Rising Powers in Global Economic Governance: Mapping the Flexibility‐Empowerment Nexus
| Author | Laura C. Mahrenbach,Eugénia C. Heldt |
| DOI | http://doi.org/10.1111/1758-5899.12643 |
| Date | 01 February 2019 |
| Published date | 01 February 2019 |
Rising Powers in Global Economic Governance:
Mapping the Flexibility-Empowerment Nexus
Eug
enia C. Heldt and Laura C. Mahrenbach
School of Governance, Technical University of Munich
Abstract
Given long-standing criticism of global economic institutions by rising powers, it is puzzling that these same governments
supported the transfer of substantial resources and responsibilities to the IMF and the World Bank during recent reform nego-
tiations. We argue rising powers’support for international organization (IO) empowerment is linked to their concerns regard-
ing an IO’sflexibility. We introduce two types of flexibility as being most relevant for rising powers. These include governance
flexibility –the extent to which rising powers may participate in IO decision-making –and issue flexibility –the extent to
which rising power preferences are incorporated into IO policies and programs. We illustrate our argument by examining the
preferences of the BIC states (Brazil, India and China) towards IMF and World Bank reforms between 2008 and 2012. Drawing
on archival material with over 50 statements from BIC representatives, we find, first, that there were clear links between Bank
and Fund governance flexibility and the BICs’support for empowerment of these IOs, but that this was not true for issue flexi-
bility. Second, we find evidence indicating the strategies of individual BIC governments differ within these IOs, suggesting a
need to undertake more differentiated studies of rising powers’IO activities.
Policy Implications
•The successful adaptation of multilateralism to the needs of rising powers requires greater governance flexibility and
stronger inclusion of the issues of relevance to BICs into an IO’s portfolio.
•Governance and issue flexibility are crucial elements of the adaptability process of multilateral institutions across policy
areas.
•The more flexible global economic institutions are in integrating rising powers into their governance structure and includ-
ing issues of more concern to these new actors, the more likely the latter will support transferring more power to IOs.
•Empowerment (transferring more power to IOs) can only work if the demands and needs of rising powers are sufficiently
taken into account.
The puzzle of rising powers’support for
empowerment
The World Bank (WB or Bank) and the International Monetary
Fund (IMF or Fund) have been extensively criticized by civil
society, rising power governments and scholars for being
inflexible and ill-suited to adapt to shifting global balances
of power (Chin, 2010; Stephen, 2012). Rising powers view
international organizations (IOs) as extensions of established
states’economic, political and normative preferences (Z€
urn
and Stephen, 2010) and therefore consider the benefits of
these IOs as primarily accruing to those states (Marcoux and
Urpelainen, 2013). Some scholars argue that this may lead
rising powers to prioritize alternative fora for cooperation
over traditional IOs (Vabulas and Snidal, 2013). Recent devel-
opments in global governance –in particular the creation of
the New Development Bank in 2014 and the proliferation of
informal summits among rising powers –support this view.
What remains puzzling is that Brazil, India and China (the
BICs) supported the empowerment of the WB and IMF
between 2008 and 2012 in the wake of the global financial
crisis (GFC). Rising powers also played a crucial role in
enacting these reforms, for example, providing large finan-
cial contributions (Woods, 2010) and shaping the content of
new rules and procedures (Gallagher, 2015; Lesage et al.,
2013). Why should rising powers agree to delegate more
power to these Western-dominated global economic institu-
tions?
In this piece, we examine the conditions under which the
BICs support IO empowerment (IOE). By empowerment, we
mean the transfer of decision-making authority and
resources to IOs. This includes the transfer of more tasks,
the expansion of IO capital and the creation of new financial
instruments and programs (Heldt and Schmidtke, 2017). We
argue that governance and issue flexibility are crucial in
explaining the BICs’support of IOE. Governance flexibility
addresses the extent to which rising powers can participate
in IO decision-making processes. Issue flexibility refers to the
inclusion of issues relevant for rising powers in IO programs
and policies. When reforms address these two dimensions
of flexibility in rising powers’favor, the BICs should support
IOE. We illustrate our argument empirically with two com-
parative case studies examining reform negotiations at the
Bank and the Fund between 2008 and 2012. The studies
Global Policy (2019) 10:1 doi: 10.1111/1758-5899.12643 ©2018 The Authors. Global Policy published by Durham University and John Wiley & Sons Ltd.
This is an open access article under the terms of the Creative Commons Attribution License, which permits use,
distribution and reproduction in any medium, provided the original work is properly cited.
Global Policy Volume 10 . Issue 1 . February 2019 19
Research Article
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