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2014 | OriginalPaper | Chapter

6. Developmental States in the Bretton Woods Institutions

Author : Sandra Heep

Published in: China in Global Finance

Publisher: Springer International Publishing

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Abstract

This chapter examines the role of developmental states in the Bretton Woods institutions. Section 6.1 portrays the structures of power within the IMF and the World Bank by analyzing the distribution of voting shares, the contribution of funds and the composition of staff and management. Section 6.2 examines Japan’s attempts to increase its institutional financial power and its challenge to the Washington Consensus in the 1980s and 1990s. Section 6.3 assesses China’s institutional financial power by analyzing its increasing voting share in the Bretton Woods institutions, examining its growing financial contributions and considering its improving representation among staff and management. In addition, it sheds light on the policies that China has been promoting in the IMF and the World Bank. Section 6.4 compares China’s policies towards the IMF and the World Bank with the policies of the Japanese developmental state.

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Footnotes
1
The World Bank Group comprises the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). In this book, “World Bank” refers to the IBRD.
 
2
The General Arrangements to Borrow (GAB), established in 1969 and comprising 11 industrial countries, can only be activated if the participants of the NAB have refused its activation. In addition to the expansion of the NAB, the IMF has signed bilateral loan and note purchase agreements with some of its member countries. In the case of NAB participants with bilateral credit lines, the latter are included in the total resources made available to the IMF under the NAB (IMF 2012c).
 
3
In addition to donor contributions worth SDR 21.1 billion (USD 31.7 billion), this amount includes reflows from credit repayments and IBRD transfers (World Bank n.d.-d).
 
4
Section 6.1.3 largely follows Woods (2003b: 108–110).
 
5
The remainder of this section largely follows Wade (1996).
 
6
The plan is only available in Japanese.
 
7
As Wade (1996: 10, footnote 13) has pointed out, this was the OECF’s first Occasional Paper in the 30 years of its existence.
 
8
In the case of the Thai rescue package, 55 % of the total funds were provided by Asian nations, including 23 % provided by Japan, while the IMF also provided 23 % (Lipscy 2003: 101).
 
9
Even though Japan did not realize its proposal to set up a regional alternative to the IMF, the general idea guiding its plan was present in Japan’s New Miyazawa Initiative and continues to live on in the currency swap arrangement among Japan, South Korea, China and the members of ASEAN known as the Chiang Mai Initiative.
 
10
In the new formula, average of GDP accounts for a weight of 50 %, economic openness for a weight of 30 %, economic variability for a weight of 15 % and reserves for a weight of 5 % (IMF 2008).
 
11
To a lesser degree, the quota shares of the US and other emerging markets were also affected by the shift (IMF 2010a).
 
12
Even though in the Chinese press it was frequently argued that the purchase of SDR-denominated bonds would contribute to the diversification of its dollar-dominated foreign exchange reserves, the bonds were to be paid for in renminbi.
 
13
China does no longer receive funds from the IDA, but continues to borrow from the IBRD.
 
14
Data on the distribution of professional and managerial World Bank staff by nationality are only available for internal use. According to the Annual Report 2011 that provides information on the distribution of World Bank staff by region, staff from East Asia and Oceania amounted to 14 % of total staff (World Bank 2011: 26).
 
15
The authors argue that the use of capital controls is justified “if the economy is operating near potential, if the level of reserves is adequate, if the exchange rate is not undervalued, and if the flows are likely to be transitory” (Ostry et al. 2010: 5).
 
16
According to Ramo, the key elements of the Beijing Consensus are innovation, sustainability and equality and self-determination. However, as Scott Kennedy (2010: 461) has pointed out, Ramo’s idea of a Beijing Consensus is “a misguided and inaccurate summary of China’s actual reform experience.” For more illuminating analyses of China’s development experiences and the question of their replicability see Huang (2011) and Naughton (2010).
 
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Metadata
Title
Developmental States in the Bretton Woods Institutions
Author
Sandra Heep
Copyright Year
2014
Book
China in Global Finance

Print ISBN: 978-3-319-02465-3

Electronic ISBN: 978-3-319-02466-0

Copyright Year: 2014

DOI
https://doi.org/10.1007/978-3-319-02466-0_6