Challenges to the World Bank and IMF: Developing Country Perspectives (Anthem Frontiers of Global Political Economy, 1, Band 1) - Softcover

Softcover

ISBN 10: 1843311410 ISBN 13: 9781843311416

Verlag: Anthem Press, 2003

Inhaltsangabe

Bringing together some of the foremost authorities in their fields, this book is the result of work carried out on behalf of the G24, the world's only research effort devoting to furthering the interests of developing countries and bringing their needs to global attention. The book gives a voice to the developing nations of the world through its powerful essays and its fresh perspective.

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Edited by Ariel Buira, with a Foreword by Dani Rodrik

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‘Nowhere is the voice of the developing nations expressed as cogently and powerfully as in these fresh and controversial essays.’  Dani Rodrik, Professor of International Political Economy, John F Kennedy School of Government, Harvard University    ‘Incisive and powerful… Challenges to the World Bank and IMF is a unique book, providing the reader with a collection of highly professional papers from the perspective of developing countries, covering their economic problems and their relations with International Financial Institutions.’  Claudio M Loser, Inter-American Dialogue    ‘This is a very refreshing and thorough critique of today’s development orthodoxy represented by the World Bank and the IMF. The combination of iconoclastic perspectives and detailed knowledge of the subject matter makes it particularly powerful.’  Ha-Joon Chang, Director of Development Studies, University of Cambridge    ‘This is a challenging and timely book by a distinguished cast of scholars, analysing the philosophy, governance, political economy and effectiveness of the two premier global economic institutions. It robustly criticizes their unquestioning reverence for free markets, their political economy and governance, and their methodology and effectiveness. Of the recent analysis of the two institutions, this is clearly one of the most rigorous, balanced and coherent. A “must” for development specialists and students.’  Sanjaya Lall, Professor of Development Economics, International development Centre, University of Oxford    This unique book examines some of the most burning issues on the global economic agenda in the world today. Bringing together some of the foremost authorities in their fields, this volume challenges the existing mechanisms for governance of the world economy.    The chapters in this book consider the current approaches of the World Bank and IMF, and offer alternative proposals for the effective participation of developing countries in these institutions. In doing so, the volume ranges from discussions on reforming the IMF and its conditionality, the operations of financial markets, debt workouts and restructuring, management of capital flows, debt sustainability and insurance against crisis, to Millennium Development Goals and the global partnership development.

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Challenges to the World Bank and IMF

Developing Country Perspectives

By Ariel Buira

Wimbledon Publishing Company

Copyright © 2003 Ariel Buira
All rights reserved.

ISBN: 978-1-84331-141-6

Contents

Contributors to this volume, ix, 
Foreword DANI RODRIK, ix, 
Introduction ARIEL BUIRA, 1, 
1. The Governance of the IMF in a Global Economy ARIEL BUIRA, 13, 
2. Who pays for the IMF? AZIZ ALI MOHAMMED, 37, 
3. An Analysis of IMF Conditionality ARIEL BUIRA, 55, 
4. Achieving Long-Term Debt Sustainability in Heavily Indebted Poor Countries (HIPCs) BERNHARD GUNTER, 91, 
5. The Poverty Reduction Strategy Paper Approach: Good Marketing or Good Policy? JIM LEVINSOHN, 119, 
6. Capital Management Techniques in Developing Countries GERALD EPSTEIN, ILENE GRABEL AND KS JOMO, 141, 
7. International Reserves to Short-Term External Debt as an Indicator of External Vulnerability: The Experience of Mexico and Other Emerging Economies JAVIER GUZMAN AND RODOLFO PADILLA, 175, 
8. Mechanisms for Dialogue and Debt-Crisis Workout that Can Strengthen Sovereign Lending to Developing Countries BARRY HERMAN, 203, 
9. Developing a Global Partnership for Development MARTIN KHOR, 227, 
10. International Financial Institutions and International Public Goods: Operational Implications for the World Bank RAVI KANBUR, 251, 
Index, 267, 

CHAPTER 1

THE GOVERNANCE OF THE IMF IN A GLOBAL ECONOMY

Ariel Buira

Abstract

The chapter reviews the elements that constitute the power structure (basic votes, quotas and the qualified majorities) by which the IMF is governed, following the commitment made by all participants in the Monterrey Consensus to increase the voice and participation of the developing countries and transition economies in the Bretton Woods institutions.

It finds that the small economies have been marginalized as a result of the relative erosion of basic votes and that quotas are far from representative of the size of members' economies. As a result, developing economies are under-represented while certain industrial countries, notably those in Europe, are over-represented. It finds that the governance of the IMF does not meet the standards of transparency and accountability needed to ensure the legitimacy of its decisions and the proper use of the resources at its disposal.

Finally, the question is addressed of how the decision-making process can be reformed to attain political legitimacy without weakening the credibility in financial markets.

1. Introduction

Following the commitment of all participants in the Monterrey Consensus to increase the voice and participation of developing countries and transition economies in the Bretton Woods Institutions, the issue of governance has come to the fore of the IMF and World Bank. The Monterrey commitment was renewed in the IMFC and Development Committee communiqués of 12–13 April 2003, and has been reflected in recent administrative steps to strengthen the capacity of African constituencies.

Moreover, since 1997, following the Executive Board's approval of the Guidance Note on Governance, the IMF has increased its attention to governance issues among its member countries. The promotion of transparency and accountability are at the core of the IMF's efforts to ensure the efficient use of public resources, as well as the domestic ownership of IMF-supported reform programs. In recent years the IMF has developed instruments to help countries identify potential weaknesses in their institutional and regulatory frameworks that could give rise to poor governance, and to design and implement remedial measures well beyond the extent envisaged in 1997.

With resources of over $300 billion and an expanded mandate, the IMF is possibly the most powerful of all international institutions. In view of its great influence, two questions on the quality of its own governance arise:

1. How to attain the adequate voice and representation of all members in the decision-making process of the institution?

2. Does the IMF meet the standards of transparency and accountability needed to ensure the legitimacy of its decisions, the ownership by member countries of the programs it supports and the proper use of the public resources at its disposal?

Since the power structure of the World Bank closely parallels that of the IMF, the fundamental question to be addressed, in this connection, is this: how can the decisions of these international financial institutions (IFIs) attain political legitimacy and help secure a greater ownership of economic programs without weakening their credibility in financial markets or their efficiency in attaining their policy goals?

To answer these questions, one must first understand the IMF's voting structure and the rules by which it is governed. This requires a review of the role of basic votes and quotas in the determination of the current distribution of voting power and the requirements of special majorities and how they affect political control and accountability.

2. Votes and decision-making

At the Bretton Woods Conference in 1944 a compromise solution was adopted between two proposed approaches for determining voting power: one that related it solely to members' contributions or quotas, and the other that based it solely on the legal principle of the equality of states. The compromise reached based voting rights on a combination of the two: it gave each member country one vote for every $100,000 of quota plus 250 basic votes. Basic votes, and the voice in decision-making they give smaller countries, were also considered to be necessary in view of the regulatory functions of the IMF in certain areas.

But, with the nearly 37-fold increase in quotas since then, the share of basic votes in the total has declined from 11.3 to 2.1 per cent, despite the quadrupling of the IMF's membership. This has substantially shifted the balance of power in favor of large-quota countries, away from the compromise agreement contained in the IMF's Articles of Agreement that sought to protect the participation of small countries in decision-making. With the passage of time, inflation and growth have combined to increase the size of quotas, but as the number of basic votes has remained constant, small countries' participation in the total has declined; indeed, the basic votes of original members fell to 0.5 per cent of total votes. Today, as a result, quotas ('shares' in the case of the World Bank) are virtually the sole determinant of voting power, and basic votes have little significance. Consequently, the voice of small countries in discussions has been substantially weakened and their participation in decision-making made negligible. The developing countries have advocated the need to increase the number of basic votes to maintain a better balance in decision-making, to no avail.

Box 1 reviews two extreme options for the reform of the 'voting' structure of the IMF.

Box 1. Extreme options for the reform of the IMF Voting structure

One country one vote

Applying the principle of the legal equality of states, which is the rule in most international institutions, there would be no weighted voting; all members would have the same say in the affairs of the institution. However, states differ greatly in size and economic power. Thus, if all financial contributions to the IMF were equal, they would have to be set at a very low level – a minimum common denominator – to be accessible to all...

Details zur Ausgabe

• Verlag: Anthem Press
• Erscheinungsdatum: 2003
• Sprache: Englisch
• ISBN 10: 1843311410
• ISBN 13: 9781843311416
• Einband: Taschenbuch
• Anzahl der Seiten: 288
• Herausgeber: Buira Ariel
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: preigu; mail@preigu.de; ; Lengericher Landstr. 19; Osnabrück; 49078; Deutschland