Globalisation Becoming Zero-Sum Game as Global Order Fragments, Cornell Economist Warns at Davos

At the 2026 World Economic Forum in Davos, Cornell University economist Eswar Prasad delivered a sobering analysis of the current state of globalisation and the international order. Prasad highlighted a growing fragmentation in global economic and political systems, signaling a shift away from cooperative engagement toward more competitive, zero-sum dynamics. This transformation, he warned, is fueled by declining credibility and effectiveness of international institutions that have traditionally underpinned globalisation and multilateral cooperation.

Prasad underscored that the era of globalisation characterized by mutual benefits and interconnected growth is giving way to a landscape where countries increasingly view gains as relative and competitive. This shift risks undermining the collaborative frameworks that have facilitated trade, investment, and technological exchange over recent decades. The erosion of trust in global institutions, coupled with rising geopolitical tensions, contributes to a fractured global order where national interests dominate over collective progress.

Focusing on China, Prasad noted the paradox of its economic position. Despite being heavily reliant on exports, China faces significant internal challenges that complicate its role in the global economy. These domestic issues, ranging from demographic shifts to economic restructuring, limit China's ability to maintain its previous growth trajectory and influence. This internal complexity adds another layer of uncertainty to the global economic landscape, as China remains a pivotal player in international trade and supply chains.

Prasad also addressed the rapid adoption of artificial intelligence (AI) technologies worldwide. While AI promises efficiency gains and innovation, he cautioned about the potential for substantial employment disruptions across various sectors. The displacement of jobs due to automation and AI-driven processes could have widespread social and economic consequences. However, Prasad noted that, despite these employment challenges, the immediate impact on corporate profitability might be limited, suggesting a complex interplay between technological advancement, labor markets, and business outcomes.

The implications of Prasad's warnings are profound. The fragmentation of the global order and the shift toward zero-sum competition may hinder coordinated responses to global challenges such as climate change, pandemics, and economic instability. Moreover, the internal struggles within major economies like China and the disruptive potential of AI adoption necessitate adaptive policies and international cooperation to manage risks and harness opportunities.

In summary, Eswar Prasad's insights at Davos paint a picture of a world at a crossroads. The traditional model of globalisation is under strain, and without renewed commitment to multilateralism and inclusive economic policies, the global community may face increased conflict, inequality, and instability in the years ahead.