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The System Worked: Global Economic Governance during the Great Recession

  • Daniel W. Drezner
Abstract

Prior to 2008, numerous international relations scholars had predicted a looming crisis in global economic governance. Policy analysts have only reinforced this perception since the financial crisis, declaring that we live in a “G-Zero” world. This article takes a closer look at the global response to the financial crisis and reveals a more optimistic picture. Despite initial shocks that were more severe than the 1929 financial crisis, global economic governance structures responded quickly and robustly. Whether one measures results by outcomes, outputs, or process, formal and informal governance structures displayed surprising resiliency. Multilateral economic institutions performed well in crisis situations to reinforce open economic policies, especially in contrast to the 1930s. While there are areas where governance has either faltered or failed, on the whole, the system has worked. Misperceptions about global economic governance persist because the Great Recession has disproportionately affected the core economies; analysts have conflated national with global governance; and the efficacy of past periods of global economic governance has been badly overestimated. Why the system has worked better than expected remains an open question, but we can tentatively conclude that both the power of the United States and the resilience of neoliberal economic ideas were underestimated.

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* Previous versions of this article were presented at the University of Toronto, Nuffield College, The Ohio State University, and the Council on Foreign Relations. I am grateful to Steven Bernstein, Brad Glosserman, Peter Gourevitch, Todd Hall, James Lindsay, John Mueller, Carla Norrlof, Rebecca Perlman, Stewart Patrick, Randall Schweller, Duncan Snidal, Alexander Thompson, Martin Weiss, Pan Rui, Trish Dorff, and Amare Bekele for their feedback and assistance. I am grateful to both the Council on Foreign Relations International Institutions and Global Governance program and the Michael and Andrea Leven Family Foundation for their generous financial support during the drafting of this paper.

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World Politics
  • ISSN: 0043-8871
  • EISSN: 1086-3338
  • URL: /core/journals/world-politics
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