The EU and the Governance of Globalisation. Bruegel Working Papers, 2006/02, September 2006

Bruegel Scholars Alan Ahearne, Jean Pisani-Ferry, André Sapir and Nicolas Véron contributed this paper to the project Globalisation Challenges for Europe and Finland organised for the secretariat of the Economic Council of Finland. The project is part of Finland's EU presidency programme and its objective is to add momentum to the discussion in the European Union on golbalisation, Europe's competitiveness policy and the Lisbon Strategy

The search for Columbus’ egg - finding a new formula to determine quotas at the IMF

The International Monetary Fund (IMF) is undergoing profound changes, not only in its policies, but also in its internal governance. These changes reflect the structural developments in the global economy, and in particular the growing role of emerging economies that demand a greater say at the Fund. In addition, the Fund has recognised that it needs to strengthen the voice of developing economies in order to increase ownership of IMF programmes and policy recommendations from this very large country group. At the heart of IMF governance lies the distribution of its quota: quotas are the percent share at the IMF that are attributed to the various members. Quotas play a central role in the Fund, because they determine not only member countries’ financial contributions, but also their rights to draw on IMF financial support and their voting rights within the institution. Therefore, quotas are essentially a matter of representation, visibility, and influence of countries at the IMF. Quotas are being calculated as a function of various economic variables and also include a certain degree of judgement. This paper provides a systematic analysis of the way IMF quota have been calculated in the past and of the current challenges of reform. It shows the importance for individual variables for specific country groups and the sensitivity of changes in the formula of overall distribution. The paper provides an extensive and comprehensive overview of various technical issues involved in choosing an appropriate quota formula. It analyses the current quota system and its functioning, and shows which countries and groups are most under and over-represented. It also puts forward an analysis of the various avenues of quota-reform that are currently under discussion.

The EU and the governance of globalisation

Alan Ahearne, Jean Pisani-Ferry, André Sapir and Nicolas Véron contributed this paper to the project "Globalisation challenges for Europe and Finland" organised for the secretariat of the Economic Council of Finland. The project is part of Finland's EU Presidency programme and its objective is to add momentum to the discussion in the European Union on globalisation, Europe's competitiveness policy and the Lisbon Strategy.

Leaving the nest: the rise of regional financial arrangements and the future of global governance

This article examines the impact of regional financial arrangements (RFAs) on the global liquidity regime. It argues that the design of RFAs could potentially alter the global regime, whether by strengthening it and making it more coherent or by decentring the International Monetary Fund (IMF) and destabilizing it. To determine possible outcomes, this analysis deploys a ‘middle‐up’ approach that focuses on the institutional design of these RFAs. It first draws on the rational design of institutions framework to identify the internal characteristics of RFAs that are most relevant to their capabilities and capacities. It then applies these insights to the interactions of RFAs with the IMF, building on Aggarwal's (1998) concept of ‘nested’ versus ‘parallel’ institutions, to create an analytical lens through which to assess the nature and sustainability of nested linkages. Through an analysis of the Chiang Mai Initiative Multilateralization (CMIM) and the Latin American Reserve Fund (FLAR), the article demonstrates the usefulness of this lens. It concludes by considering three circumstances in which fault lines created by these RFAs’ institutional design could be activated, permitting an institution to ‘leave the nest’, including changing intentions of principals, creation of parallel capabilities and facilities, and failure of the global regime to address regional needs in a crisis.The authors would like to thank Veronica Artola, Masatsugu Asakawa, Ana Maria Carrasquilla, Junhong Chang, Paolo Hernando, Hoe Ee Khor, Kazunori Koike, Jae Young Lee, Ser-Jin Lee, Guillermo Perry, Yoichi Nemoto, Freddy Trujillo, Masaaki Watanabe, Yasuto Watanabe, Akihiko Yoshida, and others who wished to remain anonymous, for their generosity in providing in-person interviews. Further, the authors would like to thank various central bank and ministry of finance officials of both FLAR and CMIM member countries. We also thank Jose Antonio Ocampo, Diana Barrowclough, and participants in the 'Beyond Bretton Woods' Workshop at Boston University (where an earlier version of this article was presented in September 2017) for their feedback on our broader research projects on RFAs. Last but not least, the authors wish to thank the anonymous referees for their constructive comments. This work builds upon previous work funded by UNCTAD and the Global Economic Governance Initiative at the Global Development Policy Center at Boston University. (UNCTAD; Global Economic Governance Initiative at the Global Development Policy Center at Boston University)Accepted manuscrip

The Evolution of Economic Governance in EMU

This paper examines the benefits of co-ordination in EMU in a stylised manner and how these benefits have shaped the co-ordination framework in EMU. It then discusses in detail the co-ordination experience in four areas that are particularly important for the functioning of EMU: (i) fiscal policy co-ordination under the Stability and Growth Pact (SGP); (ii) the co-ordination of structural policies under the Lisbon Strategy for Growth and Jobs; (iii) the representation and co-ordination of euro-area positions in international financial fora; and (iv) the co-ordination of macroeconomic statistics. The thrust of the findings is that EMU's system of economic governance has, overall, proven fit for purpose. The current policy assignment to the institutions and instruments that govern the conduct of economic policy in EMU is sound, even though further progress is necessary in several areas, particularly as regards external representation.Governance, EMU, euro area, co-ordination, van den Noord, D�hring, Langedijk, Nogueira-Martins,Pench, Temprano-Arroyo, Thiel

Global governance: an agenda for Europe

Governance of the global economy is becoming a pressing matter and the situation is compounded by the growing number and diversity of players in the global economy. The authors argue that Europe is now in a position to take a leading role. Not only is it in Europeâ??s interest to reform the global governance system, but it also has the experience necessary to do so. The vacuum created by the seeming reluctance of the US to drive the agenda forward could be filled by the European Union.

The Role of the Emerging Countries in the G20: Agenda-setter, Veto Player or Spectator? Bruges Regional Integration & Global Governance Paper 2/2011

In 2008, the G20 convened for the first time at leaders’ level, making emerging countries such as China, India and Brazil permanent members of an informal gathering at the highest political level. The aim of this paper is to refine previous assessments on the role of these emerging countries in the new G20. We first analyse the preferences of the United States and European members as a proxy for G8 positions and then juxtapose them with the preferences of China, India and Brazil as representatives of the emerging countries within the G20. We find that the latter share in particular the concern for more voice in global economic governance but – due to often heterogeneous preferences – do not generally act as a bloc. Moreover, by comparing their preferences with G20 outcomes, the paper investigates to what extent the emerging countries have agenda-setting or veto power, or whether they are taking a back-seat role among the G20 countries. We show that they are not mere spectators but have a certain agenda-setting power, especially when they are able to forge coalitions or hold the presidency

Comparing the 'Four Pillars' of Global Economic Governance: A Critical Analysis of the Institutional Design of the FSB, IMF, World Bank, and WTO

Why are the intergovernmental organizations referred to as the ‘four pillars’ of international economic governance designed the way they are? Although much of their institutional design—issues like voting, membership, mandate, and funding—can be traced back to the history of the organization and the circumstances in which states established it, the institutional setup of each organization should ideally correspond with the type of public good it seeks to provide. Formal organizations like the World Trade Organization (WTO) are treaty-based, requiring strict conditions for membership and a high degree of legal rules and enforcement. They were also established to carry out a specific function, such as balance of payment issues for the International Monetary Fund (IMF). Bodies such as the Financial Stability Board (FSB), the new player in the field of economic governance, are less formal, and are concerned with monitoring, advising, and coordination of regulatory efforts. In some cases, the roles of these organizations have expanded into new areas, or they have had functions replaced by other international bodies, especially in the wake of events such as the 1997 and 2008 financial crises. This article seeks to understand how the design of these institutions is influenced not only by the states that established them, but also by the overarching goals the organization seeks to achieve, and its place within the broader framework of global economic governance. The article begins by comparing the institutional design of the IMF, the WTO, the World Bank, and the FSB. It compares the organizations’ legal basis, membership, organs, and decision-making processes, as well as the methods by which they develop and enforce rules for the global economy. The article examines how these very different institutional setups relate to the goals of each organization. How has the design and function of these organizations changed over time, and to what extent has this change been due to the changing role of the organization, especially in light of events such as the 1997 and 2008 financial crises? Particular emphasis is given to the level of formality with which these organizations operate—when does the organization require strict rules regarding funding, voting, and membership, and when are more informal processes more appropriate? Finally, the article seeks to understand to what extent these organizations, despite their differences in terms of mandate, structure, and methods are able to work together effectively and develop policies that are mutually consistent. An understanding of these dynamics will be useful in further discussions about how these organizations might be designed and structured better in order to address the challenges facing the global economy