Development and Finance from issue 2009/3

Mihály Simai

New Problems and New Possibilities for the System of Multilateral Cooperation in the Post-Crisis World

- Abstract -

JEL F-02, F-33

The current crisis has made it clear that avoiding the derailment of globalised trade and finance and the protection of the globe from neo-fragmentation and protectionism call for enhanced global cooperation and a new flexible system of global regulations as the world has moved into a more uncertain phase of global interconnectedness, mutual vulnerabilities and unforeseen risks. It is justified to expect multilateral institutions which play an important role in global economic governance to draw attention to the evolving dangers which can lead to global crises. They should also be equipped with sufficient ‘ammunition’ to introduce measures which can hinder the outbreak of a financial and economic crisis. If the crisis has already started, however, they should be able to help national crisis management efforts, including limiting the repercussions. There are also important tasks in the post crisis era, in which multilateral organisations should play a role. Global efforts have been focused largely on the crisis at hand, but the reforms in progress are aimed equally at the post-crisis world. It would be unrealistic to expect any set of institutional changes to eliminate business cycles, but with important reform measures it is reasonable to hope that the frequency and depth of future crises can be reduced.

Mihály Simai, member of the Hungarian Academy of Sciences, research professor (Institute for World Economics, Budapest)

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