Every dynamic social system’s adaptive capacity is finite. Eventually, the ability of the system’s legal and institutional arrangements to adapt to the changing operational context is exhausted. At this point, unless the system is significantly reformed, it begins losing its legitimacy and efficacy.

This article contends that the structure, operation and scale of the global economy has changed so dramatically that the current arrangements for global economic governance are approaching this crisis moment. They are failing to deliver an inclusive, sustainable and efficient international economic system that can contribute to peace, prosperity and human welfare. Their governance arrangements and operating practices and procedures have not been adequately adapted to the new realities of the international political economy. Key institutions are only slowly adjusting their current decision-making practices to the fact that the balance of economic power among their members has shifted. They have also been slow in responding to the growing importance of such non-state actors as corporations, civil society organizations and subnational governments in the governance of the global economy.

However, the political will to make the necessary changes to the institutional arrangements for global economic governance is lacking. This means that in the short to medium term, absent a serious crisis, there is limited potential for reform. However, this does not mean that opportunities for meaningful partial reforms do not exist. Those actors that are interested in reform need to carefully seek out those opportunities and, once identified, use them to make the system more participatory, accountable and responsive to the concerns to all stakeholders in the system. This in turn should enhance the capacity of the system to respond productively to future opportunities for more profound changes in global economic governance.

In making this case, the article first briefly describes the key features of the order established after World War II. Second, it discusses some of the changes that these institutions have undergone over the past 70 years. Third, it discusses the adjustments that, in fact, have been made in global economic governance. It also indicates some ways in which opportunities for making the system more inclusive, responsive and accountable can be identified. Finally, it offers suggestions regarding possible changes within the current order and on the role entities like the Group of 20 and the BRICS grouping of Brazil, Russia, India, China and South Africa can play in promoting these changes.

It should be noted that, due to space limitations, while this article discusses global economic governance in general, it concentrates primarily on the cases of the two most prominent institutions in global economic governance — the International Monetary Fund (IMF) and the World Bank Group (the World Bank). The reason for focusing on the IMF is that it is the most significant multilateral institution active in the governance of international financial and monetary affairs. The World Bank is an important funder of development activity even if it is not the largest such lender. It is the model that was used in setting up all of the regional multilateral development banks (MDBs) and it has had an influence on the structure and function of other MDBs as well, such as the Asian Infrastructure Investment Bank. It has also been a thought leader in the area of development finance.