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 9: The World Bank and the Asian Development Bank: should Asia have both?

Vikram Nehru


The World Bank and the Asian Development Bank (ADB) face three sets of challenges: those that are common to others in the official development finance community; those that are common to the World Bank’s relations with other multilateral regional development banks (the European Bank for Reconstruction and Development, the African Development Bank and the Inter-American Development Bank), several multilateral subregional development banks, and multilateral financial institutions (MFIs); and finally, those related to operating as multilateral development banks in the most dynamic region in the world: Asia. This chapter examines all three challenges and asks whether it may be an opportune time to rethink the configuration of the world’s multilateral development banking system. The current configuration – like the rest of the global aid architecture – has grown organically, responding to emerging challenges with new institutional and procedural “fixes”. The result is a complex and unwieldy set of institutions that, despite their best efforts at coordination and cooperation, sometimes work against each other and often add to the administrative burden of the member governments they serve. The chapter begins with an overview of how a rapidly changing world is altering development priorities and giving rise to new development challenges that are stretching the capabilities of the development community, including development finance institutions. Section 9.3 describes the roles of the World Bank and ADB in Asia, provides some comparisons, notes their overlapping responsibilities, and explains current approaches to coordination and cooperation.

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