Global governance is the mantra of our era’s elite.

The surge in cross-border flows of goods, services, capital and information produced by technological innovation and market liberalisation has made the world’s countries too interconnected, their argument goes, for any country to be able to solve its economic problems on its own.

We need global rules, global agreements, global institutions.

This claim is so widely accepted today that challenging it may seem like arguing that the sun revolves around the Earth.

Yet, what may be true for truly global problems such as climate change or health pandemics is not true when it comes to most economic issues.

Contrary to what we often hear, the world economy is not a global commons. Global governance can do only limited good — and it occasionally does some damage.

What makes, say, climate change a problem that requires global cooperation is that the planet has a single climate system. It makes no difference where greenhouse gases are emitted.

So national restrictions on carbon emissions provide no or little benefit at home.

By contrast, good economic policies — including openness — benefit the domestic economy first and foremost, and the price of bad economic policies is primarily paid domestically as well.

Individual countries’ economic fortunes are determined largely by what happens at home rather than abroad.

If economic openness is desirable, it is because such policies are in a country’s own self-interest — not because it helps others.

Openness and other good policies that contribute to economic stability worldwide rely on self-interest, not on global, spirit.

Sometimes domestic economic advantage comes at the expense of other countries.

This is the case of so-called beggar-thy-neighbour policies. The purest illustration occurs when a dominant supplier of a natural resource, such as oil, restricts supply on world markets to drive up world prices.

The exporter’s gain is the rest of the world’s loss.

A similar mechanism underpins “optimum tariffs”, whereby a large country manipulates its terms of trade by placing restrictions on its imports.

In such instances, there is a clear argument for global rules that limit or prohibit the use of such policies.

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