News Analysis: Can emerging economies further move global governance reform?

It is essential for global economic governance to be further reformed in order to better reflect the growing role of emerging economies, economists said.

However, they did add that a lot depends on whether or not the United States is generous enough to budge.

"Emerging markets are a lot more important for the world economy today than they used to be," Gao Haihong, a research fellow at the Chinese Academy of Social Sciences, said in a recent interview.

Global economic governance reform is expected to be part of the discussions at the upcoming spring meetings of the International Monetary Fund (IMF) and the World Bank (WB) in Washington over the weekend.

The current global architecture of economic governance, including the IMF, the World Bank and the World Trade Organization, was established in the aftermath of World War II, but it faces criticism for being not efficient and not reflective of a dynamic world economy.

Gao said the reforms need to be carried out on several fronts by moving towards a more diversified and balanced reserve currency system while reforming the current institutions.

There have been some breakthroughs recently. The IMF's 2010 quota and governance reforms took effect in January this year after the U.S. Congress took the necessary steps to approve the proposed changes.

Nevertheless, the United States, the world's only superpower, still retains its veto right. The U.S. voting share in the IMF only declined by 0.2 percentage points to 16.5 percent. The quota change basically involved a re-allocation of voting share from other developed economies to emerging economies like China, India, Russia, Brazil and South Africa.

Ross Buckley, professor of global financial governance at the University of New South Wales, said even the changes to the global governance framework are still too small.

"If we're having another Bretton Woods moment and creating an international financial system at the moment, it would look totally and utterly different to what we've got. China would have a really big voice, India would have a decent voice, Brazil would have a decent voice," he said. "The U.S. has still got a veto."

IMF chief Christine Lagarde described the reform as "historic" and a "crucial step forward." However, bolder steps are still needed.

"Further steps are expected to change the quota distribution and voting share. As for the veto right of the United States, it eventually will have to budge," Gao said.

The World Bank, also part of the legacy of the Bretton Woods system, has also been criticized for its lack of efficiency and vigor.

Partly as a result of the slow progress in global governance reform, new multilateral development banks such as the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank were established.

Washington is obviously no big fan of the AIIB, which won over Britain and other western countries depsite pronounced dissatisfaction on the part of the United States.

Experts say these new institutions are not only complementary to the existing ones but also galvanize them by introducing more competition. Jin Liqun, inaugural president of AIIB, recently compared the establishment of the new institutions to opening a new restaurant on the same street to meet a huge demand that cannot be satisfied.

Washington, with its zero-sum mindset, has tried to use its Trans-Pacific Partnership (TPP) as "a bulwark against China's power."

The United States has also benefitted from the role of the greenback as the global reserve currency, but often at the cost of other economies. Economic policy making based solely on U.S. domestic economic conditions often have negative spillovers to other economies, especially those emerging economies that are inherently weak in terms of governance.

"With the continuing tightening of U.S. monetary policy, there is a risk of further slowdown in the global economy, primarily in emerging markets," said Ilya Prilepsky, an economist with Economic Expert Group, an independent Russian think tank.

The dollar's global primacy "allows the United States to keep printing dollars to pay the world," said Indian economist Mohan Guruswamy.

But it is not easy to change the status quo in the foreseeable future. "The dollar is the world's currency of choice," Guruswamy said.

There has been signs of a change as the United States now has to consider the spillback from the emerging economies, which now account for more than a third of the world economy, based on IMF statistics.

Sluggish growth in emerging economies as a result of the U.S. pursuing its own interests could negatively impact the U.S. itself, said the research fellow Gao.

Tristram Sainsbury, research fellow at Australia's Lowy Institute for International Policy, said emerging economies need more say in multilateral systems, but developed nations may dislike their cheese being moved.

Jin said at a recent forum that he is patient in waiting for the United States to decide on whether to join the AIIB. "Even if you decide not to join," he said, "that does not mean we cannot work together." Endi