Asian Regionalism in the World Economy

Asian Regionalism in the World Economy

Engine for Dynamism and Stability

Edited by Masahiro Kawai, Jong-Wha Lee, Peter A. Petri and Giovanni Capanelli

The structure and policy architecture of the world economy, as it emerges from the historic challenges now underway, will be affected by the dramatic rise of Asian economies and deepening connections among them. This important book examines the rapid transformation of the Asian economy, the challenges it faces, emerging regional solutions, and how Asia can play a more constructive role in the global economy.

Chapter 13: Asia in Global Governance: A Case for Decentralized Institutions

Masahiro Kawai, Peter A. Petri and Elif Sisli Ciamarra

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics


13. Asia in global economic governance: a case for decentralized institutions Masahiro Kawai, Peter A. Petri and Elif Sisli Ciamarra* 13.1 INTRODUCTION The global economic crisis has refocused attention on the governance of international economic institutions (IEIs), including especially the IMF. Although IEIs were invisible in the early stages of the crisis, there is growing agreement that they should be more central in managing and averting crises in the future. The IMF received special attention in the 2009 London summit, but remains the ‘third rail’ in the politics of many developing countries due to its role in the 1997–98 Asian crisis. Given the need to restore the IMF’s credibility, much recent work1 has focused on what Edwin Truman has called the ‘chairs and shares’ issues – concrete changes in the IMF’s management, staffing and voting structure. Less acute but also difficult challenges face other IEIs, such as the World Bank, the WTO and the proposed Financial Stability Board. This chapter examines IEI reforms from an analytical perspective – based on the theory of clubs – that highlights structural challenges in international economic governance. It identifies a ‘governance trilemma’ that makes it difficult for IEIs to be universal, democratic and effective at the same time. Reforms in chairs and shares are important, but do not resolve the trilemma and are not likely to make IEIs adaptable to the demands of a rapidly changing world economy. More systemic innovations will be needed. One promising strategy is to transform current IEIs into institutions (or families...

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