Glass Ceilings in Cracked Institutions
For the first time in history, a woman and African citizen is currently serving as the leader of the World Trade Organization (WTO). Dr. Okonjo-Iweala assumed her post on the 1st of March, immediately being catapulted to the forefront of international news for the historic and glass ceiling-shattering nature of her appointment. A renowned economist, former alumni of both Harvard and MIT, and former Nigerian minister of finance, Okonjo-Iweala can doubtlessly boast an impressive resumé. However, if one digs just a tiny bit deeper into her past economic stances – the same, toxic pattern of neoliberal economic doctrine that has seeped into and poisoned the system of global governance institutions can be spotted. For example, Okonjo-Iweala was responsible for the removal of state subsidies on fuel during her second term as finance minister, simultaneously dismantling state presence and sharply increasing both transport prices and costs of living. The WTO’s willingness to amplify voices and minds from the Global South should be celebrated; it is, however, legitimate to ask whether representation is truly enough to shift the current paradigm of multilateralism, for too long heavily skewed towards the interests of the wealthier nations of the Global North, crystallized in a neoliberal economic frame. A systemic overhaul is needed to recalibrate the goals of multilateral institutions to reach shared prosperity and an equitable economy for all.
From Guardian Angels to ‘’Unholy Trinity’’
Indeed, the triad of governance institutions comprised of the aforementioned WTO, International Monetary Fund (IMF) and the World Bank (WB) known as the ‘’Unholy Trinity’’ are largely responsible for dictating economic policies around the world – and also largely responsible for implementing policies that are stagnant at best, and deeply damaging at worst. Originally, both the IMF and WB were set up in 1944 at a conference in Bretton Woods held by Allied forces with the goal of molding postwar economic governance: the IMF started out as a short-term money lending entity while the WB contributed to the reconstruction of post-war and post-colonial societies. The genesis conceived on the benevolent purpose of creating a freer, fairer world was swiftly subverted with the implementation of the neo-liberal world order, galvanized by the elections of Reagan and Thatcher in the US and UK, respectively. The directionality of the mission of these institutions to reduce world poverty was therefore pursued with neoliberal orthodox policy characterized by the hollowing of the state through the consumption of a septic cocktail of policies that include highly restrictive fiscal and monetary measures, liberalization of trade, and the increased freedom given to corporate and private entities. A common set of policies would, at first, seem like an action plan that would prove fruitful to build cohesion and therefore lead to a global economic convergence: that is, if every country was the same. Indeed, countries in the Global South often do not possess the institutions equipped to process these economic reforms. Institutional and supply-side conditions have to work in tandem with the reforms pursued, otherwise growth will be stunted as opposed to stimulated. This was also aggravated following the Third World Debt Crisis in 1982, where both the IMF and WB saw an opportunity to instill influence by metastasizing beyond their original area of competence into sectors such as the regulation of the labour market and government decentralization, issuing loan conditionalities that further entrenched these neoliberal ideals, leaving these countries at the mercy of global markets, bilateral trade deals, and corporate greed. In regions such as Latin America, per capita income growth during the 1990s, after the policies’ period of adjustment, slowed down to 1.7% compared to a previous 3.1%, while living standards in Africa significantly plummeted.
A New and Renewed Multilateralism For All
Unluckily, this is the status quo that has prevailed for many years. Luckily, it is not irreversible. The COVID-19 crisis has unearthed just how broken this system is, as most recently seen with the richer members of the WTO thwarting the attempt of 80 developing countries to waive patent rights in a selfish act of vaccine nationalism. The recent pandemic pandering to multinational corporations and previous orthodox neoliberal policies can, however, still be contrasted. A new multilateralism can be distinguished by promoting progressive policies such as the enlargement of domestic policy space in the countries that have for too long been at the mercy of corporate whims protected and promoted by global multilateral institutions. Indeed, one first step towards this direction would be the withdrawal of free-trade agreements. These often lead to heavy-scale deregulation, making it possible for corporations and private entities to act as surrogates on behalf of the state. If countries were permitted to have a more spacious policy arena, then national development strategies could be developed to combat corporate behemoths. However, it is important to not throw the baby out with the bathwater, so to speak, and also take advantage of existing agreements that could be used as springboards towards more ambitious projects. This is the case with the United Nation’s Equitable Principles and Rules for the Control of the Restrictive Business Practices, which could be used as a canvas on which major multilateral institutions could outline new entities such as a global competition authority. To implement this on a systemic scale, however, corporate power also needs to be taken into account by sanctioning tax avoidance, enabling the expansion of fiscal space and addressing endemic inequality in developing nations: it is estimated that illicit financial flows account for 2.3% of combined GDPs in Latin American, Caribbean and African countries.
The current state of affairs exists in an anachronistic predator-prey ecosystem, where the poor are at the mercy of the rich with little wiggle room to escape. However, if we stop considering institutional shortcomings as inevitable wear and tear failures, and begin seeing them as massive institutional failures, broken by design and not by fate, we can start to bridge the existing gaps in development.
