Governing the Global Economy with the One-Size-Fits-All Model: From Ideology to Reality

Over the past few decades, globalization has provided many countries with opportunities, but it also comes with the challenge of international market failure. This paper has two objectives. First, we aim to provide a chronological account that traces global policy roots of market fundamentalism and collective action; and articulates the evolving role and power structures of international players in claiming, for the common interest, to provide global public good of financial stability. This approach succinctly demonstrates the varying ideological underpinnings in the continued pursuit of international standards to manage negative externalities of globalization. Second, by constructing three composite indexes of macroeconomic and financial factors for eleven countries, we assess the effectiveness of collective action in tackling market failures during the Asian financial crisis of 1997 and the global credit crisis of 2007. Overall, we find a substantial gap between public policy subscription and actual needs of those crisis hit economies.