Daniel Drezner/Council on Foreign Relations.
The 2008 financial crisis posed the biggest challenge to the global
economy since the Great Depression and provided a severe "stress test"
for global economic governance. States rely on a bevy of
institutions—the International Monetary Fund, World Trade Organization,
and the Group of Twenty—to coordinate action on the global scale. Since
the Great Recession began, there has been no shortage of scorn for the
state of global economic governance among pundits and scholars. However,
in this International Institutions and Global Governance program
Working Paper, Daniel Drezner concludes that, despite initial shocks
that were more severe than the 1929 financial crisis, the evidence
suggests that these structures responded to the financial crisis
robustly. Global trade and investment levels have recovered from the
plunge that occurred in late 2008. Existing global governance
structures, particularly in finance, have revamped themselves to
accommodate shifts in the distribution of power. The World Economic
Forum's survey of global experts shows rising confidence in global
governance and global cooperation. In short, international financial
institutions passed the stress test.
