Establishing a new Global Economic Council: governance reform at the G20, the IMF and the World Bank
The literature on international network governance commonly presumes an ‘effectiveness-legitimacy dilemma’: gains in effectiveness at problem solving, perhaps via smaller size, come at cost to legitimacy, because the smaller the network the more those expected to comply with network decisions are excluded and are therefore less likely to accept network decisions; and gains in legitimacy come at cost to effectiveness, perhaps because of more diversity of interests. In the case of the G20, however, the dilemma breaks down, because the G20 scores low on both effectiveness and legitimacy. In this article we present a design for a new global economic governance body, based on explicit membership criteria (as the G20 is not), in the form of a modified version of the Bretton Woods (World Bank and IMF) governance arrangement. The proposed new Global Economic Council (GEC), operating at heads of government level and below, would likely bring substantial gains in both effectiveness and legitimacy.
- A more legitimate global economic governance body should be created not by tweaking the existing G20 but by starting from the constituency system of the Bretton Woods organizations and modifying it to make it more equitably representative. Then the newly established GEC, the World Bank and the IMF would have the same constituencies.
- The GEC should have 25 seats, 16 of which are to be allocated among four regions: Africa, Americas, Asia and Europe. The remaining nine seats should be allocated on the basis of economic weight (GDP). Allocating two thirds of the seats on a regional basis sends an important signal of the new multipolar order.
- The legitimacy problems of the Bretton Woods institutions resulting from their continuing voting power imbalances should be addressed by reforming their voting power systems so as to reflect only relative economic weight (as measured by GDP).
- The GEC should exercise strategic oversight over the Bretton Woods organizations, and possibly beyond to other economic and social agencies of the United Nations system. It might be responsible for appointing their heads.