The Governance of Economic Globalisation and the Neoliberal Agenda of the International Financial Institutions

Victoria Capoferri (2012)

Introduction

This paper is a brief analysis of the overall performance of global governance. In spite of the presence of an extensive framework, global governance has often proved not to be effective: its progress has been slow and agreement among countries hard to reach. More issues that are typically global in their nature – such as food pandemics, AIDS/HIV, drug trafficking, trans-planetary monetary flows and financial crises – have multiplied, and many are far from being resolved. Furthermore, the dominant position of the industrialised countries has often resulted in a lack of democracy, due to their influence in setting the global agenda, and in determining the actions to respond to those issues. Some examples of the mismanagement of the global issues will be provided, stressing the lack of democracy at the global level and introducing the theme of economic globalization. The latter part of the article discusses economic globalisation of a neoliberal kind, and the rise of inequality particularly by referring to the developing world. Neoliberalism, the dominant economic model since the 1980s, spurred a rapid economic growth in many countries. However, economic globalisation widened the gap between rich and poor, and poverty remains a serious issue that needs to be addressed by global governance bodies. Thus, a critique of the neoliberal approach, supported and guided by the International Financial Institutions (IFIs), will be presented.

Conclusion

Economic globalisation has been governed to accommodate the interests of the western countries. Economic and Financial institutions have been established to respond to market failures and to support the growth of the poorest countries. The governance approach of the World Bank and IMF adjusted economies to meet short-term gains and objectives of the more powerful western economies. The fundamental misconception of the Washington Consensus us the “one size fits all” approach. Globalisation cannot imply uniformity, diversity is present among the countries, and thus a more country specific approach is required. Particularly, without the acknowledgment of the necessity of socially oriented policies, the developmental strategies applied so far will not be effective to eradicate poverty and fight inequality. The structure of the Bretton Woods institutions should also be reformed as the LDCs are scarcely represented and do not have sufficient influence in the decision making process. In the globalized era, issues that one country is facing can affect apparently remote regions. A more equitable distribution of the resources would reduce poverty and improve the capacity and effectiveness of the states in addressing and containing the effects of issues that could turn global. Economic decisions directly affect people’s lives. Therefore the reduction of inequality is a duty of the global governance institutions, crucial to achieve social progress, from which the global community as a whole could benefit.

 

 

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