2. International economic law and
development: before and after neoliberalism
Julio Faundez*
1. INTRODUCTION
Two features have characterised international economic law (IEL) during
the recent period of rapid and seemingly unrestrained economic globalization: its emergence as the most important field of international law and its
close association with the ruling paradigm of development, as embodied in
the celebrated Washington Consensus.
The rise to prominence of IEL is a novel development. Indeed, until
recently, IEL rules were not regarded as real law, even by the undemanding standards of legal validity and efficacy applied by most international
lawyers. As a consequence, courses devoted to general international law
rarely covered IEL. Most international law treatises and textbooks either
ignored it or dedicated only a short chapter noting that there were few
rules in this area and that most of them were either not binding (such as
the numerous rules in the GATT Agreement) or highly contested (such as
those in the area of international investment law).
From the 1980s, however, after the outbreak of the current wave of globalization, IEL underwent a massive transformation to become the most
important field of international law. Its importance is confirmed by three
different measures: volume, scope and efficacy. The volume of new international economic rules is reflected in the large number of multilateral
and bilateral treaties on matters relating to trade, finance and investment
and in the numerous decisions by international economic organisations and
other bodies that set standards and voluntary codes in areas as varied as
banking, corporate governance and food standards. The scope of IEL
rules, perhaps one of its most novel and distinctive characteristics, is
related to the extent to which the rules address matters hitherto regarded
* Professor of Law, School of Law, University of Warwick, Coventry, UK.
­10
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IEL and development: before and after neo-liberalism­11
as part of the exclusive domestic jurisdiction of states. The greater efficacy
of IEL rules is reflected in the significant improvements in their enforceability, due to the establishment of numerous international tribunals with
jurisdiction to resolve international economic law disputes. Thus, today,
there are more IEL rules and they reach deeper into the national policy­making process and are taken seriously because they are more readily
enforced.
The prominence achieved by IEL in the late twentieth century is noteworthy because, throughout the 1960s and 1970s, developing countries
tried, unsuccessfully, to make use of international legal institutions to
support their development efforts. At the time, most developing countries
relied on a development model in which the state played a leading role
in steering the economy. By the 1980s, however, developing countries
began to embrace a set of IEL rules predicated upon a radically different model: one that is based on the principles of neo-­liberalism and
drastically restricts the role of the state and transfers control over key
economic decisions to international agencies or to markets. This model
of development is generally known as the Washington Consensus. In the
areas of trade and investment liberalisation, economic deregulation and
protection of property rights, IEL rules and institutions faithfully reflect
the Washington Consensus. This is precisely the reason why today most
governments and international legal scholars take IEL seriously and
why anti-­globalization activists deride it. This set of principles has also
provided the basis for the emergence of a new economic paradigm for
developing countries. Indeed, according to leading proponents of globalization, the rapid economic integration of the world economy has made
it necessary to harmonise rules and standards in order to create a level
playing field. These rules and standards – largely derived from economic
science – have been applied to all states across the world regardless of
their level of economic development. This approach is justified, according to Larry Summers – the influential US economist, policy-­maker and
former chief economist of the World Bank – because the rules of economics are like laws of engineering: one set of rules works everywhere (Klein,
2009). IEL has thus become the main vehicle through which the principles
of the Washington Consensus have been translated into international
binding rules and policies.
The recently acquired status of IEL in international law is also significant because the set of rules that currently govern the world economy seem
to be slowly departing from traditional assumptions underlying the conceptual framework of international law. While hitherto international law
has relied on the consent of states to legitimise its rules and institutions,
today IEL rules and practices have become increasingly removed from
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IEL, globalization and developing countries
the notion that the consent of states is a prerequisite for the validity and
enforceability of international law. A more powerful source of legitimation
for IEL rules seems to be the imperative of global economic integration
and the needs and interests of the leading developed states and international power brokers. Thus, for example, today it is not easy to discern
a clear link between the profuse number of conditionalities imposed on
developing countries and the traditional view that under international law
states are only bound by rules that they freely accept.
Regardless of whether this development signals the demise of state
sovereignty, as some observers suggest, it is interesting to note that the
current transformation of IEL has been accompanied by a revealing shift
in the description of states and the content of IEL rules. States are now
often no longer referred to as actors, but merely as economies; those that
are successful are described as emerging economies and those that are not
are either ignored or described as failing or fragile. Likewise, IEL rules,
along with numerous decisions of questionable legal validity, are described
as disciplines, thus suggesting that states no longer enjoy the prerogative
of opting out of international rules. It is also revealing that the rhetoric
employed by developed states and by international economic organisations suggests that one of the main purposes of IEL rules is to ‘lock in’ the
process of structural reform that these states are supposed to implement so
as to ensure that chronically volatile developing states do not undermine
the predictability and stability of the word economy.
This view of IEL rules as a straightjacket could well be a reasonable economic expectation for leading private international economic actors; but
its political and legal implications are, if not dangerous, at least a matter
for serious concern. The notion of IEL as a straightjacket for developing
countries also raises the inevitable question of what will happen to IEL
if, as is likely, the financial crisis of 2008 gives way to a new development
paradigm. Will IEL shift back towards a more state-­centred approach to
development? If so, will developing countries be in a position to make use
of international legal institutions to further their interests? Or, will they
focus instead on politics and diplomacy rather than law?
The rapid ascent of IEL and its link to the prevailing development
paradigm undoubtedly raises an array of complex and highly contested
theoretical and empirical questions. The purpose of this chapter is to contribute towards the clarification of some of these questions. Its three main
objectives are: (1) to explain IEL’s evolving approach to development
during the past five decades; (2) to identify the impact that globalization
has had on the foundations of international economic law and reflect upon
its likely impact on developing countries; and (3) to identify contemporary
legal and political trends that may provide clues to discerning how the
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IEL and development: before and after neo-liberalism­13
relationship between IEL and development is likely to evolve in the post­Washington Consensus period.
2. THE POST-­WAR SETTLEMENT AND IMPORT
SUBSTITUTION (1950–80)
The post-­war settlement brought about the establishment of the United
Nations, the World Bank and the International Monetary Fund (hereafter, the Bretton Woods institutions) and the General Agreement on
Tariffs and Trade (GATT). This institutional framework was based upon
two main pillars: the prohibition of the use of force (UN Charter: Art. 2
(4)), unless duly authorised by the UN Security Council; and the notion
that the international community had a duty to promote peaceful social
and economic change, in order to maintain peace and security. Under the
Charter, the prohibition of the use of force is balanced by a clear understanding that the international community has a special responsibility for
improving social and economic conditions throughout the world so as to
create conditions for political stability and thus prevent conflicts between
and within states. Seen from this perspective, the political and economic
objectives of the post-­war settlement were inseparable, which explains
why the UN Charter is committed to achieving both objectives at the same
time. Economic and social development was thus an essential component
of the post-­war settlement.
The grand political objectives reflected in the UN Charter were not
achieved. The cold war, which divided the world into two irreconcilable
camps, undermined the ideal that the UN would centralise the use of
force and generated instead a network of regional security pacts that were
concerned with political stability rather than development. Moreover,
the reluctance of some colonial powers to accept the principle of self­determination brought about a wave of wars of national liberation that
divided members of the UN and distracted the attention of the organisation away from economic affairs. After the completion of the process of
decolonisation, however, the newly independent states in Africa, Asia and
the Caribbean, together with other developing countries, joined forces to
create a powerful political bloc at the United Nations. The objective of this
bloc (later loosely identified as the Group of 77) was to enlist international
law and institutions in support of their members’ quest for social and economic development.
Between 1950 and 1980 most developing countries assigned to the state
a strong role in economic development. In this capacity, the state was
actively involved in promoting the establishment of a manufacturing base
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IEL, globalization and developing countries
and modernising the agricultural sector, often through the redistribution
of land. These goals were not easy to achieve. Chronic shortage of foreign
exchange made it difficult for developing countries to import the required
capital goods. Moreover, local industries had difficulties competing with
imported goods from more advanced countries. Most developing countries therefore began implementing, albeit in different ways and at different
speeds, an economic policy that came to be known as import substitution.
This policy was based on the simple idea that, rather than wasting scarce
foreign exchange on imported products that only the rich could afford, the
state should, through an array of regulatory mechanisms, provide incentives for the development of local manufacturing capacity. The implementation of this policy required a commercial policy that today would be
regarded as protectionist but which was then regarded as essential in order
successfully to secure national development objectives.
The Bretton Woods institutions, though ultimately committed to a
liberal international economic system (Frieden, 2006), did not stand in
the way of the implementation of import substitution strategies. On the
contrary, the World Bank actively contributed to strengthening the economic capacity of states through technical assistance and grants aimed
at strengthening the economic infrastructure of developing countries.
The IMF, which allowed and encouraged countries to maintain capital
controls, ensured, through pegged but adjustable exchange rates, that
balance of payments deficits did not cause disruptions to the regular flow
of international payments. The GATT, which at the time focused mainly
on reducing tariffs in industrial goods, was not overly concerned with
the plight of developing countries. Indeed, in the 1950s, the GATT was
described as a rich man’s club. In any event, GATT rules on subsidies and
other forms of state support were both vague and flexible and thus did
not stand in the way of import substitution policies. Moreover, by the late
1960s, new GATT rules were adopted that exempted products from developing countries from the most-­favoured-­nation principle so that those
countries could enjoy preferential access to the markets of industrialised
countries (Bartels, 2007).
During this period, developing countries focused their attention on two
major objectives: first, strengthening their capacity to control the exploitation of their natural resources and consequently to assert their right to
regulate multinational companies operating in the sector; and second,
ensuring access to modern technology in order to support and further
develop their efforts to implement the policy of import substitution.
Disputes over the right of developing countries to control their natural
resources, and in particular whether they could nationalise the assets of
companies operating in this sector, were prevalent during most of the
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IEL and development: before and after neo-liberalism­15
twentieth century (Sornarajah, 1994: 294). At the international legal level
there was no consensus on how to resolve these disputes. Although developed countries conceded that developing countries had a right to nationalise, they insisted, nonetheless, that international law required them to
pay prompt, adequate and effective compensation. They also claimed that
regulatory measures implemented by developing countries constituted
indirect expropriation and, as such, also required prompt, adequate and
effective compensation (Weston, 1975). The views between developed
and developing countries on this issue remained far apart throughout
this period. Indeed, in 1964, the US Supreme Court, in the celebrated
Sabbatino case,1 candidly acknowledged that this was an area in which the
law was unsettled since capital exporting and capital importing countries
held widely conflicting views. As a consequence, disputes over the regulation of natural resources were largely handled diplomatically, culminating
often in different forms of external intervention, which sometimes led to
the overthrow of governments that insisted on their right to nationalise
foreign-­owned property (Iran 1952, Guatemala 1954, Chile 1973).
Transfer of technology was another issue that concerned developing
countries. The devastating political and economic impact of colonialism
on countries that had recently become independent was felt sharply in the
area of technology. Colonial powers were not, in general, concerned with
education and as a result, upon independence, there was a dramatic lack of
suitably qualified people either to run the economy or to organise modern
manufacturing firms. Indeed, during the period of colonialism before the
Second World War, only 12 out of more than 100 developing countries
had achieved enough know-­how to be classified as experienced manufacturers (Amsden, 2007: 37). The urgent need to have access to technology
was also sharply felt by Latin American countries, even though they had
achieved independence in the first half of the nineteenth century. Although
some of the latter countries had made significant progress in the implementation of state-­led import substitution policies, they soon found that
their capacity to further develop their manufacturing base was impeded by
their lack of technology.
During the 1960s and 1970s developing countries tried, unsuccessfully, to lobby for the adoption of new rules of international economic
law that reflected their interests and development priorities. In this
context, the United Nations General Assembly, where developing countries held the majority of seats, provided them with a unique platform to
discuss and promote their views. This process resulted in the adoption
1 Banco Nacional de Cuba v. Sabbatino (1964) 376 US 398.
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of several General Assembly resolutions, including the Resolution on
Permanent Sovereignty over Natural Resources, the Declaration of the
Establishment of a New Economic Order, the Charter of Economic Rights
and Duties of States and the Declaration on International Investment and
Multinational Enterprises (Cox, 1979; Weston, 1981). These Resolutions
and Declarations were not formally binding, and not one made its way
into the labyrinth of customary international law. Nonetheless, these
Declarations and Resolutions provided the basis for the development
of more structured charters on the regulation of multinationals (Draft
Code of Conduct on Transnational Corporations, prepared by the UN
Economic and Social Council) and on the regulation of transfer of
technology (prepared by UN Conference on Trade and Development,
UNCTAD). These two Codes underwent interminable discussions within
the UN, but were never formally approved (for the text of these draft
codes and declarations, see Weston et al., 1990).
The provisions on natural resources, foreign investment and technology
transfer contained in the Charter of Economic Rights and Duties of States
capture the essence of the aspirations of developing countries during this
period (Weston et al., 1990: 568). Article 2 (1) reaffirms the principle that
states can freely exercise full sovereignty over their natural resources and
economic activities. Article 2 (2) sets out in detail the rights that derive
from a state’s sovereignty over natural resources and economic activity.
These rights include the right to regulate foreign investment in accordance with its own laws; the right to regulate the activities of multinational
companies operating within its jurisdiction; and the right to nationalise
foreign-­owned property, subject to appropriate compensation determined
by its own laws and reviewed by its own courts. Article 2 also provides
that no state shall be required to grant preferential treatment to foreign
investment and that multinationals should refrain from intervening in the
internal affairs of host states.
In the area of technology, the Charter (Art. 13) proclaims the right
of every state to benefit from advances in technology for the purpose
of furthering its economic and social development. It calls upon states
to facilitate the transfer of technology for the benefit of developing
countries and, in particular, it calls upon developed states to support
the scientific and technological infrastructure of developing countries.
Transfer of technology is defined in the UNCTAD Draft (1.2) as ‘the
transfer of systematic knowledge for the manufacture of a product, for
the application of a process or for the rendering of a service and does
not extend to the transactions involving the mere sale or mere lease of
goods’ (Weston et al., 1990: 585). The UNCTAD Draft also purported to
prohibit restrictive business practices often associated with the transfer of
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technology, such as exclusive dealing, restrictions on research and tying
arrangements.
3. TOWARDS THE WASHINGTON CONSENSUS
Attempts by developing countries to influence the content of IEL were
unsuccessful. Today, the UN Resolutions and Codes drafted during this
period have long been forgotten and many observers would probably
regard them as politically quaint, economically barmy or the product of
misguided economic nationalism (Krasner, 1985: 6–11, 299; Pauwelyn,
2005b: 42; Finger, 2008). Yet, it is worth remembering that in terms of
economic outcomes the policy of import substitution was quite successful.
Indeed, between 1950 and 1980, the period when this policy was applied,
developing countries experienced an unprecedented expansion in living
standards and per capita income that brought about an important decline
in levels of poverty. During this period income in developing countries
grew at a rate of 5 per cent. During this same period income in developed
countries grew at a rate of 4 per cent (Amsden, 2007: 6; Yusuf, 2009: 9–11).
It is therefore necessary to ask whether IEL rules played any role in the
achievement of these good economic outcomes.
It is clear from the account in the previous section that IEL rules did not
play a direct role in securing the positive economic outcomes during the
period 1950–80. Ironically, however, these positive outcomes can be rightly
attributed to the fact that international economic institutions and rules
provided developing countries with space to experiment with a variety of
economic policies aimed at securing a more solid and competitive productive base. As Alice Amsden notes, the GATT allowed developing countries
to deviate from the principles of free trade in order to build their national
economies (Amsden, 2007:48). Thus, although the international trading
system was liberal, developing countries were allowed to customise their
policies and formulate their own industrial policies, protect the industries
that they wanted to promote and exercise strict controls on foreign direct
investment. The international monetary system, which did not require or
encourage financial liberalisation, complemented the prevailing flexible
international trading system. Thus in many respects, the notion of ‘embedded liberalism’ used by John Ruggie to describe the post-­war settlement
among developed countries also applies to developing countries because,
although the rules of IEL adhered in principle to liberal multilateralism,
the prevailing system allowed developing countries to deviate from this
principle for the sake of strengthening their economies and ensuring the
stability of their political institutions (Ruggie, 1982: 397, 413).
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IEL, globalization and developing countries
The flexible system of international economic rules that allowed developing countries to liberalise at their own pace did not last. By the 1970s, as
the Bretton Woods system of fixed exchange rates collapsed and competition in trade and investment among industrialised countries intensified,
the institutions of the world economy came under severe stress. In addition, the emergence of multinational companies as the leading economic
agents in the world economy began to make nation states appear politically and economically outdated (Dunning, 1993). From the perspective
of multinational companies, the division of the world into territorial units
with diverse and conflicting regulatory frameworks was inefficient. It was
an unnecessary political barrier that impeded the free flow of capital and
goods. Since calling for the elimination of national legal systems was not
practical, multinationals lobbied vigorously and successfully to secure
uniform international standards in key areas of international trade, investment and intellectual property. Along with the spread of multinationals,
other factors, such as the revolutionary developments in information
technology and improvements in transport and telecommunications, also
contributed to strengthening the demand for a more uniform system of
economic regulation throughout the world.
Changes in the organisation of production and the emergence of new
technology were undoubtedly critically important in making the relatively
flexible and benign rules of IEL of the post-­war settlement appear out of
date. Nevertheless, there were also a variety of political decisions that, in
combination with other developments, contributed to bringing about a
new set of rules. By the late 1970s the United States had become increasingly frustrated by the GATT’s inability to make significant progress in
the elimination of non-­tariff barriers or to develop a robust approach in
the regulation of unfair trade practices (dumping and subsidies). Instead
of comprehensive regulations in these areas, the GATT had developed a
series of Codes that were binding only on countries that chose to accept
them. The regulatory fragmentation generated by this approach was exacerbated by the fact that the leading trading nations began to look for solutions to their urgent commercial policy problems outside the framework
of the GATT, resorting to a variety of devices including voluntary export
restrictions, orderly marketing arrangements and special treaties that controlled the flow of products into certain markets through quotas.
It is thus not surprising that, at the time, this state of affairs was
described by some commentators as managed protectionism, and one of
the leading trade law scholars argued that the institutions of world trade
were crumbling (Jackson, 1978). Whether or not these assessments were
correct, there is little doubt that by the late 1970s and early 1980s the
world trading system was rapidly moving away from the ideal of multilat-
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IEL and development: before and after neo-liberalism­19
eralism embodied in the GATT. This unfortunate state of affairs was made
worse by the policy of the US Government to resort to unilateral measures
in order to protect its economic interests by imposing or threatening the
imposition of sanctions on countries that had laws or practices which, in
the view of the US President, unjustifiably restricted US commerce. This
policy, characterised as aggressive unilateralism (Bhagwati and Patrick,
1990), was vigorously used to open up markets to US exports and to
protect intellectual property rights held by US multinationals (Chorev,
2005: 333).
4. BRINGING IN NEW RULES
The United States policy of aggressive unilateralism was combined with a
more positive and dynamic policy aimed at persuading developing countries to accept the longstanding views held by the US and other capital
exporting countries regarding the protection of foreign-­owned property.
This policy led to the establishment of an extensive network of bilateral
investment treaties (BITs) with developing countries (Vandevelde, 2000).
The US policy on BITs was soon replicated by most capital exporting
countries and by the end of 2007 there were over 2,600 BITs in force. This
process brought about a major shift away from the views that developing
countries had supported during the period leading up to the approval of
the Charter of Economic Rights and Duties of States.
The US and other developed countries did not, however, focus only on
bilateral solutions. They also used their financial clout and political influence within the United Nations to prevent developing countries using the
UN as a political platform to rally support for their views on development.
Thus, for example, the New York based UN Centre on Transnational
Corporations (UNCTC) – which, since 1974, had been instrumental in
supporting developing countries in their negotiations with multinational
companies and had taken an active role in preparing the draft Code of
Conduct on Multinationals – was transferred to UNCTAD in Geneva in
1993 with a smaller budget and reduced staff.2 UNCTAD itself, which had
been established by developing countries to ensure that the international
trade agenda did not neglect the overriding importance of development
issues, was marginalised as the IMF and the World Bank began to assume
a prominent role in steering the process of development (Love, 2001).
The two large oil price increases in the 1970s, which were followed
2 See http://unctc.unctad.org/aspx/index.aspx (accessed 28 August 2009).
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by the debt crisis of the 1980s, exposed, once again, the vulnerability of
developing countries to the vagaries of the world economy. The sequence
of events is well known. The large OPEC surpluses (petro-­dollars) were
recycled by the private banking system in the form of low-­interest-­rate
loans to developing countries. Since the loans were cheap, many developing countries borrowed excessive amounts and were not careful to ensure
that the investments procured by the loans would generate adequate
surpluses. Thus, when in the late 1970s interest rates shot up and there
was a second sharp rise in oil prices, the world economy faced a serious
recession, which had a devastating impact on developing countries (Cline,
1995). These circumstances provided the IMF and the World Bank with
a unique opportunity to persuade developing countries to abandon their
state-­led development polices and to embrace instead market-­friendly
policies (Woods, 2006: 53).
The mechanisms used by the Bretton Woods institutions have varied over
the years (see Tan, Chapter 6 in this volume), but they have all included conditionalities, which generally involve soft loans in exchange for the implementation of policy reform. The initial programmes of policy-­based lending
were embodied in the notorious Structural Adjustment Loans, which
exchanged badly needed finance for the implementation of policy measures
aimed at reducing the role of the state, releasing market forces and reducing the discretion of politicians (Mosley et al., 1991a: 40–45; Babb, 2005).
These structural adjustment policies soon became the new paradigm for
development and, in the 1990s, were christened the Washington Consensus
by an insightful economist (Williamson, 1990b). The policies prescribed
by the Washington Consensus included fiscal discipline, tax reform, interest rate liberalisation, trade liberalisation, liberalisation of inward foreign
direct investment, reduction and redirection of public expenditure, deregulation, privatisation and security of property rights. These policies were
never agreed by all states, but they enjoyed the support of the US Treasury,
the US Federal Reserve Board and the two Bretton Woods institutions
(Williamson, 2000: 257). They were imposed on developing countries by the
Bretton Woods institutions through a range of formal and informal mechanisms, which some observers describe as soft law (Alvarez, 2005).
Political and economic pressure on developing countries by the United
States and other developed countries also played an important role in
spreading Washington Consensus policies throughout the world. The
World Bank claimed that these policies were a sound alternative to the
policies of import substitution, which had given far too much discretion
to corrupt politicians, usually captured by narrow interest groups (World
Bank, 2005a: 6). Despite its obscure political origins, its problematic mode
of implementation and questionable rationalisation, the Washington
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Consensus soon became the overriding constitutional framework for
IEL. In the terminology used by Hans Kelsen’s positivist legal theory,
the Washington Consensus became the ‘basic law’ of the world economy
(Kelsen, 1967).
The completion of the Uruguay Round and the establishment of the
WTO is a landmark in the process of implementation of the Washington
Consensus. Indeed, after a long period of bitter wrangling and interminable arguments the international community approved, in 1995, several
related agreements that brought to an end debates that had plagued the
GATT for several years. The Single Undertaking brought under one roof
the reformed GATT Agreement of 1947, and agreements regulating unfair
trade practices, safeguards, non-­tariff barriers, trade in services, trade­related investment measures and intellectual property. It also established
a unified dispute settlement system for all these agreements so that in any
particular dispute any of these agreements can be considered by the adjudicating bodies – Panels and Appellate Body. The Uruguay Round also
made it easier for complaining parties to establish a Panel and, through a
reverse consensus rule, made the adoption of Panel and Appellate Body
reports virtually automatic.
The judicialisation of international trade disputes is generally regarded
as the single most important achievement of the Uruguay Round (Jackson,
2008: 444). Equally, significant, however, is the fact that some of the key
provisions of the Uruguay Round Agreement effectively made import substitution policies illegal: the Agreement on Subsidies and Countervailing
Measures prohibits subsidies contingent upon the use of domestic over
imported products; the Agreement on Trade Related Investment Measures
prohibits states to require foreign enterprises to use products produced
locally or to set limits to the importation of products linked to the value or
volume of local products that they export; and the TRIPS Agreement does
not allow compulsory licensing for the purpose of furthering home-­grown
industrial policies.
The cumulative effect of these provisions has brought about a qualitative change that clearly distinguishes the WTO from the old GATT. While
obligations under the old GATT were based on the reciprocal exchange of
concessions among the Contracting Parties, the WTO has moved towards
a more regulatory stance under which its rules are more prescriptive and
not subject to negotiation. Thus, not surprisingly, WTO obligations are
now referred to as disciplines, underlining the fact that the possibility of
flexibly opting in and out of rules and procedures – a typical feature of the
old GATT – is no longer available. This is one of the reasons why even
ardent advocates of free trade have come to regard WTO structures as
unworkable (Sally, 2007: 39).
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The determination to deepen the implementation of the Washington
Consensus did not come to an end with the approval of the WTO
Agreements in 1995. Indeed, such was the perceived success of the single
undertaking approach employed at the Uruguay Round that the OECD
attempted to replicate it in the area of international investment. This
attempt took the form of a draft multilateral agreement on investment
(MAI) that was meant to consolidate, in a single treaty, the rules and
principles designed to protect foreign investors currently scattered in hundreds of bilateral investment treaties. In theory, securing the approval of
the MAI initiative should have been easy, since the proposed treaty was
intended, in the first instance, to include only members of the OECD and
the vast majority of its provisions were no longer controversial, having
already been accepted by most states in the numerous BITs. Unexpectedly,
however, the MAI initiative generated such enormous controversy that its
sponsors decided to abandon it (Henderson, 1999).
This setback did not, however, diminish the zeal of those who were
keen to further pursue the implementation of the Washington Consensus.
Indeed, since the WTO turned out to be a hopelessly inefficient mechanism for negotiating new rules, developed countries opted for the bilateral
route. A massive wave of Regional Trade Agreements (hereafter RTAs)
therefore emerged, which, as well as further liberalising trade between
treaty partners, introduced new rules (disciplines) in areas where the WTO
had been unable to make progress. These new obligations, also known
as Singapore issues – which developing countries refused to accept at
the Singapore Ministerial Conference in December 1996 – include commitments in areas such as the environment, competition policy, labour
standards, international investment and intellectual property (Whalley,
2006: 16; Heydon and Woolcock, 2009). In the area of intellectual property, some bilateral agreements require developing countries to introduce higher standards of protection than those required by the TRIPS
Agreement (see Roffe, Chapter 14 in this volume). For example, the
US–Jordan Treaty of 2000 establishes a free trade area and also provides
for extensive protection of inventions in all fields of technology without
taking into account the exceptions envisaged in the TRIPS Agreement
(Art. 27.3(b)) (UNCTAD-­ICTSD, 2003: 52, 60). This process has led to
the emergence of a vastly complex network of bilateral treaties – described
by some as a Spaghetti Bowl – that create special bilateral regimes, which
are slowly eroding the WTO’s cherished principle of multilateralism and
have the potential to create considerable political and legal confusion as
many states find themselves subject to conflicting obligations (Baldwin,
2006: 1508; Bhagwati, 2008).
As globalization intensified and the implementation of policies of eco-
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nomic liberalisation in developing countries encountered difficulties, the
agenda of the Washington Consensus expanded to include a variety of
issues that fell within the general framework of governance. The addition of governance to the original Washington Consensus has further
widened the jurisdictional domain of international economic law, thus
bringing about a further reduction of what international lawyers generally
regard as areas that are primarily within the domestic jurisdiction of states
(Faundez, 2003). Indeed, today, the World Bank and other international
organisations have unilaterally assumed jurisdiction to decide whether
the quality of governance in individual states is consistent with accepted
minimum international standards. These minimum standards have not
been agreed by states and are based broadly on Anglo-­American notions
of law and administration (Kapur, 1998: 8). Following this newly acquired
power, the World Bank and other international organisations have began
to judge whether domestic institutions are adequate for the implementation of the policies prescribed by the Washington Consensus. Although
IEL rules have not yet formally authorised the World Bank or the IMF to
determine when a complete overhaul of domestic institutions is required
(regime change), the persistent use of concepts such as fragile and failed
states suggests that this could well be the next stage in the process. In
any event, regardless of whether or not the World Bank has the power to
compel countries to follow standards of governance consistent with the
original principles of the Washington Consensus, industrialised countries
have already made use of their superior economic power to persuade
developing countries to make changes in their standards of governance.
To this end, developed countries have made prolific use of the Generalised
System of Preferences, which dates back to the 1970s, to ensure that
developing countries comply with governance standards. India recently
challenged some aspects of the EU preferential trade programme that it
deemed discriminatory. The Appellate Body upheld India’s challenge on
the ground that the EU’s programme did not represent a positive response
to an objective development need of the beneficiaries. The EU introduced
changes to its programme, but its revised programme is also flawed since,
while one of the conditions for eligibility is that the countries should be
vulnerable, vulnerability is not defined in terms of the objective needs of
the beneficiaries but in terms of their share of EU imports. The revised
programme also requires states that wish to benefit from the programme
to ratify several human rights conventions, which are not linked to any
objective development need (Bartels, 2007: 742). The United States also
uses its GSP programme to persuade developing countries to sign treaties and adopt legislation that they would not have otherwise accepted or
enacted (Jones, 2006). It also makes use of pre-­negotiation agreements,
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also known as Trade and Investment Framework Agreements (TIFAs), to
persuade countries interested in entering into RTAs to introduce legislative and institutional changes (UNCTAD, 2008b). They are very effective
since conditions imposed through bilateral treaties are tailored to suit the
trading and commercial interests of the US. They are also easy to monitor
and verify. Bilateral conditionalities therefore complement and reinforce
the policies pursued by the World Bank and the IMF.
From a developing country perspective, the current international economic legal system is flawed for the following five reasons. First, most
developing countries have little or no influence in the decision-­making
processes of international economic organisations, especially in the
IMF and the World Bank. Moreover, even in organisations such as the
WTO, in which all countries formally have the same power to influence
decisions, most developing countries effectively have no input in the
decision-­making process as developed countries employ a series of informal devices and subterfuges to exclude them (Jawara and Kwa, 2003: 305;
Gathii, 2006).
Second, today, international economic institutions, such as the World
Bank and the IMF, have assumed an inordinate amount of control over
key economic policy and governance decisions of developing countries
through the imposition of various forms of conditionalities and the exercise of surveillance powers (Woods, 2006).
Third, even in cases where developing countries are formally equal
counterparts in the formulation of IEL rules (as is the case of bilateral
investment treaties between developed and developing countries), the
reciprocal obligations established by these treaties are, in fact, vastly
unequal. Indeed, while both parties agree to protect the investment of
the other party’s nationals in their territory, in reality, investment flows
in only one direction – from developed to developing country. These
treaty obligations, though formally symmetrical, therefore ensure that the
standards of one of the parties are respected by the other. The process of
negotiation of these treaties further confirms their asymmetrical nature.
Indeed, these treaties are based on Model Treaties drafted by lawyers in
the Foreign Offices of developed countries and leave developing countries
very little room for negotiation (Schneiderman, 2000; Singh, 2001).
Fourth, the recent expansion of IEL-­based international adjudication
has been loaded in favour of private-­sector actors, as key decisions in
international investment and trade disputes are mainly handled by arbitrators and panellists whose expertise is mainly in private and commercial
law (as is the case of ICSID) or in specialised areas of international trade
(as is the case of WTO Panels). These experts often lack the necessary
knowledge, experience or inclination fully to assess the wider national and
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international public policy implications of the issues arising from cases
submitted to them.
Fifth, in the absence of explicit IEL rules, many areas of international
economic relations are governed by standards that are designed either by
small groupings of powerful states, such as the G-­7, the G-­8, and more
recently the G-­20, or by inter-­governmental organisations in which developing countries have little or no influence (Schneider, 2005).
There is little doubt that under the current international economic
legal system developing countries are, in general, ‘rule takers’, rather
than active agents in framing legal rules. There are, of course, many
areas in which developing countries have made good use of and achieved
benefits from the new IEL rules. Indeed, some countries have successfully
defended their rights through the WTO dispute settlement mechanism
(such as the case of Brazil and cotton subsidies; see Cross, 2006); others
have benefited from the use of provisions of the GATS to exploit their
comparative advantages (such as India and outsourcing; see Jensen and
Kletzer, 2008); and developing countries successfully campaigned to
persuade the WTO to adopt a Declaration on the TRIPS Agreement
and Public Health that restates that countries have the right, under the
TRIPS Agreement, to grant compulsory licences to protect public health
(UNCTAD-­ICTSD, 2003: 16).
Yet, for developing countries as a whole, the current framework of
IEL rules is not an unqualified success. The economic performance of
developing countries during the upsurge of globalization in 1980 has
been disappointing, especially when compared with the levels of growth
achieved during the preceding thirty years. Indeed, while developing
countries’ income grew at an average rate of 5 per cent between 1950 and
1980, average growth rates dropped to barely 3 per cent between 1980
and 2000. These average figures conceal, of course, significant variations. India and China, which opened their economies but did not apply
the Washington Consensus, have registered spectacular growth rates,
while other developing countries in Latin America and Africa, which
followed the Washington Consensus and/or were subjected to strict structural adjustment programmes, registered average growth rates below 3
per cent (Amsden, 2007: 6, quoting World Development Report 2002
Development Indicators). These figures show, contrary to the views of
some observers (IMF, 2007: 135–70), that unrestrained globalization has
not been an unqualified success for developing countries. It is also unclear
whether globalization has brought about an overall reduction in inequality, either in terms of the relationship between developed and developing
countries or in terms of poverty reduction within countries (Sutcliffe,
2004; Wade, 2004).
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5. HAS IEL GONE TOO FAR?
The fact that developing countries have not played a major role in shaping
the form and content of IEL rules is not surprising. After all, they have
never played a major role in shaping events in the world economy. In
recent years, however, developing countries have been under enormous
political and economic pressure to ‘globalize’, and IEL rules have played a
crucial role in this process. The problem, however, is that many of the new
IEL rules have come into being through mechanisms (such as conditionality) that do not fit comfortably with the traditional notion that binding
rules of international law are created by the consent of states. Also, many
of the new IEL rules have penetrated so deeply into the fabric of what has
previously been considered the domestic jurisdiction of states (the issue of
policy space) that questions are rightly raised about the impact of globalization on the foundations of international law and state sovereignty.
These questions have been widely debated among social scientists
and legal theorists and no consensus has yet emerged on this issue. This
debate is relevant to this chapter because it is premised on the problematic
assumption that IEL is a coherent and systematic system of rules. Before
testing this assumption, however, it is necessary to offer an overview,
albeit schematic, of the way some social scientists and legal theorists have
addressed the question concerning the wider relationship between sovereignty, globalization and international law.
The impact of globalization on state sovereignty has been noted by most
international relations specialists, political economists and international
lawyers. While economists do not generally address issues relating to
international law or state sovereignty, some ideologues of globalization
regard the advent of globalization as inevitable, thus highlighting the
economic logic of this process while downplaying the role of international
law and political bargaining (Friedman, 1999; Wolf, 2004). Political scientists and lawyers sceptical about normative concepts such as sovereignty
argue that the focus for a proper understanding of the world economy
should be on the political and economic interests of the leading players in
the world economy, rather than on empty normative concepts (Krasner,
1999; Goldsmith and Posner, 2005). Those who hold this view about
international relations are also sceptical about international law and, as a
consequence, are not overly concerned about the impact of globalization
on its foundations.
There are, of course, many social scientists who take more seriously the
impact of globalization on sovereignty and international law. Within this
group, some regard globalization as a positive factor insofar as it may be
the prelude to a world order in which citizens are part of a larger cosmo-
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politan order (Pogge, 2002: 168; Held, 2004; Habermas, 2006). These theorists, however, do not address difficult issues such as the sources of law or
the structure of the institutions in the new cosmopolitan order. Theorists
who take a less sanguine approach to the current process of international
economic norm setting describe the process as coercive socialisation
(Hurrell, 2007: 212), neo-­colonialism (Mutua, 2000; Anghie, 2006) or
simply a new form of imperialism (Chimni, 2004).
International lawyers have adopted a variety of approaches to interpret
and conceptualise the impact of globalization on IEL and international
law generally. Most of these approaches have been pragmatic insofar as
they attempt to incorporate the momentous changes that have taken place
in recent years into the current international law discourse. José Alvarez
(2005), for example, in an extremely well-­documented study, provides
unambiguous evidence that, in recent years, international organisations
have taken an expansive and often careless approach to the creation of
international law rules and notes that this process is effectively changing
the meaning of national sovereignty.
A more ambitious attempt to wrestle with the abundance and complexity of new international economic rules is found in the work of lawyers
who have sought to apply principles and techniques of administrative law
to interpreting the emerging IEL regulatory framework (Kingsbury et al.,
2005). This approach is valuable insofar as it provides enormous data on
the rapid spread of IEL rules and raises important questions about overall
political and legal implications. The weakness of this approach is that it
assumes that the political problem of legitimacy generated by the current
process of economic globalization can be resolved by applying principles and techniques of domestic administrative law originating mainly
in Europe and the United States. It thus fails to take into account that,
although in domestic settings administrative law is an essential feature of
the rule of law, a good and efficient system of administrative law presupposes a strong and legitimate political system, something that is sadly
missing at the international level.
Some international lawyers, observing that globalization has undermined the old-­fashioned, state-­led diplomatic process for making and
interpreting international law, have opted for pragmatic solutions that
change the focus of analysis. Thus, Anne Marie Slaughter (2004a, 2004b),
for example, points out that the role of established professional diplomats
has now been taken over by governmental and non-­governmental experts
who are controlling and driving the process of norm creation at the international level. In order to ensure that the leading actors in this network
do a good job, international lawyers should develop creative mechanisms
of accountability to control their activities. This approach does not,
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IEL, globalization and developing countries
however, address the issue regarding the transformation of sovereignty
under the impact of globalization nor the impact of this transformation
on the role of developing countries in the emerging international economic
legal order. Instead, working on the assumption that the spread of worldwide economic liberalism is inevitable, it seeks to provide lawyers with a
technical perspective in order to make networks accountable, thus enhancing the legitimacy of this process.
Not all lawyers, however, take such a complacent view. Ernst-­Ulrich
Petersmann (2002b, 2008), for example, is keenly aware that the legal and
political foundations of the current process of economic globalization are
weak. Noting that there is a manifest incoherence between the principles
of the WTO that focus on free trade and some international human rights
instruments that have a distinct anti-­market bias, he calls for a radical
approach to ensure simultaneous and timely respect of all human rights
– economic, political and social – both at national and international
levels. He calls this approach multi-­level constitutionalism and argues
that in order to achieve it the international community should adopt
the European Union’s approach to economic integration. Petersmann’s
proposal has provoked a lively and unexpectedly acrimonious response
from prominent members of the international human rights community
(Alston, 2002; Howse, 2002; Petersmann, 2002a; see also Picciotto, 2003).
Most international lawyers have focused their attention on rationalising and explaining international legal development and have refrained
from directly addressing the delicate question of state sovereignty (but
see Schachter, 1997; Lauterpacht, 1997). One of the most prominent
international lawyers, the late Robert Jennings, has offered a powerful
defence of the continuing validity of the notion of sovereignty (Jennings,
2002). A more qualified defence of sovereignty is offered by John Jackson,
a leading IEL specialist. He argues that sovereignty should be renamed
and redefined. He proposes to call it ‘sovereignty modern’ so as to take
into account the fact that not all contemporary rules of international economic law can trace their origin to the consent of states (Jackson, 2003,
2006). Jackson’s argument, though interesting, is unpersuasive. He does
not clearly explain which international rules do not require the consent
of all the states, nor does he explain where and how these rules originate.
Thus, his objective of redefining sovereignty does not succeed. It amounts
to little more than a gentle plea for the peaceful co-­existence of traditional
international law with a so-­called ‘modern’ international law that has to be
accepted because otherwise the world economy would become ungovernable. In this respect, Jackson’s argument comes close to those who argue
that the economic rules of the global economy should not be subjected to
political bargaining.
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IEL and development: before and after neo-liberalism­29
Regardless of whether political or legal theorists welcome, or deplore,
the demise of national sovereignty, they all seem to share the same
assumption: that current IEL rules are part of a comprehensive and coherent system of rules. In formal terms this assumption is reasonable because,
as explained in earlier sections of this chapter, most of the new rules of IEL
are consistent with the principles of the Washington Consensus. Yet, on
close inspection the new rules of IEL are more fragile, less predictable and
not as uniformly applied as either pro-­ or anti-­globalization activists and
scholars assume. Indeed, a close analysis of the application of IEL rules
would probably show that, at the point of implementation, the variety of
increasingly intrusive forms of international regulation are either ineffective or their implementation is partial and selective.
The fragility of international economic law rules stems – as I argue
below – from the absence of adequate international institutions with the
capacity to transcend genuinely the narrow political and economic interests of the leading actors in the world economy. In the absence of a strong
international institutional framework, IEL rules are subject to the political and economic vagaries of powerful nation states. Thus, in terms of
the question raised by the title of this section, IEL rules have not gone far
enough because they are not embedded within a coherent system of international institutions. This may greatly facilitate the renewal of IEL rules
once market fundamentalism, as embodied in the Washington Consensus,
gives way to another development paradigm.
6. IEL RULES AND INTERNATIONAL
GOVERNANCE
The objective of establishing a level playing field among actors in the
world economy is frequently cited as the main justification for the proliferation of IEL rules. In terms of international law, this sound objective is
embodied in the ideal of multilateralism, which is in turn based upon the
principles of equal treatment and non-­discrimination. The GATT was the
first international economic instrument to take this principle seriously,
and the WTO, as its successor, is the main vehicle entrusted with the
implementation of this important objective.
Yet, despite the rhetoric of multilateralism, the main proponents of
the WTO have not taken this commitment seriously either when they
designed the WTO or in their practice within the institution. Indeed, as
numerous observers have noted, the political mechanisms of the WTO
are hopelessly inefficient and its political organs have no capacity to take
decisions or shape the practice of the organisation in accordance with
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changing economic circumstances. The persistent failure to develop new
rules and policies in successive Ministerial meetings is directly related to
the inadequacy of the WTO as a political institution. The principle of
unanimity, inherited from the GATT and described by some as medieval,
is not at the heart of the problem. The main problem is that developed
countries are not genuinely committed to the principle of multilateralism
because of their distrust arising from the need to protect and further their
own national economic interests. The WTO thus contains a labyrinth of
complex rules that are interpreted by an adjudicatory mechanism, yet
it does not have an effective mechanism to provide timely and dynamic
responses to the ever-­changing global economic environment (Pauwelyn,
2005a, 2005b).
Although the reluctance to establish a more coherent and politically
effective WTO is often attributed to the neo-­liberal distrust of bureaucracies and big government, this interpretation has no basis. Indeed, the
opposite is closer to the truth. The decision to opt for a model of globalization that relies on self-­enforcing rules stems from a lack of faith in the
possibilities of achieving economic globalization through genuine multilateral channels and not from a genuine belief in the virtues of unregulated
markets. This explains why the patently naïve belief that unregulated
markets would rule the world was so readily embraced by the leading
industrial countries in the world.
The reluctance to establish institutions capable of effectively creating a
more equitable process of globalization through multilateral mechanisms
is also reflected in the policy of the major industrial powers towards the
Bretton Woods institutions. These institutions, which should have played
a critical role in providing guidance to achieve equitable economic outcomes, became instead the leading organs entrusted with the implementation of the now discredited Washington Consensus. In the 1980s, the
World Bank pushed the structural adjustment agenda, with no concern for
its social and economic impact (Onis and Senses, 2005: 284). Poverty eradication was an afterthought, incorporated into the Bank’s agenda in the
1990s, long after it had become clear that the ‘one-­size-­fits-­all’ Washington
Consensus policies were not yielding good development outcomes and
were causing serious domestic political problems. The IMF’s appalling
record in applying Washington Consensus principles for the resolution of
financial crisis in developing countries in the 1990s is well documented and
has been widely criticised (Stiglitz 2002a; Woods, 2006).
The poor performance of these two major institutions can again be
traced back to the failure by the leading proponents of globalization to
take seriously the importance of creating a level playing field managed
through effective multilateral institutions. Neither the IMF nor the
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IEL and development: before and after neo-liberalism­31
World Bank has the structures or procedures to take decisions that would
remotely reflect the interests of the majority of countries in the world.
Their voting system, designed for a different era, gives privileged influence
to western powers, especially the United States. Paradoxically, the failure
to introduce a timely redesign of the Bretton Woods institutions called for
an approach to globalization that played down its political edge by relying
on the technical language of economics. Thus, the Washington Consensus
became a useful mechanism which, while empowering the Bretton Woods
institutions, concealed the disagreements and tensions among the leading
proponents of globalization.
Against this background, it is not surprising that the leading industrial nations have all but ignored the principle of non-­discrimination in
international trade – one of the pillars of the ideal of multilateralism. In
recent years, Regional Trade Agreements (RTAs) have become the most
popular international instrument to manage trade and other international
economic relations at the bilateral or regional level. Indeed, such is the
popularity of these agreements – which at the last count numbered over
200 – that today they account for 50 per cent of world trade. The rationale
for entering into these agreements is that they are building blocks aimed at
facilitating economic integration among partners.
Although these agreements are not prohibited by the WTO, they are
closely regulated by the treaty (GATT 1947: Art. XXIV). Under this
provision RTAs are intended to further trade liberalisation, but must not
raise trade barriers in relation to WTO members that are not parties to the
agreements. This basic principle requires members of RTAs to eliminate
duties and other restrictive regulations of commerce with respect to substantially all trade and not to introduce more restrictive trade regulations
in respect of trade with third parties. Under the rules of Article XXIV,
all RTAs must be notified and approved by the Committee on Regional
Trade Agreements, which includes all WTO members. Although the first
of these requirements has been fulfilled, the second has not. Indeed, the
Committee has only approved one RTA (the customs union between the
Czech Republic and the Slovak Republic) because its members disagree
on the interpretation of Article XXIV. As a consequence, all but one of
the RTAs in force exist in a virtual legal limbo because WTO members
have been unable to decide whether their aims and objectives are consistent with the aims and objectives of the WTO. According to Jagdish
Bhagwati (2008), RTAs have effectively destroyed the principle of non­discrimination and have swallowed up the trading system.
The reluctance of the leading industrial powers fully to implement the
principle of multilateralism is yet another reflection of their half-­hearted
commitment to establishing a genuine level playing field for the global
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economy. Their own national political and economic interests have
made it impossible to achieve this objective. This has not prevented them
from imposing ‘one-­size-­fits-­all’ obligations on developing countries,
as reflected in most IEL rules. Thus, while developing countries are
prevented from using subsidies to develop local industries, developed
countries employ subsidies to protect their agricultural sectors; while
developing countries are required unconditionally to open up their
economies to foreign investors, developed countries carefully screen
investment from sources that they deem politically sensitive (Mattoo and
Subramanian, 2009); while most developing countries have no choice
but to accept tough conditionalities from the IMF and the World Bank,
some developed countries use their influence in these institutions to give
preferential treatment and additional financial support to their political allies (Stone, 2008); while the Millennium Development Goals were
agreed with great fanfare, their implementation has provided developed
countries with yet another opportunity to compel developing countries
to adopt policy changes (Soederberg, 2004); while developing countries
that enter into trade agreements are required to make sweeping changes
to their tariff structures, their developed country partners are not prepared to commit themselves to even a minimum level of foreign aid
(Hinkle and Schiff, 2004; South Centre, 2008a); while preferential trade
agreements are described as building blocks to further integration, some
of these agreements have made it difficult for developing countries to
avail themselves of the flexibilities of the TRIPS Agreement (Stiglitz,
2008: 1701).
Thus, one of the features of international governance in recent years
is that international economic law has been used largely to impose discipline only on developing countries. Indeed, it is quite revealing that,
in a recent negotiation of a free trade agreement with the US, Australia
refused to accept a state-­investor arbitration clause, claiming that it has a
well-­established legal system that can fairly and equitably handle claims
from the private sector (Gagné and Morin, 2006: 372). Australia’s argument underlines the one-­sided nature of most IEL rules. While developing
countries are rule-­takers, developed countries retain enormous discretion
to decide whether and how to comply with rules that are meant to create
a so-­called level playing field. The lack of coherence of IEL rules stems
largely from the fact the promoters of the Washington Consensus failed
to create institutions capable of directing and managing the process of
globalization. Instead, they chose to introduce massive structural change
through institutions, such as the IMF and the World Bank, which have a
huge legitimacy deficit and institutions, such as the WTO, which do not
function as genuine multilateral organisations.
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7. CONCLUSION
This chapter has shown that either directly or indirectly IEL has been
concerned with economic development. From the immediate post-­war
period until the 1980s, IEL was weak and almost irrelevant, thus allowing developing countries space to formulate their own economic policies.
During the recent period of unrestrained globalization, IEL has played a
crucial role as a vehicle for implementation of the Washington Consensus
in the developing world. Developing countries have been required to
implement a strict set of rules, while developed countries, especially those
that have played a leading role in the promotion of globalization, have
embraced these rules half-­heartedly. Instead of tackling the urgent need
to reform old international institutions and build effective new institutions
to manage the process of globalization, these countries have pursued,
through a range of bilateral and regional arrangements, a strategy that
gives them ample political space to secure advantages over their close
economic competitors. This process has undermined the ideal of multilateralism and made a mockery of the much flaunted objective of creating a
level playing field.
Paradoxically, the weakness of the prevailing international institutional
framework bodes well for the future of IEL. Indeed, because IEL rules are
not deeply embedded in dynamic, efficient or legitimate institutions, they
cannot stand in the way of major reform. Indeed, if the world’s leading
powerbrokers take seriously the task of building new and more effective
institutions for the world economy, and if there emerges a new consensus
on development that takes into account the needs and capacities of developing countries, there will then be a unique opportunity to develop new
IEL rules and procedures to steer and manage globalization. This is a difficult task which will succeed only if it is carried out in consultation with
all interested parties. One reason to be optimistic is that, today, developing
countries will not be taken by surprise as they have learned the hard way
that IEL rules, even the most technical, have a major impact on development.
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