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Global governance became more important at the end of the Cold War
o International organizations such as UN were expected to guide state formation, and the formation of
o
economy arose
o Interdependence of states to solve a growing number of problems
Global governance
o collection of governance-related activities, rules and mechanisms, formal and informal, existing at a
o
o
security
International system is characterized by conflict and dynamism
Balance of power discourages states from pursuing aggressive ambitions: minimize
and capacities
Powerful states able to impose their will
World government
Relies on the social contract theory
Considered unrealistic because there is no discernible incentive for people or states to
their interest to do so
Cooperation under anarchy
period
Sought to establish a framework of norms, rules, and understandings that enabled states to cooperate
over economic matters and avoid the pitfalls of welfarism and protectionism
Based on liberal economic theories, especially the virtues of an open and competitive international
economy
Classical political economic believes that unregulated market competition tends toward long-
term equilibrium
Economy works best when left alone by the government/governing institutions
However, institutional arrangements were necessary to police the international economy and
ensure stability
Inversely, Bretton Woods was created due to the fear of an unregulated international
economy
Embedded liberalism: Keynesian idea that markets had to be managed, through fiscal
policy (government spending and taxation), the framework of which was to be
deficits
International Bank for Reconstruction and Development, better known as the World Bank
New financial order
Provide loans for countries in need of reconstruction and development
General Agreement on Tariffs and Trade, which was replaced by the World Trade
Organization
New trading order
Rather than an international organization, more of a multilateral agreement
Advance the cause of free trade by bringing down tariff levels
However, we can also see that the establishment of this system was not propelled primarily by mutual
interests in a multilateral global economy
USA emerged from the WWII as the predominant military and economic power
Negotiations initiated by the US and took place in their territory, was the dominant force in
WB
as well
Low interest loans to support major investment projects, technical assistance
Primarily large infrastructure projects, shift towards projects dealing with basic needs
and what was perceived as the underlying cause of poverty: population control,
increase in poverty
However, it has responded to criticism through sustainable development, emphasis
on good governance and anti-corruption policies, negotiations with recipient
WTO
members of the Dispute Settlement Body to which all member states belong
Criticisms include a bias towards developed over developing countries, which have
no permanent representation, and lack of transparency and accountability especially
incremental
2009: creation of the Financial Stability Board as the fourth pillar of the architecture
of global economic governance
o Coordinate at the global level the work of national financial authorities and
international standard-setting bodies and to promote the implementation of
effective regulatory, supervisory and other financial sector policies