The Rise of China: Continuity or Change in the Global Governance of Development

| December 2015
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The global financial crisis (GFC) of 2008 was a reflection point for global economic governance. The crisis, which started in the U.S. banking system and had a disproportionate impact on North America and Europe, provoked widespread contemplation of the legitimacy, relevance, and effectiveness of the core ideas, rules, and structures that have governed the world economy over the past century. In turn, the crisis also illuminated the emergence of new players, power dynamics, and paradigms that promise to challenge—if not fundamentally change—the characteristics of the institutional architecture that has governed international finance, trade, and development since the end of World War II.

Complex crises such as the global financial crisis and the ongoing Eurozone crisis can in fact spur dramatic change in global governance, leading to new rules—and rulers—to manage the formal and informal institutions of the world economy. Yet pervasive uncertainty, risks, vested interests, ideological dogmatism, and sheer inertia in institutions can drive governance more in the direction of modest adaptation than deeper reforms or transformation. Outcomes are not predetermined by any structural or ideational factor, but are rather an often unpredictable result of myriad variables, shaped by path dependency and contingency, that leave predictions less a science than an art. Scholars of global governance nonetheless have a responsibility to critically assess such patterns of continuity and change to both explain what is currently unfolding in the context of the longue durée and to make educated guesses about the future.

Manuella Moschella and I have offered three observations on global economic governance that inform how we might begin to make sense of the complexity of institutional continuity and change. First, over the past decade there has been a clear proliferation in the number of institutions designed to govern various aspects of the global economy. Second, within extant institutions there has been a tremendous growth in membership, leading to larger institutions facing the inevitable collective action problems that come with such expansion. Third, an increased variety of authorities from the private, public, and nonprofit sectors leads us to more critically question who are the key actors driving global governance. To this list I might add that the world today is experiencing more contested multilateralism than ever before, suggesting that we are observing—and may increasingly observe—countries leaving institutions, exercising their voice within international governmental organizations in more assertive ways, or even creating alternative international organizations and forums to pursue new policies and practices.

In order to make sense of these shifts, and to discern whether they will result in continuity or genuine change, we developed a heuristic frame to study the dynamic of global economic governance based on the mutually constitutive roles of three “Ps”: players, power, and paradigms. This framework allows us to parse out continuity and change in global economic governance by focusing on shifts in the key actors (states, international institutions, or other nonstate actors), power (both material and ideational), and paradigms (the schools of thought that dictate what theories, policies, or practices are optimal or permissible in governance).

This essay explores one case of what I see as a possible critical juncture in the governance of international development that deals with shifts in all three Ps: the rise of China as a new aid donor. China, exercising its vast material power, is rapidly becoming a top lender in the bilateral field, and it is asserting its alternative ideas on aid funding and development cooperation. The recent establishment of several new Chinese-led development institutions, introducing new competition into the now crowded landscape of donors fighting for their own relevance and legitimacy, transforms the field of development into one of contested multilateralism. What may this rise of China mean for the global governance of development?

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Category: Development, Inequality, and Poverty, Global Governance, Issue 29.4, Roundtable: Change and Continuity in Global Governance

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