Can South–South Cooperation Compete? The Development Bank of Latin America and the Islamic Development Bank

Southern‐led multilateral development banks (MDBs) play a key role in harnessing global capital to finance the sectors most important to borrowers, especially infrastructure. Two prominent Southern MDBs, the Development Bank of Latin America (CAF) and the Islamic Development Bank (IsDB), have become crucial drivers of regional infrastructure growth. This article explores whether their performance has lived up to their goals of establishing borrower control over bank governance without sacrificing financial dynamism. Using power‐weighted voting indices for member representation on bank boards, the authors determine that these banks offer borrowers much more representation on their boards than do their Northern‐based counterparts, the Inter‐American Development Bank (IDB) and the World Bank International Bank for Reconstruction and Development (IBRD). The article also analyses bank operations to determine whether their governance structure impacts their internal performance, as reflected on balance sheets, and external performance — gaining relevance in development finance and particularly in infrastructure lending, including the burgeoning sector of sustainable (climate‐resilient) infrastructure. The authors find that the CAF and IsDB have become major players in development finance, including in sustainable infrastructure. However, important issues remain in relation to their continued internal capacity development, especially with regard to the environmental and social safeguards necessary to oversee lending.     

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.     

URBAN NETWORKS AND GOVERNANCE IN CITY‐REGION PLANNING: STATE‐LED REGION BUILDING IN NANJING CITY‐REGION,CHINA

During the transition towards a more market‐oriented economy and entrepreneurial governance, local authorities have attempted to create new cross‐jurisdiction regional entities to enhance their competitiveness through making city‐region plans or regional strategic plans in China. This article analyses the process of region building in China through a case study of Nanjing city‐region. We argue that region building is a state‐led regional project in China, not a spontaneous process. City‐region planning has played a legitimacy‐seeking role in the construction of new regions. Based on the discourse provided by the city‐region plan, associated city networks are being created as a mechanism for plan implementation and regional coordination. This signals that regional planning is entering the stage of regional institution building. By assessing the capacity of regional institutions, we argue that the newly‐emerged regional institutions or urban networks have facilitated regionalization in terms of the increasing involvement of non‐state actors, the formation of regional coherence and identity and the enhanced inter‐city co‐operation. However, it is still difficult to establish effective regional governance due to competing local governments, the arbitrary political leadership and the fragmented planning functions.     

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.     

Paths ahead for East Asia and Asia–Pacific regionalism

East Asia and the Asia–Pacific are core components of the global economy, and there have been important recent developments in the regionalism of both regions. After the 1997–1998 financial crisis, East Asian countries initiated more exclusive regional cooperation and integration ventures mainly through ASEAN Plus Three, but lately this process has stumbled. The Asia–Pacific Economic Cooperation (APEC) forum has also failed to make substantial progress. Attention has instead increasingly turned to free trade agreements (FTAs), yet these have hitherto been overwhelmingly bilateral in nature. There are still only a few truly regional FTAs in East Asia and the Asia–Pacific—and these are on a sub‐regional scale. However, various frustrations over the messy and fractious pattern of heterogeneous bilateral agreements led to the recent initiation of ‘grand regional’ FTA talks. The Trans‐Pacific Partnership (TPP) is an Asia–Pacific‐based, United States‐led project while the Regional Comprehensive Economic Partnership (RCEP) is an East Asia‐centred project. Each contains highly diverse memberships and the successful conclusion of TPP and RCEP talks is not assured. It is argued that, if negotiated, the RCEP is more likely to advance meaningful and effective regionalism than the TPP due to the former ascribing more importance to regional community‐building. Furthermore, bilateral FTAs already in force may over the long term transform into more comprehensive economic agreements that address new regional and global challenges such as energy security and climate change.     

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.     

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.     

The (Ineffective) Financial Statecraft of China's Bilateral Swap Agreements

Since 2008, the People's Bank of China has signed bilateral swap agreements (BSAs) with 35 foreign central banks. Collectively, these deals amount to nearly US$ 500 billion in Chinese renminbi (RMB) available to Beijing's foreign partners. What has led China to be so aggressive in its efforts to sign so many swap agreements? What are the political economic implications of the swap programme for the US‐centric global economic order? China's BSAs can be understood as a form of financial statecraft: the use of national financial and monetary capabilities to achieve foreign policy ends. China has deployed BSAs for both defensive and offensive reasons. Defensively, Beijing has sought to use BSAs to promote trade settlement in RMB thereby reducing China's vulnerability to the dollar's structural dominance in trade. Yet, as explained in this article, they have been ineffective in this regard. Offensively, Beijing has used BSAs as a short‐term liquidity backstop outside of the Bretton Woods institutions for partner countries in need. Here, there is greater potential for BSAs to impact the status quo economic order by enhancing Chinese economic influence. However, their potential is dependent on Beijing's willingness to act as a unilateral crisis lender and its ability to further internationalize the RMB.     

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.     

Blurring the Borders. How the Central Banks of the European Neutrals During the First World War Became Part of the State Machinery: Examining the Case of Norway

Abstract

This article analyses the relationship between the central banks and governments in the neutral countries during the First World War, with focus on the Norwegian development. It examines how independence was challenged, and the framework is a concept of central bank independence, which regards non-lending to the state as vital to the functioning of the central banks. This is a novel approach to the development during the war as the perspective has barely been discussed in the literature in Norway, and also seems to be disregarded in the standard international literature on central bank development. From this perspective the article argues that the Norwegian central bank’s pre-war independence was substantial compared to other central banks. Moreover, the distinct borders between central bank and government also safeguarded Norges Bank’s autonomy longer than in comparable countries after the outbreak of war. However, by the end of the war, Norges Bank had become one of the neutral central banks most interwoven with the state. Based on the historical development in different countries, the article questions the notion of the standard literature that lending to the state in a crisis was a central bank duty.     

IS THERE A NEW ‘TRUST’ IN INNER SCANDINAVIA? EVIDENCE FROM CROSS‐BORDER PLANNING AND GOVERNANCE

Inner Scandinavia is one of the Swedish‐Norwegian INTERREG‐A three sub‐programmes, and has been working in operationalizing cross‐border projects in the border area since 1994. To date, several cross‐border strategies have been implemented, one for each programming period of the INTERREG‐A programme. This article investigates whether these strategies can be regarded as a type of cross‐border planning mechanism in promoting territorial development of the border region. It does so by developing a typology, which captures the essentials of spatial planning, against the background of which the article also analyses Inner Scandinavia governance structures, which involves a whole set of interconnected territorial partnerships between five border counties: Hedmark, Østfold, Akershus (Norway), Värmland and Dalarna (Sweden). Here, the main goal is to see if the Inner Scandinavia governance structure, which was recently altered by the inclusion of the Hedmark–Dalarna cross‐border committee, also known as TRUST, is favourable to the implementation of a genuine and long‐term cross‐border spatial plan, with the ultimate goal of reducing the barrier effect and improving the territorial capital along the cross‐border region. Project dokuments and interviews indicate that the existing cross‐border governance model in Inner Scandinavia, led by the INTERREG‐A Steering Committee, produced substantial progresses in reducing the barrier effect, in all its dimensions, and in supporting the territorial development across the border area. Consequently, the role of other cross‐border governance structures should be confined to promoting the active involvement and mobilization of local and regional actors in the cross‐border cooperation process, and in implementing several cross‐border projects with local/regional significance.     

The Anti‐Politics of Climate Finance: The Creation and Performativity of the Green Climate Fund

This paper is an empirical case study of the institutional design process of the Green Climate Fund (GCF) of the United Nations Framework Convention on Climate Change from December 2011 to May 2014. Powerful countries, corporations and banks have favoured a deepening of neoliberal environmental governance, while civil society actors have argued over retaining movement concepts, won small representational victories, while participating in a process that has subjected them to a deepened practise of advanced liberal governance. The process has thus far produced “non‐outcomes” that fail to meet hopes that the GCF could provide a significant scaling up and paradigm shift in global climate finance. However, civil society engagement appears to be, somewhat inadvertently, exposing the “overflows”, limits and contradictions inherent in advanced liberal governance. The impasse created has prompted alternative governmentalities to emerge, not least of spectacle and (non‐)performativity, which may be generating an anti‐politics in environmental governance.     

The Neoliberal Seduction: Governing‐at‐a‐Distance,Community Development and the Battle over Financial Services Provision in Australia

This paper is concerned with understanding the reasons for the apparent success of neoliberalism: why the model of the ‘entrepreneurial, self‐reliant community’ has been adopted so widely and readily across Australia. It does this through an analysis of two events in the restructuring of financial services provision in regional Australia during the 1990s and 2000s: the John Laws/Australian Bankers’ Association ‘cash for comment’ affair, and the rise of ‘alternative’ financial service providers in the wake of the major trading banks’ financial service withdrawal programmes of the 1990s. This analysis is conducted using the conceptual toolkit of the governmentality literature. In this context, the paper explores the notion of translation — how authorities, agencies, etc., exert control over distant entities, whether these entities be branch staff or a far‐flung consumer market. In examining the often fragile character of ‘governing‐at‐a‐distance’ in modern forms of rule, it is argued that some recent advances in the ‘geography of power’ have much to offer in highlighting both the important roles played by space and scale in the execution of power in its various guises and the ways in which resistance to the more regressive features of neoliberal philosophy and policy may best focus.     

The Hollowing Out of Brazilian Metropolitan Governance As We Know It: Restructuring and Rescaling the Developmental State in Metropolitan Space

Despite regulatory and financial rollout of the state at a number of scales, and a strengthening of the institutional framework that guides territorial planning and management, Brazilian metropolitan governance continues to be characterized by fragmented and relatively competitive organizational structures. Likewise, the Brazilian metropolis is marked by economic dynamism and intense socio‐spatial and environmental contradictions. Much of the mainstream literature on metropolitan governance has emphasized a natural “optimum” scale for planning and management in city‐regions, articulated by public and private stakeholders aimed at the coordinated delivery of economic, social and environmental services. Combining the literature on new state spaces and critical Brazilian urban‐regional studies, this paper provides an alternative framework to understand the impasse of Brazilian metropolitan areas, which is grounded within a geo‐historic reading of the contradictory projects and strategies of the developmental state and the contested nature of metropolitan scale itself.     

Campaign disconnect: operational progress and strategic obstacles in Afghanistan, 2009–2011

Success in war depends on alignment between operations and strategy. Commonly, such alignment takes time as civilian and military leaders assess the effectiveness of operations and adjust them to ensure that strategic objectives are achieved. This article assesses prospects for the US‐led campaign in Afghanistan. Drawing on extensive field research, the authors find that significant progress has been made at the operational level in four key areas: the approach to counterinsurgency operations, development of Afghan security forces, growth of Afghan sub‐national governance and military momentum on the ground. However, the situation is bleak at the strategic level. The article identifies three strategic obstacles to campaign success: corruption in Afghan national government, war‐weariness in NATO countries and insurgent safe havens in Pakistan. These strategic problems require political developments that are beyond the capabilities of the International Security Assistance Force (ISAF). In other words, further progress at the operational level will not bring ‘victory’. It concludes, therefore, that there is an operational‐strategic disconnect at the heart of the ISAF campaign.     

Science and Technology at the World Bank, 1968–83

The World Bank was an important supporter of science and technology during the period 1968–83. President Robert McNamara’s poverty oriented strategy created challenges that led to technological research, technology assessment and technological innovation in agriculture, forestry, civil works construction, sanitation, and many other fields of development. The Bank also pioneered in financing governmental mechanisms to stimulate industrial innovation. On the other hand, its support to science and technology was limited by lack of an overall policy and systematic support from top management, as well as by cumbersome procedures designed for large infrastructural projects. Even so, its financial independence, its strong leadership, its experienced and non‐political technical staff, and its ability to scale up successful innovations through its project lending, made it an important promoter of appropriate technology in the developing world.     

The governance bank

While the cancellation of a number of high‐profile loans because of corruption concerns has made headline news, the World Bank's principal approach to poorly governed countries is lending in order to support reforms. Although designed to be an apolitical technocratic development financier, increasingly the Bank has focused its attention and resources on promoting good governance in its borrowers. Bank lawyers and presidents have attempted to hive of apolitical aspects of governance by arguing a distinction between the rule of law and the political character of government, but this distinction is illusory. The Bank's inability to address the political embeddedness of poor governance in neo‐patrimonial governments skews risk assessments and impedes the formation of effective strategies. Reform of the charter would not eliminate the Bank's bureaucratic and political constraints.     

When Governance Gets Going: Certifying ‘Better Cotton’ and ‘Better Sugarcane’

As many new certification systems for commodities have been established over the past decade, scholars have devoted sustained attention to the ways that these multi‐stakeholder governance initiatives have transformed the industries in which they were launched. With a few notable exceptions, studies in this area have continued to focus on the development and impacts of new governance mechanisms, and on the sectoral or industrial changes that have ensued. In contrast to these ‘inside‐out’ perspectives on governance innovation and change, this article considers how two prominent yet relatively under‐studied commodity governance initiatives have been shaped by the broader political economic order in which they operate. To offer an ‘outside‐in’ account of the Better Cotton Initiative (BCI) and Bonsucro (formerly the Better Sugarcane Initiative), the article details recent changes in what the author terms the ‘world commodity order’, and situates the BCI and Bonsucro within this order. From this vantage point, the author ultimately makes two analytical claims: (i) that the world commodity order has not precluded the differential institutionalization of these initiatives; and (ii) that aspects of the order have circumscribed the potential of the BCI and Bonsucro to deliver pro‐poor business practices.     

World Bank Influence and Institutional Reform in Argentina

During the 1990s, reforms concerned with ‘good governance’ became popular with multilateral and bilateral lenders. This trend was led by the World Bank, which claimed that in order to achieve economic development, institutions mattered. This article looks at governance reforms in Argentina, specifically in the judicial sector, and contends that World Bank involvement affected the nature, reach and depth of these initiatives. The influence of the Bank can be traced through three dimensions that have characterized its approach to institutional reform: donor‐driven designs for project reform; reliance on technical approaches; and restricted forms of decision making in project initiatives. Such an approach to institutional change conditioned domestic reform in Argentina and contributed to piecemeal and inadequate initiatives. The author also argues that the Bank's approach in Argentina can be traced to wider strategies that derive from embedded institutional practices and ideological foundations within the institution that throw into question the Bank's capacities to promote such reforms.