Ngaire Woods

The Politics of Global Regulation

List of Figures and Tables vii Introduction ix CHAPTER ONE: In Whose Benefit? Explaining Regulatory Change in Global Politics by Walter Mattli and Ngaire Woods 1 CHAPTER TWO: The Governance Triangle: Regulatory Standards Institutions and the Shadow of the State by Kenneth W. Abbott and Duncan Snidal 44 CHAPTER THREE: Filling a Hole in Global Financial Governance? The Politics of Regulating Sovereign Debt Restructuring by Eric Helleiner 89 CHAPTER FOUR: From State Responsibility to Individual Criminal Accountability: A New Regulatory Model for Core Human Rights Violations by Kathryn Sikkink 121 CHAPTER FIVE: The Private Regulation of Global Corporate Conduct by David Vogel 151 CHAPTER SIX: Racing to the Top ... at Last: The Regulation of Safety in Shipping by Samuel Barrows 189 CHAPTER SEVEN: Regulatory Shift: The Rise of Judicial Liberalization at the WTO by Judith L. Goldstein and Richard H. Steinberg 211 CHAPTER EIGHT: Economic Integration and Global Governance: Why So Little Supranationalism? By Miles Kahler and David A. Lake 242 List of Contributors 277 Index 279

Making the IMF and the World Bank more Accountable

The International Monetary Fund (IMF) and the World Bank (the Bank) are now regularly accused of being secretive, unaccountable and ineffective. Not only radical non-governmental organizations (NGOs) but equally their major shareholders are demanding that the institutions become more transparent, more accountable and more participatory. Accountability, in particular, has become the catchcry of officials, scholars and activists in discussing the reform of the institutions. Yet few attempts have been made to dissect the existing structure of accountability within the international financial institutions (IFIs), to explain its flaws and to propose solutions. That is the aim of this article. The first section examines the structure of accountability planned by the founders of the IMF and the World Bank. The second section discusses the defects in this structure. Section three analyses recent attempts to make the institutions more accountable. The conclusion offers some recommendations for improving the institutions, and a warning about the limits of accountability at the international level.

Governance and the Limits of Accountability: The WTO, the IMF, and the World Bank

Over the past two decades the functions of international economic institutions have greatly expanded to include programmes and policies which affect a wider range of people, groups, and organisations than before. Where previously people could hold their national governments to account for such policies, they must now look to international institutions where the decisions are being made. But to whom are these institutions accountable and are they accountable to those whom they directly affect? This paper sets out to answer that question in respect of the IMF, the World Bank, and the WTO. After analysing the new intrusiveness of the WTO, the IMF, and the World Bank, we explore how the concept of accountability might best be applied to international economic institutions. The paper then outlines the specific ways in which the IMF, World Bank, and WTO have recently bolstered their accountability through enhanced transparency and monitoring. In conclusion, however, the paper argues that in spite of improvements in accountability, the international economic institutions have not gone far enough in reforming their governance structures. There is a remaining imbalance between what they do, and their legitimacy as perceived by those they affect.

Uneven Patterns of Governance: How Developing Countries Are Represented in the IMF

ABSTRACT The IMF is governed by a 24-member Executive Board which represents 184 countries. Although often prized as a small and efficient decision-making body, the Board represents some countries more effectively than others. This is due to the institutional structure and incentives within which the Board operates. Prime among them is a system of constituencies which have formed and evolved as countries have sought to improve their position in the organization. These groups vary in size, shared interests, and distribution of power. Their effectiveness is not only affected by these attributes. It is also determined by decision-making rules across the institution, by the lack of formal accountability of Board members, and by the strength of other coalitions of countries acting informally within the institution. The analysis implies that representation on the IMF Board could be improved without altering the size of the Board.

The politics of influence: An analysis of IMF surveillance

ABSTRACT IMF surveillance is typically thought to have effect because it provides useful information to member countries, because it engages countries in cooperative behaviour or because it piggy-backs the bargaining power the IMF enjoys in some countries. This article explores IMF surveillance by bringing to bear theoretical explanations as to why and how these effects might work. The simplest explanation is a rationalist-realist one that the IMF has impact in countries over whom it has bargaining power: this is borne out by the evidence regarding IMF surveillance in aid-dependent countries. However, this is not the only condition under which surveillance might work. Rationalist-institutionalists point to the role information plays in shaping competition and cooperation among states, and this effect is borne out to a limited degree by the impact of IMF-supported international standards and surveillance activities on the other economies. Finally, constructivists would describe the possible impact of surveillance in terms of learning or socialization, focusing on the social organization and impact of the IMFs activities. The evidence, however, suggests that neither bilateral nor multilateral surveillance is structured or organized in a way that promotes learning or socialization. The implications are that for IMF surveillance to be more effective across all its members would require restructuring the way the organization engages with its members, as well as a greater delegation of authority by countries to the organization.

Trojan Multilateralism: Global Cooperation in Health

article argues that recent global health cooperation has been marked by two trends. First, there has been a highly successful proliferation of vertical funds to fight specific diseases. These are characterized by narrower problem-based mandates; multistakeholder governance; voluntary and discretionary funding; no in-country presence for the delivery of assistance; and an output-based legitimacy (based on effectiveness, not process). The rise of new initiatives with these characteristics has dovetailed with an increase in the funding of international organizations. However, the latter has not necessarily strengthened multilateralism. Instead, rapid increases in discretionary earmarked funding to the WHO and World Bank, which we call Trojan multilateralism, has replicated features of the vertical funds. With what conse- quences for international cooperation? Using principal-agent theory, we find a mixed picture. International organiza- tions are being redirected by specific incentives. However, two constraints on bilateral control are not shifting. There is a persistent asymmetry of information between the WHO or the World Bank and individual member states, which gives the former a degree of autonomy. Equally, there are persistent obstacles to tightening bilateral monitoring of multilat- eral action. We conclude that the positive lessons to be drawn from vertical initiatives need to be balanced by the risks posed from a convergence of vertical initiatives and Trojan multilateralism

Are there simple conclusions on how to channel health funding

In The Lancet today, Chunling Lu and colleagues present an important study identifying the key determinants of government spending on health in developing countries. These researchers present a nuanced and careful discussion of their fi ndings. We worry that others will draw two rather crude conclusions. The fi rst is that development assistance given directly to governments has a negative eff ect on government spending on health, and therefore funding for health should not be routed through governments. The second is that assistance given to non-governmental organisations (NGOs) has a positive eff ect on government spending, and therefore funding should be routed through NGOs. There are at least three reasons not to draw these conclusions. We urge you to pay attention to the caveats and suggestions for further research made by the authors themselves. First, there are major problems with the data both on government spending on health as well as on development assistance for health, which make it diffi cult to draw fi rm conclusions. Lu and colleagues have accomplished a herculean task in generating a dataset on health spending in developing countries, yet questions remain on the validity of these data. For government health spending, the authors rely on data from WHO (if 90% of the spending was obtained from country reports) and from the International Monetary Fund (IMF), and then impute missing values (41% for WHO low-income countries, 25% for IMF). Even for the non-missing data there are serious questions about quality. For example, the IMF and WHO data do not match up; the correlation between the two datasets is only 0·65. For development assistance for health, Lu and colleagues rely on a published dataset on development assistance which, when used for this analysis, leads to four sources of bias. First, the database relies on donors’ disbursements, not how much is received by the country. The gap between what is disbursed by donors and what is actually received by governments is not insignifi cant. Second, offi cial sources of development assistance, which the previous database draws on, do not fully capture the fi nancial fl ows going to NGOs. These two issues would result in overestimates of the development assistance governments receive. This is off set by two additional sources of bias: a substantial amount of development assistance for health, US

Editorial introduction. Globalization: Definitions, debates and implications

13·3 billion in 2006, cannot be traced to developing countries and thus is not linked to particular governments. Finally, the database does not capture donors that are not members of the Development Assistance Committee 8 Eddy DM, Schlessinger L, Kahn R. Clinical outcomes and cost-eff ectiveness of strategies for managing people at high risk for diabetes. Ann Intern Med 2005; 143: 251–64. 9 Gillies C, Lambert PC, Abrams KR, et al. Diff erent strategies for screening and prevention of type 2 diabetes in adults: cost eff ectiveness analysis. BMJ 2008; 336: 1180–85. 10 Eddy DM, Schlessinger L. Validation of the Archimedes diabetes model. Diabetes Care 2003; 26: 3102–10. 11 Stern M, Williams K, Eddy D, Kahn R. Validation of prediction of diabetes by the Archimedes model and comparison with other predicting models. Diabetes Care 2008; 31: 1670–71. 12 Sandbaek A, Griffi n SJ, Rutten G, et al. Stepwise screening for diabetes identifi es people with high but modifi able coronary heart disease risk: the ADDITION study. Diabetologia 2008; 51: 1127–34. 13 Glümer C, Yuyun M, Griffi n S, et al. What determines the cost-eff ectiveness of diabetes screening? Diabetologia 2006; 49: 1536–44. 14 Janssen PG, Gorter KJ, Stolk RP, Rutten GE. Randomised controlled trial of intensive multifactorial treatment for cardiovascular risk in patients with screen-detected type 2 diabetes: 1-year data from the ADDITION Netherlands study. Br J Gen Pract 2009; 59: 43–48.

Trade, Regionalism and the Threat to Multilateralism

This introduction contrasts three competing interpretations of globalization which appear in contributions to this issue. The market-centred approach is contrasted with a state-centred perspective, and finally with a people-centred interpretation of the nature and impact of globalization. The paper then draws together the lessons for developing countries which follow from the analyses of trade, investment, finance, policy choices and reactions against globalization.

Russia and the IMF

Globalization is having a profound effect on the political economy of trade.1 Over the past decade more countries than ever before have been persuaded to push aside protective barriers and further integrate into the world economy, attracted by the possibilities of world markets. These new entrants include a wide range of developing countries and the former Soviet or Eastern bloc economies. The result is a pattern of international trade which poses significant challenges to the multilateral regime which evolved under the auspices of the General Agreement on Trade and Tariffs (GATT) and continues under the World Trade Organization (the WTO).