Economic Governance Structure Research Articles

How could a new universal code of conduct prevent and resolve sovereign debt crises? Proposals for design and implementation

AbstractIn response to the COVID‐19 crisis, government spending around the world has increased significantly and will continue to grow as interest rates rise. In view of protracted and costly sovereign debt restructurings in the previous decades, contractual and noncontractual instruments of the Global Debt Governance‐system have been insufficient to prevent and to resolve sovereign debt crisis. While statutory and comprehensive approaches to resolve sovereign debt crises lack the political support such as an insolvency procedure for states incomprehensive contractual approaches including collective action clauses (CACs) cannot fully secure a comprehensive debt resolution. Codes of conduct could constitute an essential instrument to contribute to preventing and resolving sovereign debt crises. There are two main impediments for establishing and adopting such codes of conduct effectively. First, a range of codes of conduct with different institutional settings and principles have been established − and partly implemented − including those of the Institute of International Finance, the United Nations, the G20, the IMF and the OECD. However, differing institutional settings do not contribute to preventing or effectively resolving debt crises when the actors concerned apply different codes of conduct. We suggest a new universal code of conduct in which the elements of the various proposals made by the public and private sectors would be combined. Second, the global economic governance structure lacks incentives for creditors and debtors to adhere to this new universal code of conduct. This paper proposes measures providing incentives for creditors and debtors to apply the nonstatutory code of conduct.

Generating conditions of strong social support for wind power: insights from community-owned wind energy projects

ABSTRACT In community-owned windfarms, community members are involved in initiating, developing, owning and benefiting from the windfarm. As such, these projects facilitate multiple opportunities for local people to participate in development processes and outcomes. However, like any form of development, community-owned windfarms vary significantly from project to project. Specifically, projects employ different business models – including different economic arrangements, governance structures and community engagement practices – which have significant implications for the degree of community participation enabled and the types of social outcomes experienced. Through qualitative analysis of Australia's two (and only) operating community-owned windfarms, this article presents unique insights into the relationships between windfarm business models and social outcomes. The article reveals the importance of participation to realising a range of positive social outcomes, including experiences of empowerment and active support for wind energy. The findings indicate that community participation in windfarm processes and outcomes, over time and in ways that are sustained and multifaceted, contributes to generating conditions of strong social support. The insights are applicable to improving social outcomes across all models of wind development.

The changing political economy of central state-owned oil companies in China

This research seeks to reconceptualise the process of marketizing central state-owned enterprises (CSOEs) in the Chinese petroleum industry by interpreting their institutional establishment and reconstruction, and the change in their institutional context. The enterprise reform of state-owned oil companies, and the partial market liberalization initiated in the 1980s, have not pushed the petroleum sector toward the trajectory of the neoliberal free market. On the contrary, the state’s ascendency has been reconsolidated, and the institutional practice adhered to has made market-shaping possible. The state’s role is not fixed; rather, it has varied following the marketization process of the CSOEs. The state has reconstructed its role to strengthen its authority in the market, using market mechanisms to effectively improve its power to construct a flexible economic governance structure. In such a structure, where the state and market have mutually shaped each other, the combination of the two seemingly conflicting concepts of marketization and economic security has, to some degree, fostered the development of state-owned oil companies and expanded the scale of their asset-holding. The paper contributes to the broader discussion of state-market relationships and the institutionalization of energy governance with regard to China’s integration into the global capitalist economy.

Opportunities and Risk Assessment of BRICs New Development Bank*—— New Big Powers Coordination Perspective

Abstract:Under the background of counter economic globalization, the group of twenty (G20) has become the primary platform for the east and west powers to seek consultation and dialogue. And the coordination mechanism of the new global powers has come into being slowly. As a multilateral regional bank, the BRICsBank takes the interests of developing countries as the leading factor. Based on international economic cooperation ground, it will broaden the South-South cooperation to create more convenient conditions for foreign direct investment, as well as bilateral and multilateral financial cooperation. The opportunities and risks analysis of the BRICsBank from new power coordination perspective, with global economy governance structure transformation as the starting point, this research accurately defines the concept of coordination mechanism, systematically analyzes the evolution of global economic governance structure, intensively interpretsthe current characteristics of big power coordination mode in global economic governance structure, and objective assessestrends of global political and economic pattern.It is of important policy referenceimplications for China to effectively promote the BRICs Bank institutionalization andglobal governance of new power coordination nature.

The Future of EU Environmental Policy: Challenges & Opportunities

EU environmental policy is facing a new and challenging context. The current economic and financial preoccupations in Europe are unlikely to fade away quickly. It is difficult to forecast when instabilities in financial markets, uncertainties over economic and job prospects and pressure to maintain austerity regimes will end. The crisis in the Eurozone has led to bigger questions concerning the role of regulation and aspects of the EU project itself; particularly but not exclusively in the UK where political tensions have been brought to the fore in recent months. Details of a new inter-governmental agreement on the economic governance of the Eurozone are currently being negotiated. Most existing EU policies, including those concerning the environment, are not likely to be affected by this agreement. However, the political repercussions and dynamics of the new economic governance structure are yet to unfold and may spread beyond the arenas of fiscal and budgetary policy. For these reasons, conditions for the further development of a proactive EU environmental policy may not look favourable. Nonetheless, several environmental challenges call for a response as a matter of urgency, both within Europe and on a global scale. Many of these issues need to be addressed at a European level and there is a clear link to the single market as well as the ecological integrity of the continent. The current economic situation also offers a number of opportunities for promoting the environmental policy agenda, particularly in view of fostering an efficiency revolution. It has given an impetus to concepts such as the green economy, green growth, resource efficiency etc., which are increasingly reflected in mainstream political discourse both in the EU and domestically. Thus, even in a period of economic recession and political upheaval, the environmental perspective should remain a cornerstone of strategies for the future economy.

Disciplining Europe – The Production of Economic Delinquency

The main goal of the following article is to offer a Foucaultian reading of the economic governance structure of the European Union after the reforms passed and implemented over the last six years. The starting point is a reconstruction of Foucault’s analytical framework to scrutinize disciplinary power as well as the respective apparatuses and how this framework has been integrated into the more encompassing governmentality perspective. In the second section I provide a brief survey of the strategic terrain of the European Union as a site of multi-level governance that poses unique challenges from a governing perspective. The following sections are structured according to some key characteristics of disciplinary/governmental power arrangements (visibilization, norm(aliz)ation, prevention, normalizing judgement) which I try to identify in the context of the European Semester, the Six-Pack and the Macroeconomic Imbalance Procedure as elements of a broader disciplinary framework. The final section draws on Foucault’s famous point about the ‘productive failure’ of the prison as a disciplinary apparatus that ends up serving ends and purposes quite distinct from the ones officially declared and suggests that we should also consider the European regime of economic discipline and surveillance as one, which is ‘failing forward’, creating opportunity structures to pursue political projects that may differ markedly from those officially stated.

Running the Obstacle Race towards Public Accounting Harmonization in EU-28: A Temporal Study

The European Commission has recently started a project aimed at harmonizing EU public accounting systems through the development of European Public Sector Accounting Standards (EPSAS). The project is a response to the lack of coherence between primary public-sector accounts and government financial statistics, in order to strengthen the economic governance structure in the euro area. This paper aims to show that the divergences (adjustments) between the measures of surplus/deficit in governmental (working balance, WB) and national accounting (net borrowing lending, NBL) vary over time to provide future research opportunities around the factors that, affecting temporal divergences between these measures, enhance fiscal fragility within the EU public sector accounting system. By analysing the Excessive Deficit Procedure (EDP) tables issued by 28 EU countries over the period 2010-2015, the paper uses novel approaches in measuring adjustments based on network analysis and regression models, showing that they are significantly different over time.

Neoliberalism and Law: The Case of the Constitutional Balanced-Budget Amendment

This Article discusses the significance of law in neoliberal theory and practice. Prefaced by a brief look at the role that law plays in the theories of the ordo- and neoliberal thinkers Franz Böhm and Friedrich August von Hayek, the subsequent chapters focus on the work of James Buchanan and his brand of neoliberalism, which combines constitutional economics public choice theory. Buchanan's core demand is a balanced-budget amendment to the constitution. The following Sections examine this measure in its various aspects before the final section switches to the world of “actually existing neoliberalism” with a discussion of the various reforms of the economic governance structure of the European Union in recent years, particularly the “Fiscal Compact”, which amounts to the real world equivalent of a balanced-budget amendment.

District energy development in liberalised markets: situating UK heat network development in comparison with Dutch and Norwegian case studies

Many national energy policies envisage residual and renewable heat sources with district heating (DH) as a component of sustainable energy systems. There is however limited empirical evidence about facilitation of development in the context of liberalised markets and diminished local government control over direct service provision. Recent attempts to stimulate DH have had variable outcomes in different countries. Using five case studies, we ask why heat network development in the UK takes a relatively piecemeal and fragmented form in comparison with the Netherlands and Norway, countries whose heating sectors are comparable with the UK and where DH provision is limited. We argue that energy market liberalisation has been enacted differentially, resulting in different political and economic governance structures: in comparison with the UK liberal market economy, the more coordinated market economies of the Netherlands and Norway retain greater capacity for collaboration between energy utilities, localities and states, resulting in stronger foundations for district energy. Implications for UK governance are considered.

GATS Disciplines on Capital Transfers and Short-term Capital Inflows: Time for Change?

The article examines General Agreement on Trade in Services (GATS) disciplines on capital transfers in light of the challenges stemming from massive surges of short-term capital. It identifies circumstances where the Agreement outlaws controls on capital inflows that are necessary for maintaining the recipient’s country monetary and exchange rate stability. It also identifies circumstances where the Agreement allows controls on capital inflows that confer a trade advantage to the recipient country by preventing the appreciation of an undervalued exchange rate. The findings suggest the Agreement fails to secure an adequate balance between trade liberalization, capital mobility and macroeconomic and financial stability. The article argues that the problem is aggravated by the differences between GATS and IMF disciplines on capital transfers and offers some thoughts on ways to improve the lack of coherence of the current global economic governance structure related to cross-border capital flows.

Flexibility Without Security and Deconstruction of Collective Bargaining: The New Paradigm of Labor Law in Greece

Greece’s accession to the financial support mechanism of the IMF, the European Central Bank, and the European Commission in May 2010 led to severe austerity measures radically affecting the whole range of labor legislation. An intense legislative activity was manifest between 2010 and 2013, aiming at a labor cost reduction and a labor rights’ restriction. The purpose of this Article is to offer a critical overview of the most crucial reforms that have taken place in the Greek labor legislation after the Memoranda and to demonstrate how they affected the foundations, the sources, the principles and the functions of the Greek labor law. The Article attempts to demonstrate that the Greek example reveals the paradigm shift in labor law that gradually expands across the Europe, consisting into the replacement of the after war humanitarian labor law model with a neoliberal economic model of market supremacy over labor rights. The Article argues that this paradigm shift is in line with the new economic governance structure at European level laying on the neoliberal dogma of deregulation, liberalization, and removal of collective regulation constraints over employment relationship.

The Legitimacy of the G20 - A Critique Under International Law

The G20 has become the preeminent international economic and financial policy making body in the aftermath of the global financial crisis of 2007-2009. In the early phase of the financial crisis, the G20 made considerable progress with its measures to stabilize the global economy (London Summit of 2009). However, its subsequent initiatives have not kept pace with the challenges of a weakening global economy and the need for effective international financial regulatory reforms. This lack of success can be attributed in part to the G20’s unaccountable institutional structure that lacks legitimacy under international law. The G20's current institutional structure fails to respect the principle of a democratic and equitable international order as set forth in various United Nations instruments. To overcome these institutional shortcomings, this article considers a number of proposals to reform the G20 and to enhance international economic governance. This would lead to a redefined and broader mandate for the G20, allowing non-G20 countries to participate in a meaningful way in G20 policy formulation. It also suggests that the G20 integrate its operations more durably to existing international economic organisations, such as the UN ECOSOC, IMF, World Bank and WTO, in order to build a more effective and complementary global economic governance structure. By doing so, the G20 would enhance its effectiveness and credibility in addressing the important challenges facing the global economy.

The System Worked: Global Economic Governance during the Great Recession

Prior to 2008, numerous international relations scholars had predicted a looming crisis in global economic governance. Policy analysts have only reinforced this perception since the financial crisis, declaring that we live in a “G-Zero” world. This article takes a closer look at the global response to the financial crisis and reveals a more optimistic picture. Despite initial shocks that were more severe than the 1929 financial crisis, global economic governance structures responded quickly and robustly. Whether one measures results by outcomes, outputs, or process, formal and informal governance structures displayed surprising resiliency. Multilateral economic institutions performed well in crisis situations to reinforce open economic policies, especially in contrast to the 1930s. While there are areas where governance has either faltered or failed, on the whole, the system has worked. Misperceptions about global economic governance persist because the Great Recession has disproportionately affected the core economies; analysts have conflated national with global governance; and the efficacy of past periods of global economic governance has been badly overestimated. Why the system has worked better than expected remains an open question, but we can tentatively conclude that both the power of the United States and the resilience of neoliberal economic ideas were underestimated.

Research on Energy Saving and Emission Reduction Countermeasures for China's Logistics Industry

Based on the analysis of major problems on energy saving and emission reduction for Chinas logistics industry, this paper proposes the strategic objectives and strategic focus to energy saving and emission reduction of the logistics industry, and discusses possible ways for the achievement of energy saving and emission reduction in the logistics industry from multiple aspects. It also proposes key policies and regulations to the transition of logistics industry to low-carbonization from aspects of low-carbon energy policy, low-carbon technology policy and low-carbon industrial policy, thus to build the multi-cooperated low-carbon economic governance structure by government, enterprises and public.

Keeping the Agents Leashed: The EU’s External Economic Governance in the G20

The functioning of the external economic governance of the European Union (EU) hinges on the functioning of the internal economic governance structure to ensure cohesion between the EU’s external voice and its internal actions. Consequently the debate has focused almost in its entirety on the internal aspect of economic governance reform. This article, swimming against this current of economic governance analyses, examines the EU’s external economic governance in the G20 during the Great Recession using a principal–agent framework. More specifically, it argues that although the terms of delegation in the G20 are incomplete and open to the agents’ interpretation, two important sources of agency control limit the discretion of the EU delegation. The system of multiple agents with its inherent inter-institutional rivalry and the presence of the G20/EU members ultimately increase the control of the collective principal at the cost of presenting a unified EU position. At the same time the current design of the EU’s external economic governance has fuelled tensions between the EU and underrepresented developing countries. Along similar lines, looking at the possibilities of interest representation, the terms of delegation, with an unequal collective principal, are biased towards large and powerful EU/G20 member states. On the basis of probit analyses it is argued that these states are likely to oppose the increased delegation that would enable the establishment of an external economic governance.

The Failure of the International Trade Organization (ITO): A Policy Entrepreneurship Perspective

The paper aims to look at the developments that led to the demise of the ITO initiative in the years immediately after World War II. At the heart of the paper is the critical appraisal of the ITO episode from the policy entrepreneurship perspective. We identify six policy entrepreneurship functions that are necessary for the creation of the effective international economic governance structure and liberal international trade regime, and that have to tackle the issues of ideational consensus building, management of policy negotiations (by means of leadership and coordination), construction of appropriate and suitable negotiation proposals, attainment of ongoing political support of initiatives, and making policy formulation process commensurate with a broader economic and political context. It is shown that the failure of the ITO is attributed to inadequate exercise of policy entrepreneurship.

Club Goods and Local Government

Problem: Private approaches to urban service provision are becoming more popular. Some argue these approaches are more efficient and more democratic than government provision because they are voluntary. While these club approaches can shift the burden of infrastructure finance to direct groups of users, they can also fragment urban service delivery and justify unevenness in service quality across the city. Purpose: This article explores examples of club goods, that is, common interest developments (CIDS) for housing, business improvement districts (BIDs) for commercial areas, and economic development zones (EDZs) for commercial and industrial areas, and assesses their implications for local government. Emphasis is given to how clubs internalize benefits to members of the club but shed externalities onto the broader local government system. A critical governance concern is the impact on the long-term ability of local government to coordinate across disparate elements and interests in the community. Methods: I discuss three types of clubs ranging from totally private common interest developments (home owners associations), to partially private business improvement districts, to totally public economic development zones. These club types are analyzed in terms of economic benefits, externalities, governance structure, and broader concerns with equity and sustainability. Results and conclusions: Club good approaches to urban infrastructure delivery enhance private investment and reduce costs to cities, but they also shed externalities onto the broader city. Although these clubs are often private associations, this article shows how they are critically supported by government, beyond the property rights requirement assumed by most theorists. A further concern is that club approaches may undermine support for equity and redistribution at the broader city level. Takeaway for practice: Local governments are under pressure to provide public goods efficiently and engage private voluntary approaches whenever possible. The efficiency and popularity of club approaches derives in part from their ability to capture the benefits of increased investment for internal benefit. However, local government managers also must manage diversity and build public support for investment to ensure equity across the urban territory. Balancing the benefits of club goods with the need for broader urban integration is a key challenge for planners and urban managers. Research support: None.

Post the 'Washington Consensus': economic governance and industrial strategies for the twenty-first century

Recent events in the global economy have led to a growing dissatisfaction with the neo-liberal economic paradigm that has dominated economic policy over the last 30 years, and the increasing concentration of (and abuse of) economic power within the corporate sector that has ensued. However, amidst calls for a new approach to economic management, there is a danger that a new policy framework may overlook underlying economic governance structures that exist (and may evolve) within the economy. Such oversight has implications for development. This paper seeks to demonstrate that the long run efficacy of industrial strategy depends upon designing appropriate economic governance structures that serve the wider public interest. It does so by exploring past experiences of industrial strategy, drawing lessons from the USA, the UK, Japan, the third Italy and the emerging and transition economies. We also offer some suggestions for ways forward.

Economic Freedom: The Path to Economic and Political Emancipation of the Conflict-Affected Region

This working paper is a written version of an oral presentation made originally at a seminar jointly organised by the Pathfinder Foundation and Point Pedro Institute of Development in Colombo on June 05, 2009 on the revival of the Northern Economy and subsequently at the Peace Research Institute Oslo (PRIO) on July 27, 2009. This working paper argues the case for a comprehensive policy framework for the revival of the economy of the conflict-affected region, viz. the Eastern and Northern Provinces, in Sri Lanka. In lieu of going into sectoral specificities, this policy paper outlines a broad policy framework enshrined on economic freedom, transparent and accountable politico-economic governance structure, knowledge economy, and fiscal autonomy for the conflict-affected provinces and beyond. An edited version of this Working Paper was published in the journal Conflict Trends in December 2009.

Prospects for economic governance: resilient pro‐poor growth

Purpose – The purpose of this paper is to discuss the potential of the present drivers of economic governance, trade and investment, and also to envision their intersections and cross-cutting impacts on poverty and human development. Design/methodology/approach – A general review is employed to highlight scenarios shaping Africa’s economic governance and the magnitude of their impact on pro-poor growth. Potential responses are identified to address African vulnerabilities to poor governance and alternative dimensions to achievable equitable future are recommended for implementing those measures as a way forward. Findings – The paper observes that changes to the policy environment should include reform in Africa’s governance and policy processes by supporting participation by a variety of actors including the poor rural farmers and women among others. Research limitations/implications – A broader literature review to support some of the recommended alternative dimensions is needed. Practical implications – The existing economic governance structure in Africa does not include stakeholders. Changes to the policy environment should include reform in Africa’s economic governance and policy processes by supporting participation by a variety of actors including the poor rural actors (farmers and women) among other underrepresented groups. Originality/value – The paper uses foresight and futures in discussing alternative scenarios for economic governance as relatives to poverty reductions and human development.