Publication: Can Reforming Global Institutions Help Developing Countries Share More in the Benefits from Globalization?
Loading...
Published
2001-01
ISSN
Date
2014-08-26
Author(s)
Editor(s)
Abstract
Globalization could significantly expand trade, international investment, and technological advances, but the gains from global integration have been unevenly distributed across and within nations. Greater global interdependence has also brought greater macroeconomic volatility, resulting in several serious financial crises in the second half of the 1990s. The global matrix of Bretton Woods and United Nations institutions that developed starting in the 1940s, formed under a different balance of power, in a world of fixed exchange rates and limited capital mobility. Since the 1960s regional financial institutions have emerged because of the greater autonomy of different regions and the greater financial needs of development. The author reviews different proposals for reform of the international financial institutions and changes in the roles of the International Monetary Fund (IMF) and the World Bank. He highlights the implications for developing countries of (1) Policy conditionality. (2) The countercyclical role of multilaterals' lending. (3) Greater lending to middle-income than to low-income developing countries. (3) Access to liquidity at times of crisis. (4) Mechanisms for giving low-income countries a greater voice in IMF and World Bank decisionmaking. The author streses the overlapping responsibilities of the Bretton Woods and regional financial institutions and the need to reassess the allocation of responsibilities and to develop better coordination mechanisms between these institutions. Those designing institutional reform must consider the corporate capabilities of each type of institution. The corporate cultures of global and regional institutions differ. So does the kind of knowledge they generate and disseminate, and so do patterns of interactions with, and mechanisms for representation of, client countries.Finally, the author calls attention to the need to harmonize national and global growth-oriented policies in a way that reduces volatility and promotes social equity.
Link to Data Set
Citation
“Solimano, Andres. 2001. Can Reforming Global Institutions Help Developing Countries Share More in the Benefits from Globalization?. Policy Research Working Paper;No. 2518. © http://hdl.handle.net/10986/19727 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication It’s Not (Just) the Tariffs: Rethinking Non-Tariff Measures in a Fragmented Global Economy(Washington, DC: World Bank, 2025-10-22)As tariffs have declined, non-tariff measures (NTMs) have become central to trade policy, especially in high-income countries and regulated sectors like food and green technologies. Although NTMs may serve legitimate goals, they could also sort countries and firms into or out of markets based on compliance capacity and differences in product mix. Documenting recent advances in the estimation of ad valorem equivalents (AVEs), this paper uncovers new patterns of use and exposure of NTMs. High-income countries rely more heavily on NTMs relative to tariffs, while low- and middle-income countries face steeper AVEs on their exports. Firm-level evidence shows that NTMs disproportionately affect smaller firms, leading to market exit and concentration. Poorly designed NTMs can harm productivity and welfare, while coordinated, capacity-aware use can deliver inclusive outcomes. Policy design, transparency, and diagnostics must evolve to reflect the growing role—and risks—of NTMs in a fragmented global trade landscape.Publication Monitoring Global Aid Flows: A Novel Approach Using Large Language Models(Washington, DC: World Bank, 2025-11-04)Effective monitoring of development aid is the foundation for assessing the alignment of flows with their intended development objectives. Existing reporting systems, such as the Organisation for Economic Co-operation and Development’s Creditor Reporting System, provide standardized classification of aid activities but have limitations when it comes to capturing new areas like climate change, digitalization, and other cross-cutting themes. This paper proposes a bottom-up, unsupervised machine learning framework that leverages textual descriptions of aid projects to generate highly granular activity clusters. Using the 2021 Creditor Reporting System data set of nearly 400,000 records, the model produces 841 clusters, which are then grouped into 80 subsectors. These clusters reveal 36 emerging aid areas not tracked in the current Creditor Reporting System taxonomy, allow unpacking of “multi-sectoral” and “sector not specified” classifications, and enable estimation of flows to new themes, including World Bank Global Challenge Programs, International Development Association–20 Special Themes, and Cross-Cutting Issues. Validation against both Creditor Reporting System benchmarks and International Development Association commitment data demonstrates robustness. This approach illustrates how machine learning and the new advances in large language models can enhance the monitoring of global aid flows and inform future improvements in aid classification and reporting. It offers a useful tool that can support more responsive and evidence-based decision-making, helping to better align resources with evolving development priorities.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication The State of Global Services Trade Policies: Evidence from Recent Data(Washington, DC: World Bank, 2025-10-28)The economic environment for services trade has changed dramatically over the past 15 years, driven by rapid technological progress that has expanded the possibilities for exchanging services. How has trade policy responded to these changes? How do policy stances in a wide range of service sectors compare across economies? With its unprecedented global coverage, the Services Trade Policy Database and the associated Services Trade Restrictions Index, developed jointly by the World Bank and the World Trade Organization, help address these questions. This paper makes three principal contributions. First, it offers an in-depth discussion of the current state of services trade policies and their differences across 134 economies and 34 services subsectors. Second, the paper reveals how recent (2016–22) changes in policy stances have seen progressive liberalization by lower-income economies but stabilization or even slight policy reversals in high-income economies. This dynamic differs fundamentally from the trend that unfolded after the Great Recession over 2008–16. Third, the paper shows the implications of policy changes over the past six years on services trade costs, and it showcases how the Services Trade Policy Database’s regulatory information can inform trade negotiations, regulatory analysis, and policy making. Alongside these contributions, the paper documents updates to the Services Trade Policy Database’s economy and sector coverage and explains the latest methodological improvements made to the World Bank–World Trade Organization Services Trade Restrictions Index.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Montenegro - Debt Sustainability Analysis(Washington, DC, 2007-02)This report assesses Montenegro's public and external debt sustainability under alternative scenarios. The baseline scenario assumes continued implementation of a macroeconomic stabilization and structural reform program, while the low case scenario describes the alternative of a sluggish growth environment due to policy slippage/weak reform. In addition, other sensitivity tests are conducted in order to highlight the vulnerability of the baseline case to specific shocks. The report concludes that Montenegro's public debt would be highly sustainable if economic reforms continue at their current pace, and the 2007 fiscal policy is maintained over the coming years.Publication Liberia - Tapping Nature’s Bounty for the Benefits of All : Diagnostic Trade Integration Study, Volume 1. Main Report(Washington, DC, 2008-12)Liberia is a rich country, badly managed. This is a favorite comment of President Ellen Johnson-Sirleaf and an accurate one. The bad management is well-known, though perhaps not its duration and depth. Created in 1847, the country is far older than almost all others in sub- Saharan Africa. But for most of this time, it was ruled by an elite descended from African-American settlers who ignored or exploited the indigenous people. The result was growth without development, stark inequality, social tension and the seeds of unrest. The political order was turned upside down in a bloody coup in 1980, but bad management continued. Within ten years the country descended into civil war from which it only emerged in 2003. The 90 percent decline in Gross Domestic Product (GDP) is possibly the most extreme economic collapse ever experienced in the world. This study lays out a comprehensive pro poor trade strategy in support of the medium-term growth agenda of Liberia. The new Poverty Reduction Strategy (PRS) for Liberia recognizes all this. Indeed, this Diagnostic Trade Integration Study (DTIS) and the PRS were developed in parallel and with considerable cross-fertilization. A joint workshop was held on the productive sectors in February 2008. The role of this study is therefore to reinforce the message contained in the PRS, deepen the analysis, and offer some practical next steps.Publication The Banking and Financial Sector of Lao PDR : Financial Sector Note(World Bank, Washington, DC, 2002-07-15)During the second half of the 1980s, Lao PDR embarked on an ambitious program of economic reforms, called the New Economic Mechanism, whose main purpose was to gradually transform its centrally-planned economy into a market-oriented economy. The initial reform momentum lasted about one decade. The far-reaching reform program encompassed many critical components including: (a) promotion of private production through improved incentives; (b) institutional infrastructure to improve market economy operations; (c) the strengthening of Lao comparative advantages through trade liberalization and further specialization; and (d) the establishment of price stability through macroeconomic policy measures. The systemic changes introduced in Lao PDR have contributed to a significant transformation of the country s economic system, away from a rigorously centrally-planned economy and towards a form of market economy based on private ownership. The percentage of poor declined based on the national poverty line from 45 to 39 percent between 1992-93 and 1997-982. But the percentage of very poor did not decline and remained at slightly above 30 percent evidencing the need for even broader and faster growth. Moreover, several factors slowed down the economic liberalization process. Such factors included the lack of transparency in government-business relations, a weak civil society, the position of some interest groups at the national and provincial levels, and the existence of noncompetitive economic structures with a few firms and actors accounting for a large share of domestic production (except in agriculture). In some areas, reform policy stagnated and is lagging. This is the case in the financial sector. The creation of a two-tier banking system in the early 1990s with separate and well-defined functions for the central bank and the state-owned commercial banks, has not resulted in the expected benefits: Lao PDR is still suffering from chronic macroeconomic instability and the state-owned commercial banks are suffering from a large amount of non-performing loans. Taking into consideration the objective of the Lao leaders to improve the well-being of the Lao People, this paper argues that there are valid reasons for establishing rules that discipline the political influence on the design and conduct of economic policy, and more specifically, policy regulating the financial sector.Publication Cambodia Economic Update, April 2014 : Coping with Domestic Pressures and Gaining from a Strengthened Global Economy(Phnom Penh, 2014-04-02)Cambodia's economy has withstood domestic pressures and managed to sustain its high growth driven by its usual engines of growth. The external sector improved as a result of slower imports due to dampened domestic demand. The post-election adverse effects slowed down the demand for imports, while export growth advanced. Inflation rose to 4.7 percent year-on-year at the end of 2013, up from 2.5 percent at the end of 2012. Inflation is projected to remain in mid-single-digits over the short term. Financial deepening continues but the gap between credit and deposit growth rates has widened, reducing bank liquidity. Government revenue growth has moderated, resulting in an increase in the fiscal deficit. The latest joint World Bank and International Monetary Fund (IMF) debt-sustainability analysis (DSA) conducted in 2013 shows that Cambodia's debt-distress rating remains low, with all debt-burden indicators projected to be below respective thresholds. The prospects for sustaining high growth appear favorable, and real growth for 2014 is projected to reach 7.2 percent, given expectations of renewed confidence and political stability, underpinned by the strengthening of the economic recovery in developed economies. Appropriately managing domestic pressures in order to gain from the improved global economic environment will help maintain macroeconomic stability. Enhancing regional integration will also enable Cambodia to benefit more from the growth dynamics throughout the Association of Southeast Asian Nations (ASEAN) region. While Cambodia does have some fiscal space to increase wages, a cautious and careful approach to pay raise may work best.Publication Ten Years of Transformation(World Bank, Washington, DC, 2000-02)After surveying the facts and distilling the voluminous literature on the transition to market economies, the author arrives at several conclusions: with hindsight, the old debate - Big Bang versus gradualism - was really a problem of feasibility, although many of the arguments in favor of the Big Bang have now been proven right. Once more, inflation has been found to be incompatible with growth and the importance of a good microeconomic structure - especially an effective banking system - has been confirmed. The decline of the state in transition economies is both spectacular and puzzling - combining features that are both desirable and dangerous. Among useful lessons learned: 1) It has paid to start early and move fast. The Big Bang is highly desirable but impractical, and gradualism is unavoidable but ought to be compressed as much as possible. The countries that bit the bullet early and hard have done better over the past decade. 2) Stabilize first; growth next. Macroeconomic stabilization is a prerequisite for growth. The budget deficit need not be eliminated, but the link between deficits and money growth must be severed. 3) Structural reform is important, and microeconomic policies, often overlooked, should be started as soon as possible. This means establishing property rights, hardening budget constraints, building a healthy banking system, and ensuring true domestic competition. 4) The choice of an exchange rate regime, another early controversy, is apparently less important than adherence to a strict monetary policy. The floaters have tightly managed their exchange rates, while the fixers have repeatedly devalued and have often ended up floating. Some form of monetary targeting is needed, but it matters little which target is chosen so long as it is adhered to. 5) Creating irreversibilities early on allows governments to change without seriously affecting the transition. The less stable the economy, the more politics matters. A shaky economic basis is fertile ground for policy reversals that set the clock back several years (Bulgaria, Romania, Russia).
Users also downloaded
Showing related downloaded files
Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.