The IMF and World Bank Are More Democratic Than They LookBy
This weekend, the World Bank and International Monetary Fund (IMF) had their spring meetings in Washington, D.C. As the black limousines stuffed with the world’s treasury officials queued in front of the Bank’s mirror-glassed facade with its spreadsheet-inspired frames, a small band of protestors chanted peacefully outside. Although a long way from the mass arrests of giant-puppet-wielding demonstrators from years past, the protests are a reminder of the swath of opinion that views the two global financial institutions as antidemocratic forces of capitalist evil.
The World Bank and IMF are far from models of transparency and egalitarianism, but they are pretty much the most democratic global institutions we have. And that reality underscores why we need considerable innovation in the governance of global institutions far beyond those based in Washington.
The World Bank and IMF boards both operate according to a complex voting structure that is loosely connected with economic muscle. That’s why the U.S., still by far the world’s largest economy in market GDP, has the largest share of votes: about 15 percent in the bank and 17 percent in the fund. Compared with their share of global population, rich countries as a whole are considerably overrepresented. That is, of course, the key complaint of protestors worried that the concerns of poor countries (and poor people) get short shrift at the institutions.
Contrast the United Nations General Assembly—an infrequent target of riotous protest. There, the world’s sole superpower gets one vote, the same as Tanzania or Tuvalu, which may sound like one up for the small guy. But one country, one vote is incredibly biased in terms of equal representation of the world’s people: China has the same voting power as Tuvalu as well—despite a population 137,000 times as large. That makes the global body considerably more gerrymandered than the U.S. Senate (where each Californian gets one 66th the representation of a Wyomingite). Want to know why small island states, including Tuvalu, are such a constant topic of discussion in UN meetings? Because small island states have such outsize power at the UN.
Different voting systems mean the Washington-based World Bank and IMF actually give a larger say to populous poor countries than does the UN in New York. India, for example, has about 18 percent of the world’s population, a 3 percent share of World Bank votes, and a 0.5 percent share of the General Assembly vote. Overall, governance at the Bank and the Fund is more representative of the world’s population than at the UN.
In the World Bank’s governance structure, countries home to about 77 percent of the world’s people see a voting share lower than their share of global population. Per-capita voting power in those countries is about 9 percent of the per-capita voting power of countries with a voting share larger than their share of population. For the IMF, the proportion of states with a lower voting share than population share is about the same. The per-capita voting power of those underrepresented countries is less than at the Bank: 7 percent of the voting power of countries that are overrepresented in terms of population share. This looks bad, but the UN General Assembly is worse: Countries containing 82 percent of the world’s people have a lower voting share than their global population share, and their per-capita voting power is only 5 percent of the voting power of overrepresented countries, where just 18 percent of the world lives.
As cross-country incomes converge, voting at the IMF and World Bank should get more representative of the world population, while the UN will be stuck—unless big countries start falling apart and small countries amalgamate. For those who would note that global popular accountability is hardly guaranteed by representation through autocratic regimes, that turns out to be a bigger problem for the UN than for the bank and fund—because rich countries are more reliably democratic than small countries.
Even if the World Bank and IMF are more representative than the General Assembly, that’s a pretty low bar to set. Of course, you wouldn’t necessarily want the World Bank or International Monetary Fund to be strictly representative on grounds of national population, given their role in the global economy. Similarly, the United Nations is first and foremost a club of sovereign states—so it makes sense that it doesn’t vote solely along the lines of global population. But it is still sad that the world lacks an even somewhat representative deliberative body.
The European Union might suggest one path to improvement: Originally built around a model of one premier, one vote for many of its most important decisions, it has been slowly implementing reforms that give more equal representation to all EU citizens. Not least, the European Parliament has been gaining power, with MPs voted from constituencies, most about 700,000 strong. Perhaps the UN could slowly move in the same direction, and the Security Council could be a good place to start. What about guaranteeing permanent spots to the world’s five most populous countries not already permanent members of that body: India, Indonesia, Brazil, Pakistan, and Nigeria? Or put another way: Isn’t it time to have a bit of the United Nations that favors all people equally?