Global Governance in the 21st Century - Essay Example

?Global governance in the 21st century I. The United s and Global Governance Discuss the relevance of World War II to America’s rise to global leadership in 1945. Second, with specific reference to any three multilateral institutions discuss US interest and role in creating the institutional and ideological foundations of the post-World War II international system. Finally, assess the validity of the criticisms leveled against the IMF with reference to policy prescriptions for Third World countries. America’s leadership in defeating Japan, Germany, and Italy or the axis powers during World War II conferred on the country the moral ascendancy to lead in the United Nations immediately after the war. America was already an economic power by the late 19th century and early years of the 20th century. To quote Albert J. Beveridge, United States Senator from 1899 to 1911, “if England can govern foreign lands, so can America” (Beveridge, 1898, p. 2; Brand and Farmer, 2012, p. 4). As Beveridge (1898, p. 3) emphasized, this is because “we are raising more than we can consume, making more than we can use” and that, therefore, “we must find new markets for our produce” (Beveridge, 1898, p. 3). According to Beveridge, governance in foreign lands need not be done with the population’s consent because “the rule of liberty that all just governments derive its authority from the consent of the covered” applies only when people “are capable of self-government” (Beveridge, 1898, p. 1). Coming from a United States Senator who had served America for more than 10 years as Senator, the viewpoint probably expressed the ideological perspective of many officials and citizens of America in the early 20th century. The viewpoint also indicated America’s level of development before the war but immediately before the US great depression. Although the United States suffered a so-called great economic depression beginning with a stock market crash in 1929, the economic depression was not enough to displace America as one of the world’s economic power in the early 20th and mid-20th century. America managed to overcome her setbacks during the great depression by significant nominal gross domestic product growths during World War II: 9.45% in 1940, 19.0% in 1941, 15.24% in 1942, -1.88% in 1943, 28.14% in 1944, and -0.75% in 1945. However, defense spending as percentage of the federal budget was high: 17.53% in 1940, 47.15% in 1941, 73.06% in 1942, 69.18% in 1943, 86.68% in 1944, and 89.49% in 1945 (Tassava, 2010). In contrast, inflation in America during the war was not too high: annual rate of 3.5% from April 1942 to June 1946, annual rate of 10.3 percent in six months prior to April 1942, and annually rate of 28% six months prior to June 1946 (Tassava, 2010). In addition, according to Tassava (2010), American wages rose by 65 percent during the war and this indicated that “many American civilians enjoyed a stable or even improving quality of life.” Yet, the period from the end of World War II to the current century has been associated with a decline in British power also known as the “British decline” (Reynolds, 2002, p. 215). Axis power (Japan, Germany, and Italy) adventurism and expansionism made the idea of the United Nations appealing to many of the world’s countries in the mid-20th century. The combination of economic power and moral ascendancy in the fight against the axis powers gave America the influence and capability to support the organization of the United Nations, the International Monetary Fund, and the World Bank. In 1947, President Harry Truman made a declaration known as the Truman doctrine in which America “pledge to assist virtually any government threatened by communists” (Higgs, 2005, p. 3). The US has taken several initiatives worldwide. “To secure the U.S. position in Europe,” America devised Marshall Plan and “entered the North Atlantic Treaty Organization (NATO) in 1949” (Higgs, 2005, p. 3). During the 1950s, the U.S. intervened in the Korean War and has pursued “a policy of active global containment and deterrence of the USSR” or the Union of Soviet Social Republics (Higgs, 2005, p. 3). Needless, to say, deterrence and containment of the scope and influence of People’s Republic of China since 1949 had been the continuing obsession of the US. These were all possible because of the economic and military strength conferred on America by World War II. Her economic and military strength enabled the United States not only to support but also to take the lead role in organizing the International Monetary Fund (IMF) and the World Bank (WB) in July 1944 (IMF, 2012a). Both institutions were organized in an “international conference convened in Bretton Woods, New Hampshire, United States (IMF, 2012a). The mandate of the IMF is to promote international cooperation to help countries maintain “strong economies” (IMF, 2012a, p. 1). The IMF “helps countries design policy programs to solve balance of payments problems when sufficient financing on affordable terms cannot be obtained to meet net international payments” (IMF, 2012, p. 1). On the other hand, the World Bank promoted “long-term economic development and poverty reduction by providing technical and financial support to help countries reform particular sectors or implement specific projects” (IMF, 2012a, p. 1). For example, the WB helps countries build schools, health centers, power plants, fight disease, and protect the environment (IMF, 2012b). In helping countries with regard to these specific needs, the World Bank can recommend privatization or market liberalization in the specific country industrial or market sector. The United States has been one of the largest contributors to the financing of the World Bank and her “sister institution,” the International Monetary Fund. The United States funds 17.69% of the IMF’s operation and controls 16.75% of the votes in IMF policy decisions (IMF, 2012b). The United States has a voting power of 16.16% in the World Bank over 188 countries (WB, 2012). In addition, the United States was also instrumental in the formation of the General Agreement on Tariffs and Trade that “came into force” in 1948 (GATT, 1986, preface). It is generally acknowledged that the role of the GATT has been the promotion of trade liberation to restructure economy towards becoming a free or freer market. The GATT was the predecessor of today’s the World Trade Organization or the WTO. The GATT took on the role of opening economies into open market economies by restructuring the GATT into a WTO in which member organizations are required to follow organizational rules and accept penalties for misbehavior. Perhaps, the distinguishing feature between GATT and WTO is that while the GATT has agreements, the WTO has organizational rules in addition to agreements. GATT became the WTO in 1995 (WTO, 2012a). Details on the US vote in the GATT and the World Trade Organization are not available but it is likely as influential as the US vote on the IMF and the WB. The WTO has been accused of destroying jobs and being a tool of powerful lobbies (WTO, 2012b). Ogabo et al. (2010) criticized the World Bank for espousing a neo-liberal ideology and, in line with the ideology, for advocating the privatization of government-owned enterprises. Similarly, Hahn (2008) criticized the IMF for being an instrument of neoliberal imperialism. According to Hahn (2008, p. 142), “neoliberalism is a part of hegemonic project, which concentrates power and wealth in local and trans-national elite groups around the world by transferring state owned assets to private people and Trans-National Corporation” (Hahn, 2008, p. 142, citing Saad-Filho & Johnston 2005). According to Hahn (2008, p. 143), “for the proponents of the neoliberal project, economic growth and development, through free market economies and free trade, is the way ahead to ensure freedom, democracy and sustainable peace.” However, “for most critics, neoliberalism is a trans-national elite project, which under the guise of a seductive rhetoric transfer power and wealth from the public sphere to a small elite by rolling back the welfare state as the redistributive power and privatizing assets.” Is the criticism valid? In my opinion, the criticism may or may not be valid depending on the specific country experiences. The best way to correct the defects of “neoliberalism” in the IMF programs is to strengthen participatory approaches in program or privatization designs. Participatory approaches in program design would significantly help remove any negative component in program design and overcome what may constitute neoliberal imperialism in the IMF programs. II. Traditional Economic Notions of Development and Human Development With reference to key economic indicator for any third world country of your choice, illustrate the difference between the traditional economic notion of development (i.e., economic growth) and human development. Second, discuss any four factors which militate against human development and economic well-being of the people in your case country. Finally, suggest reforms necessary to make multilateral institutions such the IMF and WTO more responsive to the interest of third world countries in human development in the global south. The term “development” can be construed in many ways (Todaro and Smith, 2007). For example, let us imagine ourselves during the time of the American Indians confronted with an increasing population of British colonialists bringing with them modern technology, new ways of doing things, new ways of dressing, would the American Indians call all these as “progress” and their old or traditional ways as “backwardness”? Similarly, given the manner of dressing of the west, would believers of Islam in Afghanistan or another Islamic country consider the new ways of living “progress” or “development” and the old as “backwardness”? Probably, that is not the case. Development is value-laden: what may constitute “development” for a group of people may not be the same notion of development for another. Todaro and Smith (2007, p. 15) added that “in strictly economic terms, development has traditionally meant the capacity of the national economy.” In particular, development has meant the capacity “to generate and sustain an annual increase in its gross national income (GNI) at rates of 5% to 7% or more” (Todaro and Smith, 2007, p. 15). However, “a common alternative index of development has been the use of rates of growth of income per capita to take into account the capability of a nation to expand its output at rate faster than the growth of its population” (Todaro and Smith, 2007, p. 15). Economic development has been “typically seen in terms of the planned alteration of the structure of production and employment so that agriculture’s share of both declines and that of the manufacturing and service industries increase” (Todaro and Smith, 2007, pp. 15-16). Todaro and Smith continued that a new economic view of development emerged in the 1950s and the 1960s “when many developing nations did reach their economic growth targets but the levels of living of the masses of people remained for the most part unchanged” (p. 16). Todaro and Smith narrated that the situation led economists and policy makers to question the old notions and clamor for a concept change. Todaro and Smith (2007, p. 16) reported that “in short, during the 1970s, economic development came to be redefined in terms of the reduction or elimination of poverty, inequality, and unemployment within the context of a growing economy.” This was the context of the battle cry “redistribution from growth” of the decade (Todaro and Smith, 2007, p. 16). However, social conditions worsen during the 1980s and 1990s such that Amartya Sen’s notion of capabilities approach in the development discourse became popular. Todaro and Smith was not explicit on the period wherein Amartya Sen’s notion was popular but it seems reasonable to interpret that Sen’s notion was also popular during the 1990s as well as the during the early years of the 21st century. Coinciding with the popularity of Sen’s notion in the development literature, the United Nation’s introduced the “Human Development Index” as an indicator of development. On the other hand, Todaro and Smith (2007, pp. 20-22) introduced their notion of “three core values of development” which they identified as sustenance or the ability to meet basic needs, self-esteem, and freedom from servitude but these core values do not appear as having been adopted in the development literature. Further, various cultures have their own specific core values: what may be core values to one culture may not be the core values to another culture. What may be core values to Americans may not be the core values to Africans, Malaysians, Indians, Afghans, Saudi Arabians, Chinese, Europeans, and other nationalities. In the case, of Islamic countries, for example, religion will probably be playing a role on how the core values would be identified and defined. Thus, what is implied is that while the global community may have adopted a particular set of indicators to measure and assess development, the adoption of a common set of indicators need not have the effect of constricting countries from adopting a perspective on development that is more attune or consistent with their national or country values. The officially adopted or the United Nations adopted indicators, however, would have to represent the set of measures on what the international community believes as the minimum measure for assessing development. For my case study on country case study on economic well-being and human development, I have chosen the Republic of the Philippines. It is a country in the news today because of territorial conflict with People’s Republic of China on Spratly Islands and Scarborough Shoal. Measured through traditional measures like the gross domestic product, the Philippines has a gross domestic product of US$166.9 billion in 2008 that can be translated as US$1,847 per capita (UNDP, 2010, p. 208). Philippine GDP per capita has been growing very slowly at the rate of 1.4% per annum from 1970 to 2008. In contrast, another option to measure development would be to use the Human Development Index. The Human Development Index value for the Philippine is 0.638 compared to a perfect of 1.0. The Human Development Index cover values for economic, life expectancy, schooling and other data. Most likely, using HDI as an indicator of development would help factor in variables other than economic in assessing development. Unfortunately, the indicator may not be simple enough for ordinary people to adopt for a day-to-day measure of development. Based on a quick browse of internet materials, I believe that there are at least four factors preventing Philippine development. The first factor pertains to issues of corruption. The Chief Justice of the Supreme Court of the country was impeached and the country’s former President Gloria Macapagal-Arroyo is now in prison because of corruption charges. Another factor that probably constricts its development is its history of coup d’etat that led to political instability. The third factor is the country’s territorial dispute problems with the People’s Republic of China. Finally, the fourth factor is the frequent impeachment proceedings that are taking place in the country. It seems all Philippine presidents from President Corazon Aquino in 1986 has been subjected to impeachment proceedings and all these have led to a lack of confidence among investors on the political stability of the country and the country’s capability to keep the political sphere peaceful so investors are not worried of their investments. On the first factor, I propose that every development assistance extended to the country through the International Monetary Fund and the World Bank must have a strong component of graft prevention measures. This can be done by requiring full transparency in the financial reporting system of each assistance provided to the country. On the second factor, I propose that the IMF and the WB support studies in the country on how coup d’etat can be prevented and addressed. On the third factor, I propose that the multilateral institutions support United Nations studies and workshops on how the territorial disputes can be peacefully addressed. Finally, on the fourth concern, I propose that studies be conducted on how the filing of impeachment proceedings can be reduced or made infrequent. My recommendations confirmed that development is multi-dimension and not limited to economics, consistent to what have been discussed by Toddaro and Smith (2007). In conclusion, it is clear that not only are the problems of development cutting across several dimensions but the roots of underdevelopment can also be multi-dimensional or not limited to economic variables. References Beveridge, A. (1898). The March of the Flag. Retrieved April 30, 2012, from http://us.history.wisc.edu/hist102/pdocs/beveridge_march.pdf Brand, K. and Farmer, M., M. (2012). Albert Jeremiah Beveridge Papers. Washington: Library of Congress. GATT. (1986). General Agreement on Tariffs and Trade: Text of the General Agreement. Geneva: General Agreement on Tariffs and Trade. Hahn, N. (2008). Neoliberal imperialism and pan-African resistance. Journal of World-Systems Research, 8 (2), 142-178. Higgs, R. (2005). Government and the economy since World War II. Independent Institute Working Paper, Number 58. Oakland: Independent Institute. IMF. (2012a). The IMF and the World Bank. Factsheet. Washington: International Monetary Fund. Retrieved April 30, 2012, from http://www.imf.org/external/np/exr/facts/imfwb.htm IMF. (2012b). IMF members’ quotas and voting power, and IMF Board of Governors. Retrieved April 30, 2012 from http://www.imf.org/external/np/sec/memdir/members.aspx Ogabo, A., Agba, M., Ushie, E., and Nkpoyen, F. (2010). Privatization, job security and performance efficiency of privatized enterprise in Nigeria: A critical assessment. Researchers World, 1 (1), 95-102. Reynolds, D. (2002). From world war to cold war: The wartime alliance and post-war transition, 1941-47. The Historical Journal, 45 (1), 211-227. Tassava, C. (2010). The American Economy during World War II. Retrieved April 30, 2012, from http://eh.net/encyclopedia/article/tassava.WWII Todaro, M. and Smith, S. (2007). An introduction to economic development. 9th ed. New York: Pearson Addison Wesley. UNDP. (2010). The real wealth of nations: Pathways to human development. Human development report 2010. New York: United Nations Development Programme. WB. (2012). International Bank for Reconstruction and Development subscriptions and voting power of member countries. Retrieved April 30, 2012, from http://siteresources.worldbank.org/BODINT/Resources/278027-1215524804501/IBRDCountryVotingTable.pdf WTO. (2012a). The WTO. Geneva: The World Trade Organization. Retrieved April 30, 2012, from http://www.wto.org/english/thewto_e/thewto_e.htm WTO. (2012b). 10 common misunderstanding about the WTO. Geneva: The World Trade Organization. Retrieved April 30, 2012, from http://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m00_e.htm Read More