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2018 | Buch

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The Governance Structures of the Bretton Woods Financial Institutions

A Case of "Beggar-Thy-Neighbour"

verfasst von: Ahmed Naciri

Verlag: Springer International Publishing

Buchreihe : SpringerBriefs in Economics

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book uses institutional data to examine and analyze the current governance structures of Multilateral Financial Institutions (MFIs) with the ultimate goal of reforming MFI governance models to be more responsive to the needs of developing countries. Founded in the post-World War II era, MFIs, collectively known as the Bretton Woods Financial Institutions (BWFIs), were created to promote global economic development and financial stability. This book argues, however, that the governance structures and policies of the MFIs have been biased in favour of developed country members, excluding less economically advanced countries from decision-making processes and perpetuating the economic status quo. Considering the inability of MFIs to adequately respond to the financial needs of developing countries, the book raises an alternative proposal for BWFI reform, based on the following criteria: (i) encouraging development incentives, (ii) favouring development learning through knowledge transfer and easing its appropriation by developing countries, and (iii) guiding and facilitating access to private international financial markets. Combining historical economic analysis with policy recommendations for the future, this book will be of particular interest to students and researchers of development economics, governance, and MFIs, as well as practitioners working with the institutions studied.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Overview: Historical Development of International Financial Institutions, Development Assistance and Conceptual Issues

Abstract

Although Bretton Woods Financial Institutions (BWFIs) and the global fight against poverty programs play an extremely impacting role at the international financial environment and their action covers the entire spectrum of development finance and proves to be one of the main sources of world development assistance, there is, among the general public, insufficient in-depth knowledge about them. Consequently, there is, an increasing demand for improvement of their transparency and governance. It is commonly believed that, as global public institutions and development assistance administrators, BWFIs ought to be accountable to the world public and should act in its common welfare. The governance track record of BWFIs may, however, seem far from perfect (Bank watch network), This book studies the governance of BWFIs and global assistance programs, only to conclude that the problem appears to be neither solely with the governance of BWFIs nor solely with the quality of development assistance programs; rather, the problem seems to be with the way these marvellous creations of the 1940s are managed and poor countries are governed.

Ahmed Naciri

Chapter 2. Poor and Developing Environment

Abstract

Poverty and underdevelopment in the world today manifest themselves as a multidimensional phenomenon that strikes victims of malnutrition, privation, exclusion, diseases, and other avoidable evils. Poverty and underdevelopment also considerably reduce poor people’s life expectancy and harden their quality of living. Although the percentage of poor people is steadily declining, as of the year 2016 it was estimated that as much as 10% of the world’s population was living in serious poverty. Concerned with the misery and underdevelopment of the world, the crafters of Bretton Woods established in 1944 multilateral financial institutions and later initiated the development assistance movement (DAM) with the sole objective of fighting poverty and exclusion and promoting economic development. They were aiming for global shared well-being, particularly with countries and territories considered in unbearable insufficiencies. This original solidarity momentum was recently confirmed by the United Nations (UN) in their 2015 report on the Millennium Development Goals (MDG), which set itself the objective of ending all forms of poverty by the dawn of 2030, but which was also seriously questioned by opponents. “The most pressing economic problem of our time is that so many of what we usually call ‘developing economies’ are, in fact, not developing” (Friedman 2002).

Ahmed Naciri

Chapter 3. Bretton Woods Institutions Within the International Financial Architecture for Development

Abstract

The Bretton Woods Financial Institutions (BWFI), established by the 1944 Bretton Woods Agreement (BWA), form a complementary web of international financial organizations composed of the International Monetary Fund (IMF), the World Bank Group (WBG) and regional development banks (RDB). They have the collective aim of the carrying of Bretton Woods spirit, by actualizing the promotion of economic development of their respective membership and the fight against poverty in suffering environments. They play a strategic global financial intermediation role within the international financial architecture. Despite their close links with the United Nations (UN) system, BWFIs are independent from the UN in terms of decision-making processes, sources of funding, and administration and budget. All Bretton Woods institutions are, however, submitted to the United Nations Security Council’s agreed-upon guidelines, but they are not subjected to the United Nations General Assembly nor to one of its agencies’ decisions.

Ahmed Naciri

Chapter 4. Governance of Bretton Woods Financial Institutions

Abstract

Understanding the governance of Bretton Woods Financial Institutions (BWFI) may help illuminate their role in funding global development and fighting poverty, and may allow the assessment of their effectiveness in fulfilling their mandate. The number of votes to which each member country is entitled in the decision making of the BWFIs is crucial to the institutions’ current operations, and to their future. The governance of BWFIs is constantly subject to harsh critics, specifically and most seriously the so-called 15% rule, where only 15% of votes are required to be owned by any member to block any decisions at institutions Board meetings. Not any country member is, however, permitted to own such a number of shares, and many country members have tried unsuccessfully. Consequently, decision-making at BWFIs is structurally monopolized by a club of a handful members. This situation has made reform of the governance of institutions, a constant demand, aim to give more voice to poor and emerging economies, which are constantly underrepresented, despite their growing weight within the global economy.

Ahmed Naciri

Chapter 5. Regional Development Banks Within the International Financial Architecture for Development

Abstract

Regional development banks (RDBs) were established based on the World Bank’s business model and have been assigned a similar objective of assisting development with particular emphasis on the respect of regional particularities and needs. In addition to main donor countries, the shareholders of RDBs are regional member countries. Overtime two distinct categories of regional development banks have come into being: the group of World Bank obedient RDBs and the group of those with a weaker affiliation to the World Bank. The accelerating trend of creating new, competing regional institutions makes it eventually essential to reconsider the role of the whole RDB system.

Ahmed Naciri

Chapter 6. Governance Structure of Regional Development Banks

Abstract

Most of the regional development banks (RDBs#1 and RDBs#2) share many of the same features. All provide loans and grants at favourable and on market term conditions to various developing countries and sectors (Ottenhof 2011). They also face similar criticisms to those expressed with regard to BWFIs, in particular that their decried governance models lead to an “unfair” voting system (Carrasco et al. 2009). Eventual weaknesses in governance of the RBDs’ decision making can affect their efficiency in managing development assistance. Two key questions come to mind: First who, within RDBs, controls the allocation of funds? And second, whether funds’ allocation decisions could be made in a more democratic way?

Ahmed Naciri

Chapter 7. Development Assistance Movement Within the International Financial Architecture for Development

Abstract

The early 1930s witnessed several reactions to the misery in the world and to the financial crisis caused by the Great Depression. It was not until the end of the Second World War, however, that the urgency of fighting poverty and stabilizing the international financial system prevailed and with it the desire to keep past mistakes from surfacing again. Such a desire ultimately led to the Bretton Woods Conference, originally and mostly looking for setting the rules for trade and financial relations between the signatory countries; it has, however, paved the way for a more ambitious project of a new international financial architecture, which favours development assistance and collaboration. Although the Bretton Woods movement was originally aimed at rebuilding the European economies destroyed by war, it quickly took the form of a fight against poverty and underdevelopment in countries newly escaping colonial yoke. This movement culminated with the advent of the Official Development Assistance (ODA) program, introduced by the Development Aid Committee (DAC) of the OECD. Though trillions of dollars were spent by the international community on development assistance for the fight against poverty, the results appear to be mitigated.

Ahmed Naciri

Chapter 8. Empirical Assessment of Official Development Assistance Efficiency

Abstract

Over the last half century, trillions of official aid funds have been spent in official development aid, ODA and World Bank Group Assistance (WBGA), and some believe the world is nowhere closer to achieving the promised elimination of poverty and development advance (Easterly 2006). In recent years, ODA, including the World Bank Group assistance, has been the topic of many public discussions, often with controversial and contrasting opinions, and after seven decades of ODA, there is still no consensus on whether it works. The chapter argues that if we cannot even agree on whether development aid works at all, how can we address the more important and nuanced questions of how to make it more effective? It, therefore, studies the economic effect of development assistance in the fight against poverty and the scoring of development.

Ahmed Naciri

Chapter 9. Empirical Assessment of the Impact of Public Governance on Development

Abstract

The previous chapter points to the statistical non-significance of development assistance in developing countries’ economic progress. Although the findings may reinforce the believe of the irrelevance of official development aid, it should, however, be kept in mind that such apparent failures may also be the result of elements outside the control of international development assistance institutions, and we must be careful not to quickly underestimate the wise and helpful job undertaken by well-intentioned individuals (officials and non-officials), and the incremental progress that has been made in the fight of poverty. Official development assistance may require more attention to unearth the causes of failure, mainly weakness of public governance.

Ahmed Naciri

Chapter 10. Empirical Assessment of Developing Countries’ Public Governance

Abstract

Chapter 8 points to the inefficiency of official development aid and Chap. 9 shows that public governance in its social and economic dimensions have an important and significant impact on ODA development success. While extremely important for daily subsistence and humanitarian basic needs, official aid seems to do little to help the world’s most underdeveloped nations in their quest for development at least in the short term; public governance, however, in its social and economic dimensions may have an important and significant impact on economic outcomes. Consequently, this chapter wonders whether weak public governance could partially explain the failure of official development aid to attaint objective of poverty eradication and development advance, and indirectly, whether good public governance could partially explain economic success.

Ahmed Naciri

Chapter 11. Concluding Remarks: A Lightened Cooperation and Assistance!

Abstract

In the closing days of the Second World War, the world’s political leaders made a commitment to global security and development. Their legacy materialized substantially in a set of international institutions of economic cooperation and conflict resolution, indirectly leading to the formalisation of the concept of official development assistance (ODA). Although such assistance seems only occasionally to have reached its promised objectives of poverty elimination and development enhancement, its designers, crafters and multiple contributors deserve much respect, recognition and admiration. Despite geopolitical considerations, a large part of their action can only be motivated by their high believe in human common destiny and solidarity. Development is a difficult process, always subject to multiple impediments. Some of these impediments may appear obvious, while many others are unsuspected, and unless all human efforts are joined for the same objective, the fight against global poverty risks fought in vain. The main instrument for this purpose is, by far, the official development assistance, which is significantly delivered through the BWFIs, which despite their efforts could not escape much criticism, to which they responded through timid governance reforms.

Ahmed Naciri

Backmatter

Titel: The Governance Structures of the Bretton Woods Financial Institutions
verfasst von: Ahmed Naciri
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-97906-9
Print ISBN: 978-3-319-97905-2
DOI: https://doi.org/10.1007/978-3-319-97906-9