Bounded Reform in Global Economic Governance at the IMF and World Bank

Inefficient and illegitimate institutions may persist over time, despite the greater efficiency of alternative institutional designs. Stickiness, path-dependence and vested interests are all crucial factors that may account for the lack of a functional process of adaptation to new circumstances. Nowhere is this logic more extensively explored than within historical institutionalism, and nowhere is this pattern more vividly illustrated than in the internal governance arrangements of the Bretton Woods twins. Both the IMF and the World Bank decision-making reflects the economic reality of the mid 1940s and is widely criticized for not taking into account the global economic realities of the 21st century characterized by increasing power shifts between developed and developing countries. This paper examines the continuities in the governance arrangements of the IMF and World Bank, in spite of several opportunities for change that have materialized over the past few decades, focusing primarily on the governance reforms at the IMF and World Bank that have been unfolding since 2008. In doing so, the chapter applies the insights offered by the HI scholarship and explores productive bridges with the sociological institutionalist tradition.