Lamenting Weak Governance: Views on Global Finance

Abstract

International Financial Governance under Stress: Global Structures versus National Imperatives. Edited by Geoffrey R. D. Underhill, Xiaoke Zhang. Cambridge: Cambridge University Press, 2003. 410 pp., $75.00 (ISBN: 0-521-81732-3). International Financial Governance under Stress by Geoffrey Underhill and Xiaoke Zhang is too obviously a conference volume. The seventeen chapters, plus introduction and conclusion, are uneven. Nonetheless, the volume does contain worthwhile analyses and interesting stories, accessible to those who are familiar with the major contemporary debates about international finance. The book is organized thematically but not rigorously. The sections deal respectively with (1) concepts and arguments, (2) country case studies of emerging markets during the Asian financial crisis, (3) country case studies of “private-public interactions” in national financial regulation, and, finally, (4) norms and global governance. An alternative organization for the volume, focusing on the kinds of questions each contributor asks, might have helped clarify the ways these essays speak to one another. This review considers, instead, the contributions offering (1) prescriptive policy advice, (2) analysis of the political sociology of financial reform, and (3) theoretical perspectives on the “democratic deficit” in global financial governance. The policy-oriented economists who contribute to International Financial Governance under Stress want to know what works and what does not. For example, John Williamson examines a series of policy variables—including opaque public and private accounting, moral hazard in the domestic banking system, fiscal or monetary excess, the wrong exchange rate regime—in Asian countries that faced currency and banking crises in 1997–1998. He finds that the common experience of countries that suffered crises was recent capital account liberalization. Vijay Joshi views the Indian experience through a similar lens, and both authors recommend limited capital controls. Manmohan S. Kumar and Marcus Miller evaluate the technical feasibility of various institutional alternatives proposed to compensate for the absence of a global lender of last resort. Along the way, they provide some clues to the bargaining strategies of actors including the International Monetary Fund (IMF), the US government, and …