Term Paper on "Current International Institutions Are No Longer Effective in Regulating the Contemporary International Economy Critically"

Term Paper 16 pages (4839 words) Sources: 1+

[EXCERPT] . . . .

International institutions are no longer effective in regulating the contemporary international economy

The processes that are driving globalization today are certainly not new, but they have become some incredibly accelerated and dynamic that many of the mechanisms that have evolved over the years to help regulate this commerce are no longer sufficient to provide the oversight and administration needed to ensure a smooth flow of international commerce. Furthermore, even those international institutions that have not been overwhelmed by the pace of change in recent years are finding themselves increasingly ineffective and irrelevant in a globalized marketplace. Indeed, the emergence of non-state actors and rogue states within the international community has represented a fundamental challenge for international institutions in recent years. In many cases, though, these organizations are unwilling or unable to meet these challenges, and these trends are clear. This paper provides an overview of the forces at play in the international community today as they affect the contemporary international economy, followed by a discussion of the current trends affecting international institutions in the 21st century. Finally, an analysis of what impact on these events and trends has had on international institutions is followed by a summary of the research and salient findings in the conclusion.

Review and Discussion

Background and Overview.

According to McBride and Wiseman (2000), although the process of globalization is actually as old as mankind itself, the introduction of innovations in communication and transportation in recent years has accelerated the process beyond anyone's ability to gauge its impact today. "Despite the rapidly growing body of literature on the topic of globalization and its implications," the authors advise, "there is disagreement about how to conceptualize what is happening. Although the term is widely used to characterize the profound changes unfolding in the world, the nature of these shifts and what they mean remain debated questions" (p. 9). Nonetheless, the processes that are currently fueling the drive toward globalization appear to be inexorable and represent powerful forces for change in the coming years. In this regard, Debrah and Smith (2002) point out that, "The globalization trend which achieved much prominence towards the end of the last century is set to gather pace, to transform the workplace, to change employment relations and, indeed, our way of life. With the recent advances and innovations in technology, we seem to be racing down an unpaved road towards a globalized world" (p. 1). In fact, just like an extended family with some "crazy uncles" no one likes to talk about, this globalized world community is going to be facing some new challenges and unexpected obstacles in the coming years from various rogue states and international pariahs.

In this regard, Danks and Kennedy (2001), the growing body of research into contemporary cultural identities and social change is filled with accounts of fundamental transitions and disruptions in the social order around the world today that are being caused by globalization. For instance, these authors emphasize that, "Societies are fragmenting and disintegrating; their internal structures are becoming dis-assembled and merged into the maelstrom of the 'global post-modern.' The boundaries of societies and cultures are being breached by vast, criss-crossing flows of ideas, images and information, their former impermeability lost forever. Communities, once invested with deep meanings and encapsulating close-knit relations, are becoming de-localized -- torn from familiar and particular places" (Danks & Kennedy, 2001, p. 1).

The phenomenon of globalization has been defined as "the process by which the experience of everyday life, marked by the diffusion of commodities and ideas, can foster a standardization of cultural expressions around the world" (Watson, 2006, p. 21). The dilution of cultural expression around the world is the least of mankind's worries when it comes to the effectiveness of international institutions in administering the emerging globalized economy, though. For example, Detomasi (2002) reports that one of the biggest challenges represented by the processes fueling globalization has been the diminution of the established mechanisms of domestic and international governance:

Globalization has eroded the boundaries between various elements of governance authority; particularly those that are either purely issue or geographically based. This has been observed in the apparent weakening of formal state authority -- the erosion of sovereignty -- but it is also apparent in the governance of international institutions, particularly those designed to monitor and regulate individual aspects of the international economy. (Detomasi, 2002, p. 421)

International institutions that are responsible for regulation of global affairs such as the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank have found it increasingly difficult to assert the same levels of issue-specific governance authority they enjoyed in the past, due in large part because such assertions have important impacts on areas falling outside the issues themselves. "The phenomenon of globalization has eroded the independent authority of traditional governance institutions while simultaneously making islands of issue-specific governance theory increasingly untenable" (emphasis added) (Detomasi, 2002, p. 421). These points are also made by O'Brien (2002) who writes that the same processes that are driving globalization are causing the role of the state to be reshaped and reduced, but that the Old Guard institutions are not up to the task facing the international community today. According to this author, after the United Nations was established, a number of other international institutions were created to help administer economic and social policy-making. "In 1947," he reports, "43 such bodies were accredited to the Economic and Social Council (ECOSOC). In 1992 at the Rio de Janeiro Environment Summit, 635 ECOSOC-accredited non-governmental organisations plus 293 other organisations were accorded observer status --a total approaching 1000 in all" (O'Brien, 2002, p. 15). During the last two decades of the 20th century, though, these international institutions proved time and again that they were incapable of addressing the growing problems facing them, in some cases, they even made things worse (O'Brien, 2002).

According to McGinnis (2004/2005), policymakers and citizens alike are increasingly questioning the desirability of assigning previously held responsibilities over which individual nations exercised sovereignty to international institutions that may not have their best interests in mind. For instance, McGinnis asks, "How much power should be given to centralized decision-making as opposed to decentralized decision-making and markets? Should regulatory authority be exercised through democratically accountable mechanisms or elite and bureaucratic ones?" (McGinnis, 2004/2005, p. 41). Further, the types of problems that are facing governmental policymakers today are truly becoming global in character. For example, Burke (1997) points out that, in spite of widespread agreement that freshwater is becoming one of the most urgent environmental problem facing many people today, "There is little reason to believe that any initiatives would achieve more success than the 'Decade of Drinking Water' launched by the UN in the 1970s" (p. 15). These issues, then, have assumed even greater importance in recent years as the number of actors in the international community has increased as a consequence of innovations in transportation and communications technology and the types of problems facing individual countries are becoming global in nature.

Because the international arena is unique and there are countless interests represented, the need for international institutions that can provide an objective forum and a viable mechanism for mediation and reconciliation remains high. Unfortunately, in most cases, the past models have not lived up to the need demanded by the international economy of the 21st century. In this regard, "What is really at stake thus becomes much clearer when more traditional political concepts are used to elucidate such relatively opaque terms as sovereignty, multilateralism, global governance and customary international law" (McGinnis, 2004/2005, p. 41). In this rapidly changing and critical environment, it is little wonder that international institutions are finding it increasingly difficult to maintain pace with the changes that are confronting them, and some would even like things slowed down or reversed, and these issues are discussed further below.

Events and Trends Affecting International Institutions in the 21st Century.

In an increasingly globalized marketplace, there are in fact many more issues to be regulated. Cross-border issues are not new, certainly, but they have become profoundly extended and amplified in recent years so that there are virtually no regions of the world left unaffected by these trends today, and these processes can be expected to continue to accelerate in the years to come. In their book, Whose World Order? Uneven Globalization and the End of the Cold War, Holm and Sorensen (1995) report that as the 19th century drew to a close, the effectiveness of international institutions was already beginning to fade: "With respect to the regulation of transnational activities, economic issues were for a long time the most important" (p. 148). These early international institutions were tasked with the standardization of industrial norms, international institutions designed to restrict the tariff and nontariff barriers for international trade, at establishing a reliable international currency system, and at controlling financial markets (Holm & Sorensen, 1995). According to these authors:

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