Edited by Julio Faundez and Celine Tan
Chapter 3: Multilateral Disciplines and the Question of Policy Space
3. Multilateral disciplines and the question of policy space Yilmaz Akyüz* INTRODUCTION 1. After a relatively short-lived, win-win hype about globalization, there is now a widespread concern among developing countries that their ability to control their economic and social development is increasingly circumscribed by their global economic integration. On the one hand, many of the policy instruments widely used by both mature and late industrialisers to reach their current levels of development are no longer available because of international rules and obligations and rapid liberalisation and opening up. On the other hand, increased reliance on global markets is not generating broad-based improvements in living conditions. This concern has grown as the promises of free market reforms advocated by the Bretton Woods institutions (BWIs) and the benefits claimed from the rules-based multilateral trading system have failed to materialise for large segments of the population in the developing world. Rapid integration into the global economic system diminishes national policy autonomy in two ways. First, liberalisation of markets and dismantling of restrictions over cross-border movements of goods and services, money and capital render economic performance highly susceptible to conditions abroad and weaken the impact of national policy instruments over macroeconomic and development policy objectives. Second, international rules and obligations diminish sovereign control over national * Special Economic Advisor, South Centre, Geneva, Switzerland. This chapter is an abridged version of Akyüz (2009) as a background paper for Trade and Development Report, 2006. The author is grateful to Bhagirath Das, Martin Khor, Richard Kozul-Wright,...
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