Global Economy, Regulation and Development GEARED

at the Danish Institute for International Studies DIIS / in DANSK HJEM – (Found on Weitzenegger’s Newsletter/websites of the moment, July 12, 2010)

Since the onset of the global financial crisis in late summer 2008 a widespread consensus has emerged that the previous two decades of de-regulation, and related institutional dismantling, bear a considerable part of the burden of responsibility for the crisis. Correspondingly, a large number of proposals to re-regulate not only the financial sector but also the global economy more generally have emerged  … (about GEARED 1/2).

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About GEARED: …  In relation to the financial sector, they have concerned banking institutions, hedge funds, credit rating agencies and offshore financial centres – as well as specific markets ranging from commodity exchanges to over-the-counter derivatives trading.

The financial and economic crises may also be stimulating a process of ‘de-globalisation’: banks may become less international as government ownership of them increases; FDI, remittances and private capital flows to developing countries are slowing down or reversing, although South-South flows may not be as affected; there are growing signs of protectionism in the North; and fiscal rather than monetary policy is becoming the predominant instrument of macroeconomic management. In face of these trends, the question of what will be the key re-regulatory options is becoming a much more open one.

The agenda of the research unit is structured along three sets of key questions on:

(1) The nature and scope of re-regulation:

  • a) To what extent will the content and spirit of economic regulation be genuinely transformed in the medium term? And if so, which norms, ideas and conventions will be used to justify and implement re-regulatory efforts?
  • b) Will re-regulation follow substantially different trajectories in different national and regional contexts?
  • c) Will there be a new type of global financial regulation, or at least a common pattern of global regulation led by global institutions such as a reconfigured IMF?
  • d) How will economic institutions, both in developed and developing countries react to whatever regulatory landscape emerges?

(2) The tools of re-regulation:

  • a) What roles will ‘soft’ tools (such as benchmarking, codes of conduct, shame lists, voluntary standards and market-based instruments such as labeling) play vis a vis ‘hard’ regulation (mandatory standards, national legislation, international agreements) in such re-regulatory efforts?

(3) Re-regulation, developing countries and global value chains

  • a) How will re-regulation efforts in the financial sector impact directly or indirectly the functioning of the ‘real economy’ in developing countries?
  • b) How will re-regulation affect current efforts to maintain flows of credit to developing countries? How will it impact flows of trade finance and FDI? What will be the relative contribution of South-South flows?
  • c) How will the governance of global and regional value chains be affected? With what impacts on developing country actors and small-scale producers and operators in particular?

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