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Emerging Powers and IMF Reform: Where Multipolarity in the World Economy is Leading the Fund

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Abstract:

This paper examines the impact of increasing global economic multipolarity, reflected in the rising influence of emerging markets in global economic multilateralism, on International Monetary Fund (IMF) reform. We explore the extent to which the Fund's recent revival, as evident in commitments made at the Group of Twenty (G20) summits and in the governance reforms passed by the IMF's Executive Board in the autumn of 2010, is indicative of a multilateral consensus between emerging and established economic powers. Specifically, this consensus would imply a revival of a legitimate and effective IMF. We argue that recent reforms passed by the Fund are certainly a reflection of increasing multipolarity in the global economy, but conclude that the path to accommodating emerging powers is far from clear. In particular, recent changes to the Fund's governing structure provide only a superficial enhancement of the IMF's legitimacy and effectiveness as an international financial institution (IFI). Indeed, the foundations of IMF reform remain fragile and hinge on whether both the Fund's governance structure and its mandate, which are mutually constitutive, will ultimately be perceived as legitimate by emerging and status quo powers alike. Governance reforms are certainly an important part of this equation but internal reforms (those affecting its broader mandate and technical capacity), which affect the IMF's function as an independent and effective IFI, remain unsettled. To illustrate our case we evaluate the recent governance reforms and proposals, including quota share re-allocations, the consolidation and reshuffling of seats at the Executive Board, as well as the recent proposal to expand and institutionalize the use of Special Drawing Rights. Based on recent surveys by the IMF's Independent Evaluation Office, we provide an appraisal of the ways in which both emerging and advanced countries view the Fund and conclude by discussing some limitations in our analysis.

Document Type: Research Article

Publication date: May 1, 2011

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  • The St Antony's International Review (STAIR) is the only peer-reviewed journal of international affairs at the University of Oxford. Set up by graduate students of St Antony's College in 2005, the Review has carved out a distinctive niche as a cross-disciplinary outlet for research on the most pressing contemporary global issues, providing a forum in which emerging scholars can publish their work alongside established academics and policymakers. Past contributors include Robert O. Keohane, James N. Rosenau, and Alfred Stepan.
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