Without Strong Institutions, Development Will Remain Out of Reach

International institutions are passing through a deep crisis. Many were designed for another era, shaped by globalization, the expansion of liberal democracy and confidence that cooperation between countries could solve much of the world’s problems. That consensus has now receded, while security concerns increasingly take precedence over economic efficiency and ideological affinities.

The deterioration is visible in the World Trade Organization, whose dispute-settlement system has been seriously weakened, and in the United Nations, where divisions among permanent Security Council members often produce paralysis. Yet the article identifies a paradox: the less predictable and institutionalized the international order becomes, the more important national institutions are.

Countries with stable rules, professional bureaucracies and strategic capacity will be better positioned to convert economic and geopolitical opportunities into development. Institutions provide the certainty investors need in a world marked by conflict and uncertainty. Countries with clear rules, reliable courts and a functioning rule of law are better placed to attract investment, even when other countries offer higher potential returns or temporary tax advantages.

For developing countries, stability and predictability can also help local companies lead their nations’ economic integration into the world. Without a reliable currency and stability, credit does not expand and capital markets capable of financing entrepreneurs do not emerge. Argentina offers a stark example: private-sector credit amounts to less than 18% of GDP, compared with more than 100% in Chile.

The same logic applies to foreign policy. A good idea or accurate diagnosis is not enough without the means to implement it. Otherwise, strategy remains an intellectual exercise that collides with reality. The article highlights the importance of institutions such as Argentina’s diplomatic service, armed forces and intelligence system as security challenges grow, then ends in the supplied text while turning to conflicts in the Middle East, the war between Russia and Ukraine, and recurring tensions.