Economic Underpinnings of Global Governance and Desired Reforms

AuthorSharat Kumar
Published date01 September 2022
Date01 September 2022
Subject MatterArticles
Economic Underpinnings
of Global Governance
and Desired Reforms
Sharat Kumar1
The global economy with ‘non-system’ post-Bretton Woods system continues
to be fragile. Amongst the major countries of the world, budget deficit of the
federal government of the USA has been increasing every year. The leverage
to borrow with ease from both internal and external sources places the US
federal government in a unique position. This ‘exorbitant privilege’ of the USA
to borrow from rest of the world emanates from the US$ being the dominant
international currency. This is, in a way, the result of ‘the White Plan’ that got
accepted at the Bretton Woods conference (1944). Along with the budget defi-
cit, the US trade deficit has also been growing over the years, particularly so with
China and Japan. The counter balancing trade surpluses of China and Japan have
been rising with no system in place to rectify such a trade imbalance between
these countries. This is indeed not sustainable, and needs reforms in the existing
(neo-liberal) world economic order. The article argues that both the G-20 and
the IMFC (IMF) may give a fresh look to the proposals of ‘the Keynes Plan’—as
enunciated at the Bretton Woods conference for the desired reforms.
International Clearing Union, Bretton Woods System, IMF, Keynes Plan, White
Plan, Bancor, Triff‌in Paradox, G-20
The period between 1870 to 1914 is considered as that of ‘the liberal world order’
characterised by (a) free market and civil liberties (except in the colonies, mine);
(b) generally low tariffs amongst trading countries; (c) free movement of labour
and capital across countries; and (d) macroeconomic stability based on ‘the gold
standard’ (Chang, 2006). The gold standard, in turn, implied use of gold as the
medium of exchange for settling payments for international trade.
Indian Journal of Public
68(3) 414–425, 2022
© 2022 IIPA
Reprints and permissions:
DOI: 10.1177/00195561221101584
1 Former Senior Adviser, Ministry of Environment and Forests, Government of India, New Delhi,
Corresponding author:
Sharat Kumar, Ministry of Environment and Forests, Government of India, New Delhi 110003, India.

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