Remaking the architecture: the emerging powers,self‐insuring and regional insulation

This article examines the interaction between the emerging and traditional powers in global governance reform, and asks whether we are heading towards an international financial system that is more fragmented, where power is more diffused and national and regional arrangements play a more prominent role, at the expense of global multilateral institutions. It begins with a brief discussion of the global systemic and country‐specific factors that motivate Brazil, China and other emerging countries to accumulate large currency reserves. We find that national arrangements for managing financial and currency crises will continue to hold sway for emerging countries in the wake of the global crisis. However, the actual capacity of regional arrangements in managing future financial crises is uncertain, and the significance of regional alternatives in the emerging architecture should not be overstated. The real capacity of East Asian regional arrangements to manage financial crises, payments problems or currency attacks is still untested, and key thresholds in multilateralization still lie ahead. In South America, multilateral lender‐of‐last‐resort support inside the region is largely confined to the sub‐regional level and is limited by Brazil's reticence. Enduring reliance on bilateral measures for financial crisis management is noted. Where there has been progress in regional solutions, since the global crisis, has been in the role of regional development banks in providing financing for developing countries to enact counter‐cyclical policies. Such support also provides insulation for states in the region against the contagion effects of international financial crisis. We are in the midst of transitioning to a more diverse and multi‐tiered global financial and monetary system. A reformed IMF could have a role to play in addressing global imbalances and encouraging a shift from national reserves to collective insurance, however, it would be preconditioned by significant shifts in the policy, lending operations, and internal governance of the Fund, and willingness among the G20 to strike a new consensus on how to deal with imbalances, and new accommodation on acceptable reserve levels.     

Strengthening the Foundations? Alternative Institutions for Finance and Development

The 21st century has ushered in the emergence of alternative institutions for liquidity provision and development finance, many of which are Southern‐led. The special issue that follows this Introduction assesses the extent to which existing theoretical perspectives and tools are sufficient for evaluating the implications of these alternatives for the global financial architecture. Our analysis finds that while an increasingly varied landscape of diverse institutions designed to foster financial stability and development comes with inherent risks, these new forms of finance bring real benefits to an architecture that has long been deemed insufficient. Larger and more capable Southern‐led institutions not only mean additional sources of financing for emerging market and developing countries, but also could increase their voice in an international financial architecture long dominated by the most advanced economies. That said, the variation in the landscape could create inequities and fault lines between new and existing institutions, which will be difficult to overcome through the coordination of a fragmented and diverse system. Finally, despite the increases in capital for liquidity provision and development made available by these new institutions, significantly more financing and coordination will be needed to achieve financial stability and economic development on a global scale.     

Setting the rules: private power,political underpinnings,and legitimacy in global monetary and financial governance

The role of private market agents in global monetary and financial governance has increased as globalization has proceeded. This shift in both markets and patterns of governance has often been encouraged by states themselves in pursuit of liberalization policies. Much of the literature views these developments in a positive light, yet there are other aspects of these developments that also merit attention. This article supports its central propositions with two cases of emerging global financial governance processes: the Basel II capital adequacy standards for international banking supervision and the International Organization of Securities Commissions‐based transnational regulatory processes underpinning the functioning of cross‐border securities markets. Based on the case findings, the article argues first that private sector self‐regulation and/or public‐private partnership in governance processes can leave public authorities vulnerable to dependence on the information and expertise provided by private agents in a fast‐moving market environment. Policy in the vital domain of financial regulation has been increasingly aligned to private sector preferences to a degree that should raise fears of bureaucratic capture. Second, the article contends that the overall outcome in terms of global financial system efficiency and stability has been mixed, bringing a range of important benefits but also instability and crisis for many societies to a degree that has led to challenges to global governance itself. The case material indicates that the input, output and accountability phases of legitimacy in global monetary and financial governance are highly problematic, and much of the problem relates to the way in which private market agents are integrated into the decision‐making process. Third, the article posits that a better consideration of these three ‘phases’ of legitimacy and their interrelationships is likely to enhance the political underpinnings and legitimacy of global financial and monetary order.     

Financialization and Global Commodity Chains: Distributional Implications for Cotton in Sub‐Saharan Africa

Restructuring of global and local markets has led to an increased influence of commodity derivatives markets on commodity price setting. This has critical implications for price risks experienced by actors along commodity chains. Commodity derivatives markets have undergone significant changes that have been referred to as the ‘financialization of commodities’, which we define as an increase in trading activity by financial investors and the reorientation of business strategies by commodity trading houses towards risk management and financial activities. This article assesses how these global financialization processes affect commodity producers in low‐income countries via the operational dynamics of global commodity chains and national market structures. It investigates how prices are set and transmitted and how risks are distributed and managed in the cotton sectors in Burkina Faso, Mozambique and Tanzania. It concludes that uneven exposure to price instability and access to price risk management have important distributional implications. Whilst international traders have the capacity to deal with price risks through hedging, in addition to expanding their profit possibilities through financial activities on derivatives markets, local actors in producing countries face the challenge of increased short‐termism — albeit to different extents depending on national market structures — with limited access to risk management.     

Bingo or fiasco? The global financial situation is not guaranteed

The 1998 Russian debt default following the Asian financial crisis sent a signal to global capital markets that no country from now on could be seen as 'too big to fail'. The concern which followed Russia's crisis raised two questions: first, with regard to the relevance of the interest rate in the presence of highly lever-aged securities; and second, over the question of the protection of a country or institution from bankruptcy while simultaneously making sure that any rescue would not encourage either further risk-taking from investors or more badly managed policies from emerging market economies. Moreover, the moral hazard question, coupled with the sheer size of private capital flows, led international institutions to consider involving the private sector in solving financial crises. This article describes why a situation has now been reached where no future guarantee can be given to countries or financial institutions, implicitly or explicitly, that their debts will be bailed out.     

From International to Global Development: New Geographies of 21st Century Development

Recent claims of 21^st century global convergence and the ‘rise of the South’ suggest a profound and ongoing redrawing of the global map of development and inequality. This article synthesizes shifting geographies of development across economic, social and environmental dimensions, and considers their implications for the ‘where’ of development. Some convergence in aggregate development indicators for the global North and South during this century challenge, now more than ever, the North–South binary underlying international development. Yet convergence claims do not adequately capture change in a world where development inequalities are profound. Between‐country inequalities remain vast, while within‐country inequalities are growing in many cases. Particular attention is given here to exploring the implications of such shifting geographies, and what those mean for the spatial nomenclature and reference of development. This article concludes by arguing for the need, now more than ever, to go beyond international development considered as rich North/poor South, and to move towards a more holistic global development — where the global South remains a key, although not exclusive, focus.     

Environmental Narratives on Protection and Production: Nature‐based Conflicts in R7iacute;o San Juan,Nicaragua

This article focuses on local processes and global forces in the struggle over the fate of forests and over the contested claims of protection and production in a protected area buffer zone of Río San Juan, Nicaragua. The struggle over control of local natural resources is seen as a multifaceted process of development and power involving diverse social actors, from agrarian politicians and development agents to a heterogeneous group of local settlers, absentee cattle raisers, timber dealers, transnational corporations, and non‐governmental organizations. The initial interest is in the local resource‐related discourses and actions; the analysis then broadens to include the larger political‐economic processes and environment‐development discourses that affect the local systems of production and systems of signification. The article underlines environmental resource conflicts as one of the major challenges in subjecting structures of social power to critical analysis.     

Collective conflict management: a new formula for global peace and security cooperation?

This article surveys current security challenges and identifies obstacles to effective global and regional responses and cooperation in an era when security has become increasingly divisible. The new situation is partly explained by the complexity and variety of security challenges, both traditional and new, and by the linkages between them. It argues that a new pattern of improvised, ad hoc and often case‐specific security mechanisms has developed, which it calls Collective Conflict Management (CCM). The argument is illustrated by reference to cases of CCM where a wide range of actors—multilateral institutions at the global and regional levels, individual states or ad hoc coalitions, professional and commercial bodies, and non‐governmental organizations—collaborate in an effort to manage specific security threats and challenges, bringing together a variety of relationships, resources and skills. The urge for collective action, rather than unilateral or single actor‐led, is motivated by a number of factors and ‘drivers”, not all of them necessarily positive or constructive. The article concludes that the success or failure of CCM will depend in part on the severity of the problems it faces and in part on the motives and incentives behind collective responses. This new pattern raises interesting and important questions for the future of international security. While CCM may be untidy and lack clear norms and standards, in many cases it may be the best available in an increasingly fractured world.     

Multipolar governance and global imbalances

The deficiency of financial regulation and the presence of large macroeconomic global imbalances should be considered complementary interpretations of the global economic and financial crisis. The risk we face is that a new expansionary phase will bring back large and growing external imbalances, which will keep world growth on an unsustainable path. At the international level there is a classical ‘collective action’ problem to address since if export growth oriented strategies are pursued by all major countries they will generate a deflationary bias in world demand. This article explores how multilateral cooperation and international institutions can become reengaged with, and provides a meaningful device for addressing, these new issues and problems. It is necessary to restore shared rules of the game for international macroeconomic adjustment. This means endorsing a strengthened surveillance regime for the IMF in order to induce more compatible macroeconomic policies. In this regard, the IMF should have enforcement rule incentives and mechanisms, otherwise we are going to repeat past negative experiences where peer pressure did not produce significant results.     

From the State to the Shareholder: Rent and the Production of Shareholder Value in Real Estate

Following the 2008 global financial crisis, the use of real estate tax credits to generate shareholder value for investors increased significantly. While tax credits are lauded as crucial to the delivery of social goods like affordable housing, the multiplier effects they supposedly generate fail to account for the hollowing out of the state that occurs as public funds are transferred to shareholders. Through a detailed case study of the historic tax credit industry in the United States, this research shows how many of the banks and financial institutions investing in tax credits have come to rely on overly engineered forms of landownership, deeply discounted credit pricing, and a wave of stock buybacks to boost their corporate profitability. This paper therefore develops a theoretical framework to understand taxation as a financialised accumulation strategy where the state serves as an important—if not problematic—source of real estate profit.     

Why is There a Biodiversity Convention? The International Interest in Centralized Development Planning

The Convention on Biological Diversity (CBD) is an unusual international environment agreement in that it does not concern an international or global resource. Most of the resources whose regulation is implicit in the CBD are in fact domestic terrestrial species, everything from elephants to medicinal plants. The rationale for international intervention in the sphere of national land use planning lies in the recurring themes of underprovided diversity: underfunded, underappreciated, undermanaged species. In many different areas of international affairs–ranging from the trade in endangered species to the management of agricultural gene banks–these same problems arise. How is it possible to induce countries hosting diverse biological resources to expend theresources necessary to maintain them? The CBD represents the confluenceof all these various movements, and it constitutes the recognition of the importance of a global perspective regarding national land use decision-making.     

Introduction

The aim of this special issue of International Affairs is to address the changing dynamics in the international economic system from an interdisciplinary standpoint, in order to unpack some of the emerging processes of globalization and to investigate the relationship between power and rule‐setting. The idea is to bridge the gap between the traditional realist accounts of the international system that place the nation‐state at the centre of the analysis, and the liberal, market‐driven approach that focuses on the problems of an increasingly integrated global economy and fragmented political authority. The framing question is how the global order (governance) has to change in order to accommodate the enlargement of the playing field and in particular the emergence of fast‐growing developing economies. How is this shift going to affect the distribution of power, both among nations and between state and non‐state actors? Is this shift going to drive a fundamental rethinking of the rules governing relations between countries—and regions—and institutions? The thread that links the articles in this special issue is the rather benign view of globalization, leaning towards ‘liberal ingenuity’ that sees governance as a way to accommodate conflicting interests through institutions in such a way as to minimize the potential for conflict.     

The Italian industrial districts and the crisis of the cooperative form: Part I

The theory of the industrial districts—spatial clusters of mutually supporting, mostly small and medium‐sized, flexibly specialized enterprises, held together by virtue of their deep local embedding and relations of trust—is now a well‐developed part of regional planning doctrine and folklore. The canonical cases are those located in the so‐called Third Italy’. In Part I of this paper, I review the theory, and present the first of three case studies, each of which challenges one or another fundamental element of the district model. Here, I consider evidence of penetration into the Emilian food packaging machinery district by outside financial interests, which have proceeded to impose hierarchical order on what had previously been more collaborative relations among more or less symmetrically powerful firms. The remaining two cases—on the emergence of vertical production systems in the clothing sector of the Veneto, and on the contradictions of excessive fragmentation in the production of Pratese woolen textiles—will be presented in Part II. These cases do not point to economic failure, per se, but they do (I think) point to an underlying contingency and ultimate instability of the canonical district form.     

The Regulatory State and Turkish Banking Reforms in the Age of Post‐Washington Consensus

The new era of the Post‐Washington Consensus (PWC), promoted under the auspices of International Financial Institutions such as the International Monetary Fund and the World Bank, centres on the need to develop sound financial regulation and strong regulatory institutions, especially in the realm of banking and finance in post‐financial crisis developing countries. This article uses an examination of the Turkish banking sector experience with the PWC in the aftermath of the 2001 financial crisis to show its considerable strengths and weaknesses. The authors argue that the emergent regulatory state in the bank‐based financial system has a narrow focus on strengthening prudential regulation, whilst ignoring the increased ‘financialization’ of the Turkish economy. They identify the positive features of the new era of the PWC in terms of prudential regulation, which has become much more robust in its ability to withstand external shocks. At the same time, however, the article highlights some of the limitations of the new era which resemble the limitations of the PWC. These include the distributional impact of the regulatory reforms within the banking sector, and notably the emergence of foreign banks as the major beneficiaries of this process; weaknesses in promoting productive bank intermediation that finance the real economy and economic growth, leading to poverty reduction via growth of employment whilst stimulating financialization within the economy; and finally, the exclusive focus on prudential regulation, whilst ignoring regulatory costs, consumer protection and competition regulation.     

The Impossible Trinity: Inflation Targeting,Exchange Rate Management and Open Capital Accounts in Emerging Economies

This article contributes to the debate on macroeconomic management and capital account regulations in developing and emerging countries (DECs). It argues that the recommendation by neoclassical economists and international financial institutions (IFIs) to combine an inflation‐targeting regime with exchange rate management, whilst maintaining open capital accounts, is not only impossible but also potentially counterproductive. The article draws on extensive semi‐structured interviews with currency traders in Brazil and London to show that this is due to the particular way such a regime shapes central bank interventions in the money and foreign exchange markets and the destabilizing way these interventions interact with financial market expectations. The interview results also demonstrate that the guidelines issued by IFIs actually undermine, rather than aid, DEC central banks’ initial attempts to manage excessive exchange rate movements. These results support the long‐standing argument by heterodox economists and critical international political economists that DECs need to make the exchange rate an explicit instrument and goal of their macroeconomic policy and complement it with comprehensive capital account regulations to reduce the destabilizing impact of international capital flows. The interview results also give some concrete suggestions on how to achieve this.     

The political parameters of post‐withdrawal Iraq

The withdrawal of US combat forces presents new challenges and opportunities for Iraqis over the coming months and years. This special issue of International Affairs seeks to provide an assessment and analysis of many of these challenges and opportunities from the perspective of Iraqi actors, while also considering the interests of the wider regional and international community. Iraq remains important, fundamentally so. The main challenges that now face Iraqi leaders are not of recent origin but have never been fully confronted—to some degree the US presence has acted to ameliorate tensions at difficult times and helped to find compromise solutions that have left situations calm but also put on hold. The articles in this special issue focus on a range of these challenges, questioning orthodox views on Iraqi political development and considering the possibilities that lie ahead. They present not only ‘post‐American Iraq’ but also ‘post‐Iraq America’. By facing these challenges successfully, political, economic and social opportunities clearly unfold. These opportunities, if exploited to the full, would see Iraq's security become normalized, its economy and social structures repaired, and the prominence of the country in international affairs as a constructive rather than destructive force increased. However, the reverse of this is also starkly apparent. The failure of Iraqi leaders to meet the challenges may present very serious problems in the near future—problems possibly made all the more severe due to the lack of a US military presence and the perceived weakening of US will to impose itself on the political direction of the country.     

One world? Many worlds? The place of regions in the study of international society

This article is a revised version of the 2006 Martin Wight Memorial Lecture and examines the placeof regional states‐systems or regional international societies within understandings of contemporary international society as whole. It addresses the relationship between the one world and the many worlds‐on one side, the one world of globalizing capitalism, of global security dynamics, of a global political system that, for many, revolves a single hegemonic power, of global institutions and global governance, and of the drive to develop and embed a global cosmopolitan ethic; and, on the other side, the extent to which regions and the regional level of practice and of analysis havebecome more firmly established as important elements of the architecture of world politics; and the extent to which a multiregional system of international relations may be emerging. The first section considers explanations of the place of regionalism in contemporary international society and the various ways in which the one world aff ects the many. The second section deals with how regionalism might best be studied. The final section analyses four ways in which regionalism may contribute to international order and global governance.     

Trade Liberalization and Prudential Regulation: The International Framework for Financial Services

This article provides an overview of the issues involved in international efforts to open and restructure markets for financial services and to ensure adequate regulation and supervision of financial firms. It discusses the liberalization in the General Agreement on Trade in Services (GATS), the first global trade agreement to cover financial and other services, and the roles of various international fora in strengthening national regulatory and supervisory systems and enhancing cooperation and coordination between supervisors. The article emphasizes that measures to liberalize trade in financial services and measures to strengthen prudential regulation and supervision are complementary and mutually reinforcing.     

New Multilateral Development Banks and Green Lending: Approaching Scalar Complexities in the Global South

Newly established multilateral development banks promote green finance and support a green transition in the global South. This article examines the new multilateral development banks using a dynamic view and documents the projects and lending preferences of New Development Bank (NDB) in Brazil and Asian Infrastructure Investment Bank (AIIB) in Turkey. While AIIB and NDB have made it easier for global South actors to access infrastructural investment funding and are committed to expanding green lending, their commitment rests on the use of country systems and national financial intermediaries. This results in extending loans for projects with significant risk and ignoring the broader connections of the projects to the environmentally hazardous strategies of capital accumulation. Despite their strong green discourse, their design and the way their mandates have been interpreted render new multilateral development banks prone to business as usual.     

明清苏州经济中心地位略论

明清时代的苏州,交纳赋税最多,负担最重,是全国最为突出的赋税钱粮重地;丝绸、棉布及加工业和书籍刻印等大宗商品生产极为发达,木器制造加工业独步全国,玉器雕琢、绣作、裱褙作、漆作、乐器、铜铁金银器加工业等极其精巧,是举世闻名的商品生产加工中心;大规模输出当地大宗商品,输入各种原材料,转输全国物资并平衡整合市场,是全国物资的流通转输中心;钱庄、票号等金融机构布设密集,银钱流通量巨大,较早行用洋银,金融结算手段较为先进,吸纳周围城镇的资本,货币周转获利较快,是高度发达的银钱金融中心。从当时苏州的经济总量、商品生产和商品流通来看,其中心都市的地位远在另一工商城市杭州之上。