Can soft power help the IMF make the world more stable?

Abstract

In an integrated world, one of the more intractable problems we have to deal with is how to ensure all countries undertake macroeconomic policies that are in the global interest even when these go against short-term domestic political compulsions. It is unlikely that countries will sign up to a common set of policy rules, nor is it probable that peer pressure alone will convince countries to co-operate. This paper argues that multilateral institutions have to do more to sell the global policy consensus to the influential public in each country, so that leaders are pushed by domestic constituencies to internalize the global good. Rather than solely a top down process of global policy-making, where grand summits make little progress, we also need a bottom up approach, where the summiteers will feel the pressure for global deals from their primary domestic constituencies.