New Global Economic Architecture
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New Global Economic Architecture

The Asian Perspective

Edited by Masahiro Kawai, Peter J. Morgan and Pradumna B. Rana

The global financial crisis of 2007-2009 exposed flaws and shortcomings in the global economic architecture, and has sparked an international debate about possible remedies for them. The postwar global architecture was essentially guided by the major developed economies, and was centered around the IMF, the GATT – the predecessor of the WTO – and the World Bank. Today, however, the balance of economic and financial power is shifting toward the emerging economies, especially those in Asia, and both global governance and economic policy thinking are beginning to reflect this shift. This book addresses the important question of how a regional architecture, particularly one in Asia, can induce a supply of regional public goods that can complement and strengthen the global public goods supplied through the global architecture. These public goods include institutions to help maintain financial stability, support more open trading regimes and promote sustainable economic development.
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Chapter 2: From a centralized to a decentralized global economic architecture: an overview

Pradumna B. Rana


The Asian Financial Crisis of 1997–98 led to calls for a new international financial architecture and discussions focused on crisis prevention, crisis management and crisis resolution efforts (see Kawai and Rana, 2009). The global economic crisis (GEC) of 2008–09, which was initially expected to be the worst crisis since the Great Depression of the 1930s, likewise led to calls for a New Bretton Woods (NBW) system – a wider and much more comprehensive set of reforms of the global governance system and international economic institutions (IEIs), similar to the remarkable 1944 Bretton Woods conference where the World Bank, the International Monetary Fund (IMF) and the General Agreement on Tariffs and Trade (GATT), the predecessor of the World Trade Organization (WTO), were established. In the post-global economic crisis (GEC) period, a number of academics and politicians have made calls for an NBW. These include Stiglitz (cited in Bases 2008) and Sarkozy and Brown (cited in Kirkup and Waterfield 2008). The central bank governor of the People’s Republic of China (PRC), Zhou (2009), has also made a pitch for a new reserve asset; and the World Bank President, Zoellick (2010), has called for a return to a modified gold standard. Supporting the need to return to a modified gold standard, Mohamad (2012) has called for an NBW with poor countries well represented. So far, a number of proposals to reform the global economic architecture (GEA) – the configuration of institutions for global economic governance – have been implemented.

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