The international financial institutions (IFIs) have adapted and changed their policies over time to focus on global justice and poverty alleviation. This evolution is explored, with close attention to the role of political economy scholars and international events that increased the pressure on the IFIs to change their policies. Events such as the failure of structural adjustment policies, and the increasing role of nongovernmental organizations after the end of the Cold War were strong forces advocating for both debt relief policies and efforts designed to alleviate poverty. Problems surrounding the deadline for the Millennium Development Goals in 2015 and the increased role of the IFIs during the 2008 global financial crisis are also discussed.
Wesley W. Widmaier
Global economic governance refers to efforts to organize, structure, and regulate economic interactions. In substantive terms, economic governance deals with a host of policy challenges, including the definition of basic property rights, efforts at monetary and fiscal cooperation, ando concerns for the “macroprudential regulation” of financial markets. The Global Financial Crisis has demonstrated not only the importance of macroeconomic and regulatory cooperation, but also the role of crises in redefining the purposes of economic governance itself. Debates in the fields of international relations (IR) and international political economy (IPE) over global economic governance have revolved around strategic interactions, social psychological forces, and the post-crisis emergence of new agents and international organizations. In applied IPE settings, these debates more explicitly pertain to the systemic importance of hegemonic power, multilateral interactions, or intersubjective interpretations. These views intersect with neorealist, neoliberal, and constructivist assumptions regarding systemic interactions. Over the 1990s, IR and IPE scholars would increasingly seek to move beyond both the structural materialism associated with hegemonic stability theory and the structural idealism associated with “first-generation” Wendtian constructivism. Future research should focus on broader questions of whether the Global Financial Crisis will spark renewed theoretical creativity and contribute to an enhanced policy relevance, or whether IR and IPE will continue to work to mask the role of power in limiting such possibilities.
The global political economy is a multilevel system of economic activities and regulation in which the domestic level continues to predominate—in other words, it is a global system comprising national capitalist economies. Nations differ in terms of the regulations and institutions that govern economic activity, an observation that is embodied in the so-called “varieties of capitalism” (VoC) literature. Contemporary VoC approaches highlight the significance of social and political institutions in shaping national economies, in stark contrast to neoclassical economics which generally ignores institutions other than markets or sees them as hindrances to the functioning of free markets. Three analytical premises inform the diverse conceptual frameworks within the VoC literature: the firm-based approach, national business systems approach, and the governance or “social systems of production” approach. The VoC literature offers three important contributions to our understanding of the global political economy. The first is that different sources of competitive advantage for firms and nations are institutionally rooted and not easily changed. The second contribution is that these distinct national arrangements give rise to different interests/preferences in how the global economy is constructed and managed. Finally, the VoC approaches provide a framework for analyzing long-term institutional changes in capitalist systems and the persistence of diverse forms of capitalism, including the global financial crisis of 2008–2009 that may usher in yet another epochal change in the “battle of capitalisms.”