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Norms, Legitimacy, and Global Financial Governance

Author

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  • Geoffrey R D Underhill

    (University of Amsterdam)

  • Xiaoke Zhang

    (University of Nottingham)

Abstract

Despite regular and serious systemic volatility, reform of international financial architecture remains limited, retaining market-oriented characteristics and adjustment mechanisms. A failure of the architecture to focus on the political underpinnings of global financial and monetary governance yields crucial deficiencies. The article defends three propositions implying a serious challenge to political legitimacy in contemporary financial governance: i) external financial constraints conflict with a range of potential domestic, particularly democratic, political imperatives; ii) developed state initiated global financial integration strengthens private interests in the policy process, narrowing the definition of the public interest in a democratic context; iii) market-friendly institutional reforms put pressure on domestic socio-political arrangements underpinning longer run political legitimacy. The article first analyses norms and legitimacy in global financial governance; then outlines the constraints on public policy of global financial market integration in the light of the foregoing analysis of legitimacy; thirdly it discusses possible solutions.

Suggested Citation

  • Geoffrey R D Underhill & Xiaoke Zhang, 2006. "Norms, Legitimacy, and Global Financial Governance," WEF Working Papers 0013, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
  • Handle: RePEc:wef:wpaper:0013
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    References listed on IDEAS

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    4. Dailami, Monsoor, 2000. "Financial openness, democracy, and redistributive policy," Policy Research Working Paper Series 2372, The World Bank.
    5. Mosley, Layna, 2000. "Room to Move: International Financial Markets and National Welfare States," International Organization, Cambridge University Press, vol. 54(04), pages 737-773, September.
    6. Garrett, Geoffrey, 1995. "Capital mobility, trade, and the domestic politics of economic policy," International Organization, Cambridge University Press, vol. 49(04), pages 657-687, September.
    7. Joseph Stiglitz, 2003. "Globalization and the economic role of the state in the new millennium," Industrial and Corporate Change, Oxford University Press, vol. 12(1), pages 3-26, February.
    8. Hurd, Ian, 1999. "Legitimacy and Authority in International Politics," International Organization, Cambridge University Press, vol. 53(02), pages 379-408, March.
    9. repec:cup:apsrev:v:91:y:1997:i:03:p:531-551_21 is not listed on IDEAS
    10. Jens Steffek, 2000. "The Power of Rational Discourse and the Legitimacy of International Governance," EUI-RSCAS Working Papers 46, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
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