Institutional Change From The Perspective Of Global Governance: Financial Crisis And The Group Of Twenty

Viewing from the perspectives of power, institution and culture (or idea), the causes of institutional change lie in recent power structure’s failing to reflect the interest configuration among different countries because of uneven development, failure-driven institutional change (reform, disappear, replacement or reconstruction), or changes in notions, ideas and cultures. The basic theoretical assumption is that changes of power structure resulting from power shift are the main impetus for institutional changes of global governance, and institutional failures due to immense changes of externalities are the catalyst for institutional changes. What is more, U.S. plays a very important role in the formation and change of global governance institutions.The global financial crisis and the countermeasures from the incompetent international organizations prompted the western world to overhaul the global economic governance institution. On one hand, developing world accused the current institutions of legitimacy deficit, and on the other hand, under the guidance of pragmatism, developed countries themselves were seeking more cooperation opportunities with the emerging economies, since the old institutional arrangement was far from efficient to meet the current global economic challenges. Against the background of the rise of the emerging economies and their enlarging clouts in the global economic arena, there is an increasingly louder voice from the developing world for a reform in the international economic institutions. However, different strategies were taken by emerging economies and G7on pushing G20onto the center stage of global economic governance.Differences between G20and G7are developed during the process of institutional change in terms of power structure, regulation structure and value structure. G20outpaced G7for achieving balance between effectiveness and legitimacy, adjusting the institutional arrangements to reflect the power structure, and having lower establishing costs. How to evaluate the role and effectiveness of G20in crisis management is one of the key issues to be examined in this thesis. Since it’s impossible to evaluate one institution’s performance without the consideration of its goal, this paper will make an objective scrutiny on G20’s performance during the global financial crisis by analyzing its five major goals first. What’s notable is, G20will have to cope with the internal and external challenges on the way of future development. To begin with, G20will face the institutional competition from G7. Though the relations between G20and G7in economic sphere are in good position, once agendas of G20spill over into political or security areas, relations between the two will become intense because of fierce competition. Secondly, G20and functional international organizations will be mired in governance fragmentation because of a lack of direct and effective interaction mechanism, as a result of which, governance effect of G20and functional international organizations will be in great damage. Furthermore, the special role of U.S. also has a great weight over the future of G20. Path dependence on traditional institutions will reinforce America’s hegemonic inertness, and America’s passion and willingness for reforming existing global governance institutions will fade away along with rebound of global economy in the future. Without America’s lead and push, G20may lose its orientation and impetus. How to figure out effective measures to deal with these challenges is the key to G20’s future development.