The term “global economic governance”
refers to how individual states’ expanding powers impact international financial, monetary, and trade frameworks. In this view, the operation of such sectors is heavily influenced and assisted by politics rather than individual interventions. As a result, some recognized institutions, such as the IMF, have been formed over time to assist in the management of the global economy. Global fiscal dominance has aided in containing and reducing the first distinctive inclinations of crises, protectionism, and political unrest. Conversely, the system has been disputed and reported of various limitations that would emanate from the occasional disagreement amongst the member countries. This paper outlines into details how the global economy is governed, as well as the merits and demerits that are attached to the platform.
How the Global Economy is Governed
The administration of the global economy is on the docket of specified institutions. Among the organizations include the International Monetary Fund (IMF), World Bank, and the World Trade Organizations (WTO). Notably, each body has a specified role in the internal economic running. For instance, the IMF has a specialized set of leadership that comprises the managing director who is tasked with chairing the board and holding the senior management and staff. Besides, the set-up has a decentralized headship where the regional superintendents that mainly concern with discussion and deliberation of the global monetary cooperation as well as the financial stability. With the combination of 184 member states, the administrators assist in reinforcing the economic performance and identifying including giving a solution to the factors that would hinder the financial prosperity amongst the member countries.
Similarly, the World Bank
has a proactive approach to governing the global economy. Under the direction of the president and other executives, the organization collaborates with other nations to raise funds as well as championing major economic projects that are highly vital for the economic attainment. The board of governors forms the committees to foster the quality management in line with efficient administration and operation of duties. Apparently, the World Bank comprises of various countries both in developed and developing states.
On the other hand, the World Trade Organization (WTO)
has got legal framework governance that comprises the Council for Trade in Services. The panel is tasked with the mandate of; overseeing the entire functioning of the General Agreement on Trade in Services (GATS), determining the rules and procedures, as well as holding periodic meetings to discuss the major economic issues. Moreover, Yarbrough and Yarbrough adds that the WTO ensures that there are better trade relations between the member countries by indulging in a proper negotiation on the better conditions of commerce across the affiliate nations.
What is Right With the Global Economic Governance
Giving Mutual Opportunity for the Development of Businesses Internationally
Under the global economic governance, businesses and the property owners are highly advantaged. For instance, apart from communities, labour groups, and other interests, the proprietors and entrepreneurs have got exclusive rights for trading activities. The system awards the legacy commerce policy that is vital to the foreign program and corporate prosperity. Therefore, investors and international traders can freely initiate projects in the preferred countries after the feasibility study provided that the originating country is subscribed in the global fiscal establishments.
Addressing the Issues of Climate Change and Cooperate Governance
The global economic governance ensures that the integrity of environment is put in place. With the help of established institutions such as the World Bank, the projects that are environmentally friendly are being supported. On the other hand, the organization initiates and support ecological conservation and protection especially in the developing countries. Apparently, the sound ecology gives the surety for the continuity and sustainability of food and agricultural production to maintain the frequent supply of the raw materials. Also, the institution conducts a serious scrutiny to various administrations to ascertain the best utilization of the allocated funds for various developments. This dispels the frequent instances of money embezzlement that have been triggering the economic growth.
Flexibility in Solving the Urgent Economic Challenges
The desire to address the global economic issues globally has called for more varied approaches and flexible ways of offering solutions. In reckon, the system-level structural change of the administration from GFC to G20 was formed following the IFIs to settle the East Asian economic and political crisis. The new governance was to rectify and dispel the doubts in the vital multilateral regulatory framework practices for the running of the international economy. At this time, both WTO and IMF were contemplating to find better ways of accommodating the interest and values of all the member states. The moral high ground was to extend the coverage to entire nations unlike the initial times, where the considerations were limited to the Western and United States.
Formation and Strengthening of Trade Relations
The global economic governance foresees that an outstanding trade relationship occurs amongst the member states. Through the council of trade services that govern the institution, the organization assists in assigning the recommended and mutually acceptable commerce terms. The union helps in organizing the bilateral deals, an instance that has reinforced the business. Through the consensus, various nations that are participants of WTO have easily penetrated the various markets by removal of barriers to trade including tariffs and quotas. Additionally, the emergence of the G20 became the firm of the inclusion of the entire interest of the various groups, including the small participants.
Initiation of Projects in Low Economic Countries
The global monetary management institutions like the World Bank assists in championing various projects. To the member countries that form part of the World Bank especially the developing states benefits more from the allocation and introduction of the new infrastructures like roads that support the trading activities. Through the bilateral and multilateral deals in which the industrialized states sign some agreement, the receiving countries are highly advantaged since they the schemes are sources of both taxes and job opportunities to the majority of the residents found in the states that they usually visit.
The Democratic Reinstatement of the Leaders
Overtime, the leaders who take part in the active global economic governance have been elected into position through the political system where the preferred contestants are voted in by the leaders of the various countries from the member states. Therefore, the selection process is open and subject to the free will of the people. Various countries can comfortably choose the leaders based on the remarkable best performances in reckon. Notably, this methodology assists in eradicating the bias intentions that would appear in form of corruption to appoint those allied to the top administrators.
Striving to Correct the Inequality in the Global Economy
The global economic governance institutions have been at the forefront to solve the world inequality in the economy. Since 1944, both the World Bank and IMF have been collaborating in their operations to seek the sensible international trade as a result of the failure of the global governance. Also, these organizations encourage and assist the government of various states to increase the productivity, improve the living standards status as well as the labor territories. Moreover, the establishment is concerned with the factors for economic disparities in the poor nations, for instance, Africa. Among the conditions include poverty, education, food, and many others. This approach has considerably improved and avoided the common imbalance in the economy.
What is Wrong With the Global Economic Governance
Discontent with the Mode of Operation
Over time, some countries have expressed dissatisfaction with the continuing roles of the international financial institutions (IFI). In reminisce, the East Asian crisis of late 1990 highly contended following the perceived partiality. During the error, the observers raised various concerns that faulted the IFS for encouraging the premature economic liberalization. The institution failed to take the initiatives for managing the impacts of crisis and fostering recovery process. As a result, the East Asian purported to develop new regional economic mechanisms with the sole intention of having an adequate preparation to solve urgent catastrophes. Indeed, there has been a steady increase in the local multilateral economic organizations to seal the gap of IFI.
Legitimacy Matters
In the global economic governance, judges are given the privilege of forming part of the most consequential policy makers. In this essence, the international institutions often appoint the lawyers and juries to participate in the governance rules. Over time, there has been an establishment of various institutions like a plethora of the international courts such as ISDS and WTO. Despite the perceived benefits, the authorization of the judiciaries in the policy formulation has been criticized for various issues like overlooking the political context of operation and social science data. Therefore, at times, it appears challenging in identifying and responding to the societal jeopardizes that would hinder the equal fiscal prosperity.
Failure to Liberalize Some Key Sectors of Economy
WTO, as a global economic governance organization, has suffered a challenge since some of its wealthy countries have been reluctant to venture in agriculture. This situation appears unfair to the developing countries that heavily rely on the agriculture as the chief goods for trade in the global market. Furtherly, the European Union deteriorates the terms by venturing in the activities that completely lock out agricultural businesses. For instance, the US government subsidizes farm activities, thus unfavorably competition their counterparts in the poor countries. In turn, the underdeveloped countries are left with the option of over depending on the special discretionary deals and bilateral agreements. Following the failure to open agriculture across the WTO members, more time and negotiating resources are spent in ratifying the terms of widening the scopes of operation. Therefore, the poor states still incur more cost in compliance and risk enforcement acts.
Lack of Equal Influence in the Global Policy Governance
Ideally, the global economic governance has been allegedly reported to be flawed with inequality in the policy formulation process. The joining states, as well as the international organizations, have continually become the most influential actors. This is seen through the biased representation of the employees in such institution who act as the public legislators and regulators. In comparison with the developing countries, many representatives come from the superior and economically stable nations. The situation has unnecessarily branded the institutions to be full of internationalized public sector officials as opposed to the global public.
Slow Account of Capital Liberalization
The IMF institution reported the instance of alleviating the member countries from the external shock. Instead of offering the financial advice and support, the organization was highly concerned with ideological and prescriptive. From the East Asian crisis, the union showed a weakness in addressing the vulnerabilities and instigators of the calamity. Also, the IMF deployed the use of undifferentiated prescription for liberalization.
Great Effect During Multilateral Disagreements
The dissatisfaction with the leadership of initial powerful countries such as United States, Japan, Canada, and European Union has exacerbated the emergence of other unions like the G20. Such institutions have been standing to protest the bias in the internal administration. Therefore, the absence and deterrence of the multi-lateral deals bring the option of bilateral negotiations. Given that it is highly complicated to strike a balance and negotiation in the bilateral relationship. Furthermore, where there is a slow adoption of multilateral platforms, nations overspend in time and resources needed to sign the new deals. On the other hand, the poor countries would be having the limited option or subjected to exploitation due to the limited scope of the market for the local commodities.
Spending of more Time and Staff Strengthening in the Developing Countries
The major countries that are donors like UK, Japan, and the US rely on the World Bank to a smaller extent. Majorly, these states have got well-developed agencies and processes that they extend to the poor countries. With the use of megaphones and the national agencies, these republics communicate with the government of various states alongside other international sectors like the WTO, World Bank, and IMFI. As a result, the developing countries and over-stretches their government officials, spend more time, as well as staff strengthening.
Overall, the global economic governance gives the influence of rising powers of the countries to control the economy of the world. The three international bodies are very much essential for the running of the international fiscal activities. These include the IMF, World Bank, and the World Trade. The right things with the global supremacy include giving the mutual opportunity to develop the business internationally and giving a solution to the climate change and corporate governance. Additional concepts are the flexibility in realizing the immediate economic issues, strengthening and reinforcing the trade relations, initiation of different projects in the developing countries, democratic choosing of leaders, and struggle of keeping inequality that appears from the international commerce. Among the wrong things with the universal authority includes the dissatisfaction with the operational mode, varying legitimate matters, and a letdown to liberate the key aspects of the economy. Also, they comprise lack of a similar influence in the global governance, the slow pace of capital liberation, adverse consequences during the multilateral disagreements, and spending more time and staff reinforcement mainly in the developing countries.
Work Cited
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Gilpin, Robert. The political economy of international relations. Princeton University Press, 2016.
Hay, Colin. “Depoliticisation as process, governance as practice: what did the’first wave’get wrong and do we need a second wave’to put it right?” Policy & Politics 42.2 (2014): 293-311.
Yarbrough, Beth V., and Robert M. Yarbrough. Cooperation and governance in international trade: The strategic organizational approach. Princeton University Press, 2014.
