Comparing the ‘Four Pillars’ of Global Economic Governance: A Critical Analysis of the Institutional Design of the FSB, IMF, World Bank, and WTO

Why are the intergovernmental organizations referred to as the ‘four pillars’ of international economic governance designed the way they are? Although much of their institutional design—issues like voting, membership, mandate, and funding—can be traced back to the history of the organization and the circumstances in which states established it, the institutional setup of each organization should ideally correspond with the type of public good it seeks to provide. Formal organizations like the World Trade Organization (WTO) are treaty-based, requiring strict conditions for membership and a high degree of legal rules and enforcement. They were also established to carry out a specific function, such as balance of payment issues for the International Monetary Fund (IMF). Bodies such as the Financial Stability Board (FSB), the new player in the field of economic governance, are less formal, and are concerned with monitoring, advising, and coordination of regulatory efforts. In some cases, the roles of these organizations have expanded into new areas, or they have had functions replaced by other international bodies, especially in the wake of events such as the 1997 and 2008 financial crises. This article seeks to understand how the design of these institutions is influenced not only by the states that established them, but also by the overarching goals the organization seeks to achieve, and its place within the broader framework of global economic governance. The article begins by comparing the institutional design of the IMF, the WTO, the World Bank, and the FSB. It compares the organizations’ legal basis, membership, organs, and decision-making processes, as well as the methods by which they develop and enforce rules for the global economy. The article examines how these very different institutional setups relate to the goals of each organization. How has the design and function of these organizations changed over time, and to what extent has this change been due to the changing role of the organization, especially in light of events such as the 1997 and 2008 financial crises? Particular emphasis is given to the level of formality with which these organizations operate—when does the organization require strict rules regarding funding, voting, and membership, and when are more informal processes more appropriate? Finally, the article seeks to understand to what extent these organizations, despite their differences in terms of mandate, structure, and methods are able to work together effectively and develop policies that are mutually consistent. An understanding of these dynamics will be useful in further discussions about how these organizations might be designed and structured better in order to address the challenges facing the global economy.