Regime Complexity and the Institutions of Crisis and Development Finance

The theory of regime complexity offers a useful lens through which to analyse the increasing density of international institutions and the patterns of conflict and cooperation among them. Scholarship on crisis and development finance would benefit from more fully employing this approach to explain the emergence of overlapping institutions and offer recommendations for designing regime complexes. The theory advanced here emphasizes the strategies of key states to use institutional overlap to limit agency ‘drift’ away from their preferences. Prioritizing control often comes at the cost of conflict among the institutions, however, and can thus impede the achievement of financial stability and development goals. The regime complexity approach is distinct from the rational design of institutions, institutional experimentalism and theoretical realism. Drawing on lessons from the euro crisis, this article offers informed conjectures on financial arrangements in the regions of Latin America and East Asia and their interaction with global multilateral institutions, such as the International Monetary Fund.     

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.     

Financial crises and the balance of power in international finance, 1890–2010

Has the centre of gravity of international finance irreversibly started to shift from the Atlantic to the Pacific since the financial debacle of 2007-2008? This article discusses this highly topical question in a historical perspective, by considering previous changes in the balance of power in international finance and the role played by global financial in these changes. Particular attention is paid to the Baring Crisis of 1890, the American Panic of 1907, the financial crisis of July -August 1914, the banking crises of the Great Depression of the 1930s, the financial instability of the early 1970s and the ensuing banking failures, the International Debt Crisis of 1982, and the Japanese Banking Crisis of 1997-8. The article concludes that financial crisis, perhaps surprisingly, did not lead to clear changes in the balance of power in international finance; and that the financial debacle of 2007-8 is unlikely, in the medium-term, to fundamentally alter the current order.     

Is the Globalization Consensus Dead?

Abstract: The development economist Dani Rodrik recently declared that “the globalization consensus is dead”. The claim has momentus implications, because this consensus has steered economic policy around the world for the past quarter century. It emanates from the heartland of neoclassical economics, and defines the central tasks of the Washington‐based organizations which claim to speak for the world. This essay answers two main questions. First, is Rodrik's claim true, and by what measures of “consensus”? Second, to the extent that the consensus has substantially weakened, is the state returning to the heart of economic life, as Karl Polanyi might have predicted? The answers? First, the globalization consensus about desirable economic policy has weakened, though it is far from “dead”. Second, the western state is returning to the heart of economic life in response to the current global economic crisis, but will retreat soon after national economies recover—because unless the crisis becomes a second Great Depression, the norms of more free markets and more global economic integration will be politically challenged only at the margins. New rules of finance may be introduced, but with enough loopholes that by 2015 Wall Street and the City will operate in much the same way as in the recent pre‐crisis past.     

Tackling the Down Side: Social Capital,Women’s Empowerment and Micro‐Finance in Cameroon

Micro‐finance programmes are currently dominated by the ‘financial self‐sustainability paradigm’ where women’s participation in groups is promoted as a key means of increasing financial sustainability while at the same time assumed to automatically empower them. This article examines the experience of seven micro‐finance programmes in Cameroon. The evidence indicates that micro‐finance programmes which build social capital can indeed make a significant contribution to women’s empowerment. However, serious questions need to be asked about what sorts of norms, networks and associations are to be promoted, in whose interests, and how they can best contribute to empowerment, particularly for the poorest women. Where the complexities of power relations and inequality are ignored, reliance on social capital as a mechanism for reducing programme costs may undermine programme aims not only of empowerment but also of financial sustainability and poverty targeting.     

Regional Financial Arrangements in the Global Financial Safety Net: The Arab Monetary Fund and the Eurasian Fund for Stabilization and Development

The so‐called global financial safety net provides backstop insurance during financial crises. The three elements of the global safety net — the IMF, regional financial arrangements (RFAs) and bilateral swap agreements — underwent substantial changes after the global financial crisis. How have these changes influenced their use? What role do RFAs have in the safety net? This contribution addresses these questions by examining the timeliness, volume and policy conditionality of liquidity provision of each of the three elements, using a data set of 50 RFA member countries from the period 1976–2015. The article presents case studies of the Arab Monetary Fund (AMF) and the Eurasian Fund for Stabilization and Development (EFSD) to create a deeper institutional understanding of the governance mechanisms of regional funds. The authors find that today's global financial safety net produces inequalities in emergency liquidity provision. In terms of volume, RFAs improve the safety net only for small member countries — about one‐third of the countries in the sample can access sufficient liquidity regionally. The experiences of AMF and EFSD demonstrate that intra‐regional asymmetries of RFAs play a contradictory role: while the participation of large economies leverages liquidity provision, it simultaneously creates difficulties for the governance of the regional body.     

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.     

Economic crisis in Korea and the degraded developmental state

This article analyses the Korean developmental state since the late 1990s, and argues that the state has continued to play a weighty role in the economy. The state guided industrial and financial restructuring after the Asian economic crisis, and intervened to stimulate the economy during the 2008 global financial crisis. In doing so, state elites have displayed a distinctive form of economic leadership that is largely consistent with the developmental state. Rather than focusing predominantly on performance-related indicators of state strength such as growth rates, this article analyses the deeper aspects of the developmental state, specifically its internal functions and its collaboration with business. The article brings politics back into analysis of the developmental state by questioning the assumption that strong economic performance is necessary for the maintenance of close ties between the state and chaebol. Instead, economic performance is better understood as a predictor of patterns of conflict and cooperation. Long-standing ties between the state and big business have endured two significant economic crises, even if the performance of the developmental state has been degraded compared to earlier decades.     

Constituting Corporate Europe: A Study of Elite Social Organization

Abstract: This article explores the emerging shape and form of the European corporate community since 1996. We examine the cohesion of corporate Europe through the network of interlocking corporate directorates and memberships in the European Round Table of Industrialists. We focus on the unequal structure of representation; the interplay of national and transnational aspects of the network; the role of finance capitalists as a signpost of a regime of internationalized finance capital; and the embeddedness of corporate Europe in the global corporate network. Although the transnational European network gained in strength while national networks eroded, expansion of the European network did not negate a structure of representation favoring the northwest. Bankers became less dominant, yet industrialists with financial connections formed the core of the European corporate community, signaling a departure from national corporate communities centered upon banks. At the threshold of the current economic crisis, corporate Europe comprised the most integrated segment of the global corporate elite.     

The role of negotiated developer obligations in financing large public infrastructure after the economic crisis in the Netherlands

The economic crisis that started in 2009 has negatively impacted in the Netherlands the available financial resources for urban development. Dutch municipalities struggle since then with falling local financial sources, especially since active public land policy, traditionally an important additional financial source, became not so profitable anymore. One supposed effect is the limited degree to which municipalities can nowadays finance public infrastructure that serves wider areas, thus more than one specific development site (i.e. ‘large’ public infrastructure). Until now, however, there are no data available that support this claim. In this paper, we explore this and the role that developer obligations can play as an alternative, compensating financial source. Developer obligations are in many countries a growing popular public value capturing instrument, but in the Netherlands, a relative new phenomenon. On the basis of surveys, interviews and policy analysis, we conclude that at least a quarter of Dutch municipalities use developer obligations to obtain financial sources for large infrastructure. This seems, however, so far not to compensate for the diminishing of other municipal financial sources. The paper ends with some speculation about the future evolvement of developer obligations in the Netherlands.     

Transforming the Developmental Welfare State in East Asia

This article attempts to explain changes and continuity in the developmental welfare states in Korea and Taiwan within the East Asian context. It first elaborates two strands of welfare developmentalism (selective vs. inclusive), and establishes that the welfare state in both countries fell into the selective category of developmental welfare states before the Asian economic crisis of 1997. The key principles of the selective strand of welfare developmentalism are productivism, selective social investment and authoritarianism; inclusive welfare development is based on productivism, universal social investment and democratic governance. The article then argues that the policy reform toward an inclusive welfare state in Korea and Taiwan was triggered by the need for structural reform in the economy. The need for economic reform, together with democratization, created institutional space in policy‐making for advocacy coalitions, which made successful advances towards greater social rights. Finally, the article argues that the experiences of Korea and Taiwan counter the neo‐liberal assertion that the role of social policy in economic development is minor, and emphasizes that the idea of an inclusive developmental welfare state should be explored in the wider context of economic and social development.     

States,Money and the Persistence of Colonial Financial Hierarchies in British West Africa

This article contributes to debates about the persistence of colonial hierarchies in global finance by examining the reproduction of key features of colonial monetary and financial systems through the end of formal colonialism in West Africa, with a focus on Ghana. The article draws together engagements with Marxian theories of money and of the colonial state, and an examination of a key period which has often not received sufficient direct attention in debates about colonialism and financial subordination: the breakdown and end of formal colonial rule, roughly between 1930 and 1960. The central puzzle addressed in this article is how, despite the explicit desire on the part of nationalist political leaders to overturn colonial financial systems, these wound up being reproduced through the negotiation of political independence. The article shows how the entanglements of colonial monetary and financial systems with processes of state formation posed severe limits on efforts to articulate a ‘developmental’ colonialism after World War II. Efforts to work around these limits ultimately reinforced the reliance of the colonial and postcolonial state on extractive and hierarchical structures of global finance. In short, the article shows how the contradictory position of the state in colonial capitalism is vital to understanding the persistence of colonial monetary and financial structures.     

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.     

The Sino-centric Capital Export Regime: State-backed and Flexible Capital in the Philippines

There is an ongoing debate as to whether Chinese capital can be described as developmental. While some argue that Chinese capital is simply a tool of the Chinese state to exploit the global South, others claim that Chinese capital opens new development opportunities. Rather than advancing a framework based upon either an exploitative or an egalitarian mode of development, this article argues that China's current crisis of overaccumulation has led to a so-called Sino-centric capital export regime, which sends out two types of capital to the global South. First, state-backed capital imposes a development model by modifying ‘local orders’, attempting to make host states legible by creating maps of peoples and terrains that surround China. These maps aim to improve China's ability to manage inter-state disputes. Second, flexible capital is interested in extricating itself from the conditions imposed on it in China. By moving into the global South, flexible capital breaks through the barriers placed by the Chinese state. As a by-product of this quest for extrication, flexible capital can generate new venues of accumulation and novel ways of organizing production. This article demonstrates these two types of capital using examples from Rodrigo Duterte's Philippines — the Kaliwa Dam project and online gambling — drawing on original field research and a newly generated dataset.     

‘If You Fall,Stand Up Again’: The Moral Nature of Financial Literacy in the Global South

Over the past decade a range of development actors have begun to implement financial literacy training in low‐income countries. These programmes have become a key pillar of financial inclusion projects targeting the rural poor but, to date, they have received little scholarly attention. This article draws on ethnographic observation of two financial literacy programmes implemented by microfinance institutions in Cambodia to examine the current practices of financial education in the global South. The findings highlight that while financial literacy training purports to be a technical, skill‐building intervention aimed at enabling knowledge, its practices work primarily to impress upon borrowers moral lessons associated with creditworthiness, while also stressing individual responsibility for debt stress. In this way, it furthers the goals of financial providers, but fails to address the complex and real problems of debt stress. The authors suggest that financial literacy, at least where it is enacted by microfinance providers, is unlikely to moderate the problems of over‐indebtedness faced by rural borrowers.     

Finance and Industrial Policy in Unsuccessful Developmental States: The Case of Pakistan

While a large body of research indicates that state‐directed finance worked for successful East Asian developers, the dominant assumption remains that countries with a weak state capacity, where corruption is rife, should not ‘try this at home’. In this article, that narrative is questioned through a case study of the role of the financial sector in Pakistan, which is widely considered to be a successful case of financial liberalization, contrasting the role of the publicly controlled financial system in the 1970s and 1980s with that of the liberalized financial system in the 2000s. Utilizing archival firm‐level and aggregate data, historic government documents, and interviews with policy makers, financial sector employees and industrialists, it is argued that in the Pakistani case, the withdrawal of state control over the financial sector led to a deterioration of outcomes. This resulted in the allocation of credit away from the productive sectors, namely industry and agriculture, towards unproductive sectors, for speculative purposes; and in the health of the financial sector not improving as expected, with non‐performing loans and corruption remaining a problem, and banks actually becoming a greater burden on government finances. This indicates that even states with weak capacity and flawed industrial policy may be better off with some degree of public control over finance.     

Rights to food with a human face in the global south

This article seeks to dispel the popular myth surrounding the food crises which precipitated food riots in the global South in 2008. Arguing from a structural and historical perspective, the article suggests that global hunger is a deep-rooted crisis that is embedded in the social and structural variables associated within the nation-state that places a restraint on the self-regulating capacity of nation-states in the South. Internationalizing the food crisis, however, will do more harm to the south’s agricultural transformation and rural development. The article argues for integrated rural development that will increase output growth through an institutional, technological, and marketing strategy.     

Coordinated Credit Spaces: The Globalization of Chinese Development Finance

This article examines the emergence of Chinese development finance on the global stage and evaluates the extent to which it differs from, complements and/or competes with the Western‐backed development finance institutions. Whereas the new, China‐backed multilaterals are closer to the Western model, especially the Asian Infrastructure Investment Bank, this analysis finds that China's national development finance is significantly distinct along three parameters — the scale and business model of Chinese finance relative to its Western counterparts, the composition and approach of China's lending portfolio, and the governance of China's development finance institutions. These differences can be seen as complements to the Western‐backed system, given that much of Chinese development finance has flowed into countries and sectors in which Western development finance institutions have ventured to a lesser extent. However, the globalization of Chinese development finance, patterned on the international diffusion of what is coined in this article as the ‘coordinated credit space model’, contrasts with Western development finance, governance and business models, and has triggered a competitive stance from Western actors. Either contestation or convergence are possible trajectories for the future, and the outcome will be determined by whichever can produce conditions akin to the ‘politics of productivity’.     

金融危机与日本业内规制演进分析

日本金融市场上历次出现的金融危机,暴露了日本金融规制体系存在的问题,也影响了金融业规制政策的重点和发展方向。1927年昭和银行危机后实施的对策为“护送舰队”式规制提供了前提。日本的泡沫经济、1997年的亚洲金融危机对规制产生了影响,2007年由美国爆发的金融危机及其引发的全球金融海啸,影响了日本金融业规制的发展。日本金融业规制在金融危机的影响下,从限制竞争的“事前规制”演进到注重健全经营的“事后规制”,目前正向“事前规制”与“事后规制”相结合的以防范系统性风险为目的的保护性规制体系演进。     

Better than Cash,but Beware the Costs: Electronic Payments Systems and Financial Inclusion in Developing Economies

This article considers current proposals for using electronic payments systems to promote financial inclusion — that is, to widen the availability of financial and monetary services in developing countries. While such systems can generate significant savings in the operation of monetary systems, payment services markets are typically uncompetitive and require regulatory and broader state interventions to ensure those savings are widely distributed. The use of those systems to broaden the reach of for‐profit lenders raises a number of concerns, as a growing literature has documented how microcredit initiatives in developing countries have resulted primarily in expansions in consumption credit to households, often under predatory terms. The authors advance two original arguments in this connection. First, the perverse results of many microcredit initiatives reflect the underdevelopment of the areas concerned: without broader development strategies, potentially transformative productive projects are rare and unprofitable to finance. In contrast, widespread unmet consumption needs ensure consumption credit offers lenders a profitable alternative business orientation. Second, and in light of this, electronic payments platforms can contribute to economic development by enabling the establishment of well‐regulated or public systems of electronic ‘narrow banks’ restricted from lending, but capable of widening access to affordable payments, savings and insurance services.