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As the world grapples with a financial crisis, leaders have called for a fundamental rethinking of global economic institutions. To explore the possibility of a new global economic architecture, AEI announces the launch of a series of four sessions at which the past performance and future prospects of the institutions
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that oversee global trade, development, and finance will be analyzed--as called for at the meeting of the Group of Twenty in November 2008.
At the first of these four AEI events, leading academics and practitioners from the fields of economics, international relations, and law will examine global economic institutions as a whole. Subsequent events will analyze the specific challenges to individual institutions: the International Monetary Fund, the World Bank, and the World Trade Organization.
| 8:15 a.m. | Registration | |
| 8:30 | Panel I: The View from Academia | |
| Panelists: | Dan Drezner, Tufts University | |
| Brink Lindsey, Cato Institute | ||
| T. N. Srinivasan, Yale University | ||
| Moderator: | Philip I. Levy, AEI | |
| 10: 00 | Panel II: The View from Practitioners | |
| Panelists: | Grant Aldonas, Center for Strategic and International Studies | |
| Kenneth Dam, Brookings Institution | ||
| Anne Krueger, Johns Hopkins University | ||
| Moderator: | Claude Barfield, AEI | |
| 11:15 | Adjournment |
WASHINGTON, MARCH 10, 2009--While the global financial crisis has spurred calls for rethinking global economic institutions, several leading academic and legal experts argued at an AEI Program in International Economics conference on February 20 that it is too soon to offer a full diagnosis of the current system's flaws.
Panelists at the first event in a series on rethinking global institutions discussed whether the current set of global economic institutions--the World Bank, the International Monetary Fund (IMF), and the World Trade Organization (WTO)--are capable of managing the current crisis and addressing the challenges of the twenty-first century.
T. N. Srinivasan of Yale University pointed out that policymakers and scholars have an incomplete understanding of the current crisis, and thus, he said, it is impossible to conduct causal analysis or propose sensible reforms. He warned against the "temptation to use the crisis to attempt far-reaching structural reforms." Such proposals may promise to alleviate short term worries--but at the expense of an even greater crisis in the long run. Srinivasan recommended:
- Confining the IMF mandate to maintaining stability of the global financial system and dispensing advice to member governments on fiscal, monetary, and exchange rate policies without getting mired in structural adjustment and poverty alleviation issues
- Downsizing the World Bank and limiting its lending and advising functions only to least-developed countries (LDCs) that lack the resources and the capacity to design and implement appropriate policies
- Restricting the WTO mandate to international trade in goods and services and keeping labor and environmental standards, competition policy, and other domestic regulatory issues out of the WTO's purview
Srinivasan also pointed to the need to reform the weighted voting mechanism in the IMF and the World Bank to reflect the new global economic order, but he noted that it was far more urgent to abandon the entitlement of the European Union and the United States, respectively, to choose heads of these organizations. In order to amplify LDCs' already strong voices in the WTO, Srinivasan said that more emphasis should be placed on capacity-building.
Anne Krueger of Johns Hopkins University lamented the excessive focus being placed on institutional governance, particularly with the issue of voting weights and the nationality of organization heads. Krueger stressed that the biggest problem lay in member countries' inability to formulate cohesive agendas, which rendered them incapable of following up on their prior commitments. Responding to moderator Claude Barfield's question about whether the Group of Twenty (G20) might be a better decision-making forum, Krueger noted the empty pledge the G20 made in November 2008 to thwart protectionism. Krueger also agreed with Srinivasan that the interactions between different components that contributed to the current economic crisis were not fully understood and that it would therefore be a big mistake to rush fundamental changes.
Dubbing the WTO the "crown jewel" of the multilateral system, Marc Busch of Georgetown University credited its relative success in the multilateral setting to its willingness to work within the limits set by its charter. He warned against saddling the organization with additional mandates that would broaden its scope.
Brink Lindsey of the Cato Institute argued that the main drivers in the international system are national governments and that international institutions play a minor role in shaping it. However, in response to moderator Philip I. Levy's question about whether the recent limitations on "Buy American" provisions demonstrated the current framework's ability to prevent member nations from reneging on prior international commitments, Lindsey conceded that international institutions do prevent backsliding by providing "extra inhibition to protectionism through internationalizing national-level commitment to open markets."
Kenneth Dam of the Brookings Institution noted that the demand for IMF funds is increasing in the global economic crisis and suggested that the IMF needs to focus not only on macroeconomic issues as it currently does, but also on more actively addressing financial issues.
Grant Aldonas of Split Rock International argued that the main obstacle to effective reform is the difficulty of deviating from the existing architecture. Speaking on the trade policy reform, Aldonas argued for the creation of a "free trade core group" of countries, strong incentives for middle-income countries to liberalize further, and harmonization of preferences for LDCs.
--DHARANA RIJAL
Grant Aldonas is a senior adviser at the Center for Strategic and International Studies. Previously, Mr. Aldonas was affiliated with the law firm Akin Gump Strauss Hauer & Feld, where his practice focused on international trade, investment, corporate governance, and corporate social responsibility. He is also the principal managing director of Split Rock International. He formerly served as the under secretary of commerce for international trade in the U.S. Department of Commerce and as the chief international trade counsel to the majority in the Senate Committee on Finance. He was responsible for granting extensions of trade negotiations, implementing trade agreements—including preferential trade arrangements such as the Generalized System of Preferences and the Caribbean Basin Initiative—and enforcing U.S. trade and customs laws. Prior to this, Mr. Aldonas was a partner with Miller & Chevalier, specializing in tax, international trade, investment, and litigation. He also served concurrently as counsel to the bipartisan Commission on U.S.-Pacific Trade and Investment Policy. Previously, he chaired the American Bar Association (ABA) Task Force on Multilateral Investment Agreements and was the vice chair of the ABA International Section’s Trade Committee and its Committee on Foreign Investment in the United States.
Claude Barfield is a resident scholar at AEI. He is the author or editor of a number of books on trade and science policy, including Free Trade, Sovereignty, Democracy: The Future of the World Trade Organization (AEI Press, 2001). In 1999, he coauthored Tiger by the Tail: China and the World Trade Organization (AEI Press) with Mark Groombridge. Mr. Barfield is working with Andrei Zlate on the forthcoming AEI Press book The Eagle and the Dragon: The United States, China, and the Rise of Asian Regionalism. Before coming to AEI, he served in the Gerald R. Ford administration on the staff of the Senate Governmental Affairs Committee and as a co–staff director of the President’s Commission for a National Agenda for the Eighties.
Marc Busch is the Karl F. Landegger Professor of International Business Diplomacy at the School of Foreign Service and associate professor in the government department at Georgetown University. His research and teaching focus on international trade policy and law. He is the author of Trade Warriors (Cambridge University Press, 1999) and various edited volumes. His articles have appeared in the American Journal of Political Science, the American Journal of Sociology, the British Journal of Political Science, the Fordham International Law Journal, International Organization, the Journal of Conflict Resolution, the Journal of World Trade, and World Politics. He was previously an associate professor at the Queen’s School of Business and, prior to that, an associate professor of government and social studies at Harvard University, where he was also the director of graduate student programs at Harvard’s Weatherhead Center for International Affairs. He has been awarded research grants from the National Science Foundation, the Social Sciences and Humanities Research Council of Canada, Harvard University, the John M. Olin Foundation, the John D. and Catherine T. MacArthur Foundation, the Center for Social Sciences at Columbia University, and the Institute for the Study of World Politics, among others. He is coeditor of the journal Economics & Politics.
Kenneth Dam is a member of the board of the Brookings Institution and serves as a senior fellow in the economic studies department. He is also a senior lecturer at the University of Chicago Law School. A former deputy secretary in the U.S. Departments of Treasury and State, Mr. Dam focuses on economic and U.S. foreign policy, national security, and science and technology. His publications include a number of books, most notably The GATT: Law and International Economic Organization (University of Chicago Press, 1970); Economic Policy Beyond the Headlines (University of Chicago Press, 1998), with George P. Shultz; and The Law-Growth Nexus: The Rule of Law and Economic Development (Brookings Institution Press, 2006). Mr. Dam is a board member of the Committee for Economic Development, a member of the Shadow Financial Regulatory Committee, and a member of the National Acadamies’ Science, Technology, and Law Panel. He was chairman of the German-American Academic Council and a board member of a number of nonprofit institutions, including the Council on Foreign Relations and the Chicago Council on Foreign Relations.
Anne Krueger is a professor of international economics at the Johns Hopkins School of Advanced International Studies, a distinguished fellow and past president of the American Economic Association, a member of the National Academy of Sciences, and a research associate of the National Bureau of Economic Research. She also served as first deputy managing director of the International Monetary Fund from September 1, 2001, to August 31, 2006. Previously, Ms. Krueger was the Herald L. and Caroline L. Ritch Professor in Humanities and Sciences in the economics department at Stanford University. She was also the founding director of Stanford’s Center for Research on Economic Development and Policy Reform and a senior fellow at the Hoover Institution. Ms. Krueger previously taught at the University of Minnesota and Duke University and, from 1982 to 1986, was the World Bank’s vice president for economics and research. A recipient of many economic prizes and awards, she has published extensively on policy reform in developing countries, the role of multilateral institutions in the international economy, and the political economy of trade policy. She has edited or coedited numerous books, including Economic Policy Reform: The Second Stage (University of Chicago Press, 2000) and The WTO as an International Organization (University of Chicago Press, 2000).
Philip I. Levy studies international trade and development at AEI. Before joining AEI, he handled international economic issues as a member of the secretary of state’s policy planning staff (2005–2006), was senior economist for trade on the President’s Council of Economic Advisers (2003–2005), and was a faculty member in Yale University’s department of economics (1994–2003). An economist by training, he has experience in many international trade and development policy issues, including free trade agreements, trade with China, antidumping policy, welfare effects of globalization, U.S. foreign assistance policy, and economic development policy.
Brink Lindsey is the director of the Center for Trade Policy Studies at the Cato Institute. Mr. Lindsey is the author of an important new book on globalization, Against the Dead Hand: The Uncertain Struggle for Global Capitalism (John Wiley & Sons, 2002). His writings have been published in the Wall Street Journal, the Financial Times, The New Republic, National Review, The Weekly Standard, and the Journal of World Trade. Mr. Lindsey has appeared on CNN, MSNBC, CNBC, BBC, National Public Radio, and PBS and is also a contributing editor at Reason magazine. An attorney with extensive experience in international trade regulation, he was formerly director of regulatory studies at the Cato Institute and senior editor of Regulation magazine.
T. N. Srinivasan is the Samuel C. Park Jr. Professor of Economics and professor in international and area studies at Yale University. He has also taught at the Indian Statistical Institute in Delhi and at numerous universities in the United States. His research interests include the Indian economy, international trade, development, agricultural economics, and microeconomic theory, and he has published extensively in these areas. His most recent book is Reintegrating India with the World Economy, with Suresh D. Tendulkar (Institute for International Economics, 2003). His other books on India include Eight Lectures on India’s Economic Reforms (Oxford University Press, 2000); Agriculture, Growth and Redistribution of Income: Policy Analysis with a General Equilibrium Model of India, with N. S. S. Narayana and K. Parikh (Allied Publishers, 1991); and Foreign Trade Regimes and Economic Development: India, with Jagdish Bhagwati (Columbia University Press, 1975). He has coedited several books, including Federalism and Economic Reform: International Perspectives, with Jessica Seddon Wallack (Cambridge University Press, 2006); Frontiers in Applied General Equilibrium Modeling: Essays in Honor of Herbert Scarf, with Timothy J. Kehoe and John Whalley (Cambridge University Press, 2005); and Poverty and Income Distribution in India, with P. K. Bardhan (Statistical Publishing Society, 1974). He is a foreign associate of the National Academy of Sciences and a fellow of the American Philosophical Society, the Econometric Society, and the American Academy of Arts and Sciences.
