapped places in this “league table”). The main economic beneficiaries during the previous years were “the other” countries but the fact of “the North” economic leadership erosion evidently doesn’t bring about conceived multipolarity as such.

But any measure of economic size taken in isolation doesn’t mean much per se. The factor of size can be (but is not necessarily) translated into power (or ‘leadership’) via several channels, including

  • Trade and investment gravity;
  • Vast human capital pool;
  • Military expenditures;
  • Reserve currency issuance;
  • Leading role in the international organizations;
  • Soft power capabilities, etc.[vi]

Some of these factors cannot be directly and accurately measured but natural ways to assess others are, fortunately, readily available. For instance, in terms of military expenditures the United States is still an unsurpassed force despite assertions that world power basis is no longer unipolar as it used to be. Graph 2 shows that currently as in the beginning of the millennium the US commands the biggest by far share of global military outlays.

Graph 2. Military expenditures (top 5 countries, % of global volume).

Source of data: SIPRI


Regardless of recent considerable increase in financing of its armed forces by China and Russia, even if these expenses are combined (admittedly, a very big if from a strategic point of view) US corresponding disbursements (without taking into account joint NATO efforts) are still routinely measured at different axis (see Graph 3). Note that in this particular case “the other” rather decline and military concentration continues to hold pace though again, no evident sign of multipolarity is presented (though one has to take into account increased resolve and capacity by China and Russia to project military power in their near abroad).

Graph 3. US, Chinese and Russian military expenditures, bn US dollars, current prices.

Source: Sandler, T. and George, J. (2016)


Another important measure of global influence by nations is embodied in the status of reserve currency. The national money widely used for international trade and investment gives its issuer, using Charles De Gaulle’s formula, “an exorbitant privilege” which consists of removing currency risks and lowering transaction costs for domestic business entities, financial inflows and cheaper capital, boost to a national financial sector and seigniorage while corresponding costs of currency internationalization for major reserve currencies are considered to be of much lower magnitude[vii]. The annual benefit accrued to the US owing to the status of dollar as global currency is estimated to exceed 100bn USD[viii] (in other words, it can be roughly approximated by 1% US GDP).

Recent studies confirm that it is closely linked to the geopolitical (especially military) standing (for instance, it was found that military alliances boost the share of a currency in the partner’s foreign reserve holdings by 30 percentage points)[ix]. In that sense, the reserve currency status could be considered an integral measure of leadership, comprising the factors of economic size, financial markets breadth and width, and structural quality (macroeconomic policy, financial regulation, institutional characteristics)[x].

A look at the current reserve currencies’ standing as compared with 2000 (Graph 4) demonstrates that dollar dominance persists. The role of Chinese renminbi in domestic and cross-border payments is still lower than that of Japanese yen or British pound and of the same magnitude as Canadian and Australian dollars (see Graph 5) and is even less so when only international payments are considered (Graph 6).

Graph 4. Representation of leading currencies in the international official reserves, %

Sources of data: IMF, ECB


Graph 5. Currency activity share for domestic and international payments, %

Source: SWIFT (2018)

Graph 6. Currency activity share for international payments, %

Source: SWIFT (2018)


Despite IMF 2015 decision to include the Chinese currency into SDR basket and immense currency internationalization efforts by Beijing renminbi’s progress lately stalled and was even reversed (Graph 7).

Graph 7. Market share of Chinese currency in international payments, %

Source: The Economist (October 14th, 2017)


Indeed, lately developing countries led by China demonstrated impressive economic and social progress markedly increasing their share and influence in the global system. Nevertheless, the declaration that the world has turned multipolar on several metrics looks premature.


Impediments for multipolar world

It does take longer than expected for new contenders to claim their “fair” share of global control. Several reasons can be drawn to explain why it happens so.

  • Difference between “stocks” and “flows”

Several measures used in international comparisons represent in economic parlance “flows“ as compared to “stocks”. For instance, the hard power dominance of country A over country B could be achieved not when A’s current military budget (flow) becomes bigger than B’s but when the same relationship occurs in terms of “stocks”, i.e. the total military might, the result of annual flows’ accumulation. However big is the “discount factor” applied to annual flows of previous years, if this simple concept is taken into account, the overall military gap between America and its possible foes despite looks insurmountable current progress of the latter. The same line of argument can be applied to other material stockpiles being built up over time such as investment.

  • Inertia and status quo preference, “stickiness” by incumbents

For instance, the current role of developing countries in the international organizations does not mirror their real weight. The IMF quotas saga demonstrates that institutional inertia and political resistance are important factors of delay.

G20 agreed in 2010 that reform of the IMF voting power is needed to account for changes in the global economy and greater role of the developing and emerging market countries. Nevertheless, it took five years to pass because of the position taken by Republicans in the U.S. Congress. Moreover, United States retained more than 15% of IMF quota effectively bringing it a right of veto, OECD countries control almost 2/3 of vote (their PPP share in the world economy is now less than 1/2), while several major developing countries, especially China, India and Indonesia, are still heavily underrepresented. Though quotas review has already become an accepted mode, further necessary reforms in the future could face similar delays[xi].

In its turn, the status of reserve currency is also based on usual routine and formal/informal business conventions which change extremely slowly. Historical experience teaches that it involves a significant dose of inertia; a significant exogenous shock is often required to move from one state of equilibrium to another[xii].

  • Neophytes’ unwillingness or inability to exercise leadership

The resistance to the new leading players’ ascent is partly due to a legitimate concern that they are not prepared or don’t want to exercise genuine leadership when at the helm. For the time being one can only guess what are the intentions of the new potential leaders (on top of their disagreement with the current rules) and how it will rearrange the international agenda. This is especially important in the epoch when the world is facing a “Kindleberger trap”, a vacuum of power when a lack of global leadership can lead to disastrous global consequences as a result of US international disengagement under Trump administration[xiii]. Indeed, there are strong voices in China itself against more active involvement in global affairs, representing it as a conspiracy to trap the country into messy regional troubles[xiv]. China’s reluctance to assume new obligations was anything but evident in many spheres during the recent years.



US relative decline and partial retreat from global affairs could mean that unipolar world is close to an end. At the same time China’s rapid ascent creates domestic and international headwinds – and the global leadership status is thus eroding. Having analyzed the material facts – global GDP distribution, relative military power and, lastly, international reserve currencies’ standing – we can conclude that multipolararity is not with us yet.

Before it finally arrives (if at all) scholars keep on trying to describe our Brave New World in different ways. Samuel Huntington coined the term uni-multipolar balance of power; in other words, America now has to balance its dominance with other, lower-level power centers to achieve its ends [xv].  Alternatively, Richard Haass proclaimed the age of non-polarity when states, international organizations and non-state actors interact and compete in the world arena.[xvi] Indeed, as Facebook and other global tech giants accumulate enormous amounts of valuable data they – along with the leading nations – could become big players of the future[xvii]. But the vast differentiation of the interests of future major actors (even if we ignore mighty insurgent players like ISIS) will make it difficult for them to communicate and build productive alliances. It might reduce the shared agenda to the few most uncontroversial subjects which are usually not the very important ones.

The U.S. National Intelligence Council in 2008[xviii] forecasted the emergence of a “global multipolar system” within two decades. It remains to be seen whether this forecast proves correct but in spite of numerous acute global problems pending but in any event in the meantime the world is likely to become more fragmented rather than multipolar.


Author: Oleg Buklemishev, Head of Center for Economic Policy Studies, Faculty of Economics, Moscow State (Lomonosov) University, Russia


BIS: Currency internationalisation: lessons from the global financial crisis and prospects for the future in Asia and the Pacific. BIS Papers No.61. December 2011, 247 pages. (

BOBBITT, Phillip: The Shield of Achilles. War, Peace and the Course of History. London. Penguin Books, 2002, 921 pages.

BUKLEMISHEV, Oleg, and DANILOV, Yuri:”Economic Leadership and the “Leadership Rent””. In: World Economy and International Relations. No. 10, 2015, pp. 5–17 (In Russian).

CHEN, Dingding: Is China Ready for Global Leadership? In: The Diplomat. February, 27, 2017 (

DUGIN, Alexander: Geopolitics. Textbook for students. Moscow. Academic Project, Gaudeamus, 2011, 592 pages (

EICHENGREEN, Barry, and MEHL, Arnaud and CHIŢU, Livia: Mars or Mercury? The Geopolitics of International Currency Choice, NBER Working Paper 24145, December 2017, 48 pages.

FRANKEL, Jakob: “Internationalization of the RMB and Historical Precedents. In: Journal of Economic Integration. No. 27(3), 2012, pp. 329-365.

HAASS, Richard: “The Age of Nonpolarity. What Will Follow US Dominance”. In: Foreign Affairs, May–June, 2008 (

HUNTINGTON, Samuel: “The Lonely Superpower.” Foreign Affairs No. 78:2, March-April, 2007.

MANSFIELD, Edward: “Concentration, Polarity, and the Distribution of Power”. In: International Studies Quarterly. Blackwell Publishing. No. 37 (1), March 1993 pp. 105–128.

NATIONAL INTELLIGENCE COUNCIL: Global Trends 2025. A Transformed World, Washi          ngton, November 2008, 120 pages.

NYE, Joseph: “The Kindleberger Trap”. In: Project Syndicate, Jan 9, 2017. (–nye-2017-01).

ROGOFF, Kenneth: “America’s Endless Budget Battle”. In: Project Syndicate, Oct 1, 2013 (

Russian-Chinese Joint Declaration on a Multipolar World and the Establishment of a New International Order, adopted in Moscow on 23 April 1997.

SANDLER, Todd and GEORGE, Justin: “Military Expenditure Trends for 1960–2014 and What They Reveal”. In: Global Policy, No. 7, 2016, pp. 174–184.

STIGLITZ, Joseph and SEN, Amartya and FITOUSSI, Jean-Paul:  Mismeasuring Our Lives: Why GDP Doesn’t Add up: The Report. New York, 176 pages.

SWIFT: RMB Tracker (Special report), January 2018 (

“The internationalisation of China’s currency has stalled”. The Economist. October 14th, 2017 (

“The world’s most valuable resource is no longer oil, but data”. The Economist. May 6th, 2017 (

THIMANN Christian: “Global Roles of Currencies”. In: ECB Working Paper Series, №1031, 2009 (

WALTZ, Kenneth: Theory of International Politics. New York, McGraw Hill, 1979, 256 pages.

WEISBROT, Mark and JOHNSTON, Jake: “Voting Share Reform at the IMF: Will it Make a Difference?” Washington, DC: Center for Economic and Policy Research, 2016 (

WOHLFORTH, William: “The Stability of a Unipolar World”. In: International Security, Summer, Vol. 24 Issue 1, 1999.

[i] Wohlforth (1999), p,5.

[ii] See, e.g. Dugin (2011).

[iii] Waltz (1979). Bobbitt. (2002).

[iv] See, for example Stiglitz, Sen and Fitoussi (2010).

[v] Detailed explanation is given in Buklemishev, Danilov (2015), pp. 6-7

[vi] Ibid, pp. 5-17

[vii] BIS (2011)

[viii] Rogoff (2013)

[ix] Eichengreen, Mehl and Chiţu (2017)

[x] Thimann (2009)

[xi] Weisbrot, Johnston (2016)

[xii] Frankel (2012)

[xiii] Nye (2017)

[xiv] Chen (2017)

[xv] Huntington (1999).

[xvi] Haass (2008)

[xvii] The Economist. May 6th, 2017

[xviii] National Intelligence Council (2008)

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: