Every dynamic social system’s adaptive capacity is finite. Eventually, the ability of the system’s legal and
institutional arrangements to adapt to the changing operational context is exhausted. At this point, unless the
system is significantly reformed, it begins losing its legitimacy and efficacy.
This article contends that the structure, operation and scale of the global economy has changed so
dramatically that the current arrangements for global economic governance are approaching this crisis
moment. They are failing to deliver an inclusive, sustainable and efficient international economic system that
can contribute to peace, prosperity and human welfare. Their governance arrangements and operating practices
and procedures have not been adequately adapted to the new realities of the international political economy.
Key institutions are only slowly adjusting their current decision-making practices to the fact that the balance
of economic power among their members has shifted. They have also been slow in responding to the growing
importance of such non-state actors as corporations, civil society organizations and subnational governments
in the governance of the global economy.
The political will to make the necessary changes to the institutional arrangements for global economic
governance is lacking. This means that in the short to medium term, absent a serious crisis, there is limited
potential for reform. However, this does not mean that opportunities for meaningful partial reforms do not
exist. Those actors that are interested in reform need to carefully seek out those opportunities and, once
identified, use them to make the system more participatory, accountable and responsive to the concerns to all
stakeholders in the system. This in turn should enhance the capacity of the system to respond productively to
future opportunities for more profound changes in global economic governance.
In making this case, the article first briefly describes the key features of the order established after
World War II. Second, it discusses some of the changes that these institutions have undergone over the past 70
years. Third, it discusses the adjustments that, in fact, have been made in global economic governance. It also
indicates some ways in which opportunities for making the system more inclusive, responsive and accountable can be identified. Finally, it offers suggestions regarding possible changes within the current order and on the
role entities like the Group of 20 and the BRICS grouping of Brazil, Russia, India, China and South Africa
can play in promoting these changes.
It should be noted that, due to space limitations, while this article discusses global economic governance
in general, it concentrates primarily on the cases of the two most prominent institutions in global economic
governance – the International Monetary Fund (IMF) and the World Bank Group (the World Bank). The
reason for focusing on the IMF is that it is the most significant multilateral institution active in the governance of
international financial and monetary affairs. The World Bank is an important funder of development activity
even if it is not the largest such lender. It is the model that was used in setting up all of the regional multilateral
development banks (MDBs) and it has had an influence on the structure and function of other MDBs. It has
also been a thought leader in the area of development finance.