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30 Years of economics for development

New Roles and Functions for the UN and the Bretton Woods Institutions  

Project name/title
New Roles and Functions for the UN and the Bretton Woods Institutions
Global Governance and Conflict
In a world beset by the effects of the Great Depression and war, the 'Keynesian message' (full employment, the correction of 'market failures' and the creation of world regulatory institutions) strongly inspired the postwar policy agenda and the structuring of the UN/Bretton Woods system. In contrast, for several years now, an increasing gap has been emerging between the changing problems of the world economy on the one hand and the policy agenda and the ability to govern of world institutions of the other. The rapid growth of international trade, capital, migration, investment, tourism and communication flows of the last 50 years has sharply boosted global interdependence and increased the scope for the interventions of global institutions. However, at the same time it has reduced the effectiveness of these interventions. The need for stronger governance has been heightened by the emergence of supranational problems (such as those in the environment and crime) which have brought to the fore the limitations of national states in dealing with the new challenges. Meanwhile, the disintegration of the FSU has increased regional instability (see below) and raised the issue of the best way to guide the peace process in a multipolar world. Global institutions have experienced a gradual erosion of their capacity to 'govern'. The IMF now controls only 2 per cent of the world's liquidity and is able to impose some monetary discipline only on a few developing countries. Its ability to prevent balance of payments crises has been challenged by a long line of difficulties, including the recent events in Mexico. Similar problems affect the World Bank, whose share in the recycling of global surpluses has faded and whose management of the (financially modest, but socially explosive) problem of African debt is being seriously questioned. While encouraging, the creation of WTO should not obscure the emergence of powerful trade blocs and the fact that only about one tenth of world trade follows GATT rules. Needless to say, similar problems plague the UN, where the erosion of original mandates (as in the case of UNCTAD and UNIDO) has been accompanied by the lack of a clear agenda and by uncertainties over the objectives and institutional arrangements for the tackling of old and new problems. It is therefore paramount to understand the far-reaching changes of the last 50 years and to identify the key elements of a new development agenda. While politically useful, the concept of 'sustainable human development' has not gained universal currency and does not yet add up to a sufficiently complete paradigm. Considerable theoretical effort is thus required for the definition of new notions and overall agendas, starting perhaps from concepts such as a 'human security' which can ensure basic universal rights, the right to automatic emergency relief first among them. (These efforts will, however, face steep ideological hurdles: while any new agenda is likely to advocate 'international rules and obligations', including those in the area of taxation, mainstream economics will continue to demand ever greater liberalization and deregulation.) Finally, proposals are needed on the structure, powers and resources required by the new world institutions for the implementation of the development agenda for the future.
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