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Formal Global Interdependence Mechanisms And Processes How Do We Best Address Global Economic Challenges?

Updated: January 21, 2012 2:50 pm

Mechanisms of formal global governance can call upon an extensive array of statistics to demonstrate their value to the international system. Yet advocates and critics alike label these same mechanisms as ‘unfit’ for the challenges of the 21st Century.


Yesterday we broadly traced the Western roots of global governance as a concept. Implicit in the analysis was the need to question state-centric approaches to international relations, not only because of the growing importance of ‘effective’ multilateralism, but also because of an uptick in the transnationalization of threats to human security (pandemics, environmental degradation, trans-border crime, etc.) Not so implicit in the analysis was the need to continue investing in a latticework of transnational organizations that spread governance into the dark corners of world disorder. But what is the current status of some of these organizations, particularly when dealing with poverty reduction and promoting economic development? What factoids about them should we remember?

To address these questions, we begin today with a statistical portrait of some of the sturdiest ‘perennials’ of formal global governance: the United Nations, World Bank, World Trade Organization (WTO) and the G-20. By providing data that charts these organizations’ success in combatting poverty and promoting economic development, we get to reiterate yet again that effective global governance can only be achieved when it relies upon formally established mechanisms and organizations. But what constitutes, a critic might ask, such mechanisms? In “Kant, Habermas and Democratic Peace,” Robert Delahunty and John Yoo consider Jürgen Habermas’ ‘Kantian world federalism’ as a device for securing global peace. Their criticisms of Habermas’ belief in transnational organizations as the appropriate vehicles for more cosmopolitan global governance then fit seamlessly into to the third part of our analysis, which highlights a recent debate staged by the International Institute for Management Development (IMD). Not only does the IMD argue that current approaches to global governance need to undergo wholesale changes, it also considers how technological developments may encourage a less formal approach to interdependence.

In working through the above three-part structure, today’s analysis is a transitional one. It begins with a reminder of the benefits of transnational governance, regardless of how limited; it then considers some of the “but wait’s” that thoughtful people should raise about this form of governance; and it concludes by pointing towards our discussion tomorrow, which entertains the argument that global interdependence should be more informal than formal, and therefore avoid some of the pathologies typically associated with large-scale organizations.

Justifying Increased Global Governance by the Numbers

While the current instruments of global governance have an extensive array of stakeholders, it is the member-states of organizations such as the UN who can claim true ownership over them. The organizations, naturally enough, respond to this oversight by producing statistics and analyses that demonstrate their effectiveness in dealing with transnational issues. In doing so, formal global governance makes its own case for its own existence. This self-interest, however, does not invalidate an obvious truth — without the institutions that nudge us towards increased global governance, there can be only insufficient responses to global poverty, economic crisis and other issues that tear at the fabric of the international system, as the following “we do good” statistics confirm.

Example #1: Implementing the eight Millennium Development Goals (MDGs) is universally acknowledged as one of the premier projects of the UN. Not only were these goals agreed upon by all UN member-states, they were also formulated in conjunction with the world’s leading development institutions. The MDGs which promote better health, equality, environmental sustainability and global partnerships seek to improve general global wellbeing by the target date of 2015. One MDG specifically targets the reduction of child mortality by two-thirds between 1990 and 2015. As a result of this initiative, child mortality rates in the developing world have declined from 100 deaths per 1000 live births in 1990 to 72 deaths in 2008. Indeed, as the following graph shows the goals of this specific MDG have had a profound impact upon the child mortality rates of Malawi.

Example #2: The aims of the Millennium Development Goals, of which reduced child mortality is one of them, dovetail nicely with the World Bank’s overarching objectives of reducing poverty in middle-income and poorer countries. These objectives are met through two development institutions owned by the 187 member-states of the World Bank: the International Bank for Reconstruction and Development (IBRD) and theInternational Development Association (IDA). Through the activities of both institutions, the World Bank was instrumental in reducing the share of people living on $1 a day from 46 per cent to 27 per cent between 1990 and 2015. In the wake of this success, the World Bank has set itself the further target of halving this share by 2015. (The dramatic decline experienced by the Asia Pacific region in general and China in particular may partially explain the World Bank’s decision to pursue this target.)

Example #3: To complement the successes of the UN and World Bank, the World Trade Organization (WTO) can also point to some dramatic results within the developing world, and thereby further demonstrate the utility and benefits of these intermediary mechanisms that inch us towards increased transnational governance. One of the core objectives of the WTO, for example, is to promote international trade through the reduction of tariffs. As the following chart demonstrates, world average tariffs have been reduced from 10.2 percent to 6.9 percent between 1999 and 2010. Indeed, some of the most significant reductions involved emerging powers such as Brazil, Russia and India. (The latter experienced the most dramatic reduction in tariffs between 1990 and 2009, when average tariffs declined from 82 per cent to 12 per cent.)

Finally, while the G-20’s virtues are less demonstrable by resorting to statistical data, it is nevertheless a formidable vehicle for greater global governance. Formally established in 1999, the G-20 is made up of the finance ministers and central bank governors of 19 countries and the European Union (EU). Membership is roughly divided between developed Western states and the emerging economies of the developing world. But as its most recent summit in Cannes demonstrates, the G-20 is by no means an exclusive forum within which global financial and economic issues are discussed. As this meeting sought to help stabilize the global financial system, a number of non-member states were invited to participate. These included states such as Ethiopia, Singapore and Spain, whose populations and economic prowess place them on the fringe of full membership of the G-20. Crucially, the collective membership of the G-20 can draw other mechanisms of global governance to its summit. In addition to guest states, more than a dozen international organizations were also invited to the summit in Cannes. These included the International Monetary Fund, European Central Bank, and African Union.

‘Ideal’ Global Governance?

Advocates of increased and more formal global interdependence can (and do) use the above statistics not only to reinforce the importance of acting collectively to deal with holistic problems, but to push for broader and deeper political collectivization yet. In their eyes, global governance is undeniably an effective instrument of change. Yet, even the most vocal advocates of increased governance readily admit that international organizations, in their current guises, are not maximally designed to address what appears to be a growing list of transnational problems. The UN’s MDGs have achieved, for example, some spectacular results in reducing child mortality, but only 10 of the 67 countries identified as having high mortality rates are on track to meet agreed targets by 2015. The World Bank’s statistics also suggest that its successes in poverty reduction are episodic i.e., its initiatives have made little progress in sub-Saharan Africa, for example.

Such underbelly facts exist for complex reasons, but they do overlap with Jürgen Habermas’ fear that organizations like the UN and WTO “give the impression of a suit of clothes a couple of sizes too big waiting to be filled out.” Habermas’ palliative for these inadequacies, at least according to Robert Delahunty and John Yoo, unhappily mirrors Immanuel Kant’s 18th century call for world federalism. In Habermas’ case, however, the call is for the creation of a global cosmopolitan constitution that “would entrench peace between and within states, partly through extending world citizenship and human rights protection to all human beings.” Such a cosmopolitan constitution would require individual states to subordinate their legal systems to a greater global good. They would also have to sacrifice both their internal and external sovereignty to a higher authority. Again, this would happen through the ‘constitutionalization’ of international law, which would result in the development of a “supranational power above competing states that would equip the international community with the executive and sanctioning powers required to implement and enforce its rules and decisions.” But how would one do this, one might ask? Well, despite his previous criticisms, Habermas is nevertheless confident that organizations such as the UN and WTO are ideally suited to provide the foundations for his individualism-centered, sovereignty-compromising and constitution-based cosmopolitan order. All that is required are mandates from the community of states to facilitate cosmopolitan global governance.

But how can Habermas be so confident that an international organization such as the UN can build an effective cosmopolitan order leading to global governance? His response rests upon one of the more controversial mechanisms of currently imperfect global governance the United Nations Security Council (UNSC). Without doubt, the UN has assumed the legal and moral authority to intervene in failed states and sanction corrupt and repressive regimes. In this respect, member states grant the UNSC the authority to safeguard the rights of citizens from the most pernicious effects of state failure. For Habermas, this specific function of the UNSC demonstrates that the UN can readily be acknowledged as an organization that is responsible for the wellbeing of ‘global’ citizens and states. Accordingly, a suitably reformed UN could work to safeguard peace and human rights at the supra-national level “without having to assume the state-like character of a world republic.” However, adjustments are required to facilitate a well-functioning UNSC and international court of criminal justice. These would complement a General Assembly of government representatives that would be effectively shadowed by a second chamber composed of ‘global’ citizens.

Uh, not so fast say Delahunty and Yoo. In their view, Habermas envisions a role for a UN that it has consistently been unable to perform as advertised, largely because it became a mixture of liberal-democratic, capitalist and communist states. Indeed, it has never been a Kantian-type organization of liberal democratic states. And, as a result of its belief in open-armed universal membership, it is unlikely that it will ever be able to fulfill Habermas’ preferred vision of cosmopolitan global governance, or so our authors argue.

The International Institute for Management Development’s (IMD) echoes Delahunty and Yoo’s concerns, but in a different sphere of interest the present condition of global economic governance. While the structure of the global economy continues to be affected by a multitude of issues, states remain fundamental to improving global economic governance. As a result, the IMD advocates a radical overhaul of the G-20 that would result in a better balance between developed states and the developing world. In exploring the necessity of this latticework-oriented reform, the IMD also investigates an international system where ‘moribund’ forms of global governance have been overtaken by informal actors. In doing so, it provides an interesting segue into tomorrow’s analysis of informal mechanisms of global interdependence.


The formal mechanisms that point us towards formal global governance are diverse. Yet critics of these mechanisms are not wrong to highlight their ‘poor health’ when it comes to addressing today’s transnational problems. One lingering problem is that cosmopolitan conceptions of governance seek to create international organizations based upon liberal-democratic values and norms. Such an attempt wrongly assumes that the international system is composed of politically homogenous states, instead of the plurality of political systems that actually exist. Consequently, elaborating and improving upon the mechanisms of global governance is likely to remain as complex an activity as the diversity of international organizations shaping the fabric of the international system.

(Prepared by ISN staff)


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