GLOBAL GOVERNANCE

Spring 2010

by Jean Pisani-Ferry

The G20 summits of 2008-2009 helped resist the temptations of protectionism and delivered a global agenda on new financial regulation, concerted stimulus efforts, a major increase in the IMF’s resources and an unprecedented commitment to macroeconomic coordination.

It wasn’t a negligible harvest, so now the question must be whether this cooperative spirit can last long enough to survive the acute phase of the crisis? For the aftermath may be less easy to deal with than the apex, with two issues of particular relevance. The first is the future of the coordination process launched last year at Pittsburgh, whose goal is a rebalancing of global growth. How can a heterogeneous group of countries succeed, when some – not least the U.S. and China – have no tradition of allowing foreign oversight of their domestic policy choices?

External surpluses and deficits and corresponding exchange rate policies will be key, as any re-balancing of global economic growth requires the U.S. and China to engage in major overhauls of their own growth models. Domestic adjustment has started on the U.S. side, but it’s by no means certain that the U.S. political process will take external dimensions into account when confronted by the hard choices that lie ahead. And welcome as it was, China’s stimulus shouldn’t be seen as a first step towards more consumer-oriented growth. The task ahead for Chinese policymakers is daunting, and China’s refusal to bow to U.S. and European pressures on revaluing the renminbi doesn’t bode well for future macroeconomic and monetary cooperation in the G20.

The second issue is the redefining of global governance responsibilities. Europe’s huge over-representation in international organisations like the IMF and World Bank has long irritated the rest of the world, and so far, the G20 has achieved no progress on this. An even more difficult question is whether the emerging world is ready to take part in fully in the fashioning of new global rules. Again, China’s answer will be key; for all the talk of G2, Beijing still seems very reluctant to take on its full share of global responsibilities. It will still be a poor country when it overtakes the U.S. as the world’s leading economic power, and right now it lacks the human resources to play a full role in international financial diplomacy. China is also afraid of being made co-responsible for decisions it will have little ability to influence.

The upshot of all this is that after a brilliant start, global cooperation and governance may disappoint in the years ahead, even though is to be hoped that the acquis of 2008-2009 will provide the basis for its further development.

 

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Iain Begg	Global governance could take a leaf from the EU's book
Leszek Balcerowicz	Worldwide reform means engaging public opinion first
Robert Hutchings	Why U.S.-EU economic co-operation holds the key to global governance
Paul Tucker	Ending boom and bust: The case for macroprudential instruments
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C. Fred Bergsten	The global crisis has accelerated governance reform
Daniel Daianu	G20 could turn into a global economic security body
Kemal Dervis	G20 should increase the legitimacy of the international institutions
Jirí Dienstbier	Nation states cannot meet the challenges of deregulated globalisation
William Drozdiak	An alternative is regional institutions to act in the service of global governance
Monica Frassoni	The only global governance model that would work is federal
Angel Gurría	G20 could give the momentum needed to usher in unprecedented international co-operation
Danuta Hübner	The dynamics of crisis have fundamentally altered the global financial system
Wolfgang Ischinger	We need fundamental reform of the international institutions
Sandra Kalniete	Global governance requires predictable and fair funding
Sergei A. Karaganov	Despite its decline, Europe will be a shining example of how the world should be governed
Kishore Mahbubani	Europe provides both the problem and the solution to reforming global governance
Reza Moghadam	We at the IMF have already begun the process of reconciling effectiveness and legitimacy
Hans-Gert Pöttering	The European Parliament must play a central role if we want a democratic model of global governance
Jiang Shixue	China would never accept the idea of a G2
Danilo Türk	We need global institutions capable of making international co-operation inclusive
Guy Verhofstadt	Integration that transcends borders is the logical response to 21st century realities
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