Developing-Country Cooperation in International Financial Institutions

Abstract

The early history of monetary and financial cooperation among developing countries in relation to the Bretton Woods institutions, the World Bank and the IMF, has been set out by Henning (1992). He observes that ‘the transformation of world politics and economics at the beginning of the 1990s presents new challenges for developing country cooperation in the Group of Twenty-Four’ (G-24). Specifically, market-based economic reform in the former Soviet Union and Eastern Europe, the easing of the international debt problem, and the triumph of ‘market-friendly’ policies everywhere, are viewed as posing ‘new problems of coalition formation among the developing countries’. The present paper seeks to explore some options for coalition formation that now confront the developing countries in the new situation. The first section of this paper reviews the working methods of the Group of Twenty-Four so far, and explores the potential for coalitions with both the smaller industrial countries, and the reforming economies of Eastern Europe. This is followed by an examination of the ways in which the interests of Japan and those of developing countries might converge during the 1990s, and the final section outlines a broad substantive agenda in the pursuit of which appropriate coalitions can be constructed on the principle that form must follow function.