Corporate governance in a radically changed world - a fresh look at the Rhineland model

Richard Tudway

The collapse of the global financial system raises critical issues in corporate governance, particularly in Anglo American jurisdictions. The global financial crisis, triggered by events in the US and the UK, has destroyed global wealth and output on a huge scale. In spring 2010, world stock markets recorded an astounding $20tr loss in value from highs of some $61tr in December 2007 (World Federation of Exchanges, March 2010). OECD growth slumped in the immediate aftermath of the crisis but has since recovered, though very slowly as growth in advanced economies is expected to remain broadly unchanged at 2.5% in 2011 according to the IMFs World Economic Outlook. Recent data on the US and the UK may yet herald a slide back into recession. Indeed, according to the OECD September forecast, the annual rate of growth in the G7 countries will fall to around 1.5% in the second half of 2010, a full percentage point lower than its forecast in May 2010. In the case of the US, fears that weak employment numbers in September may foreshadow a double-dip recession have prompted further quantitative easing by the Federal Reserve. The Made in America financial crisis and the role of the Anglo American model of corporate governance urgently needs to be re-examined.

FIFA 2010 World Cup: fair play on the pitch but foul play for workers

Crispen Chinguno

South Africa hosted the 2010 FIFA World Cup behind unprecedented fanfare and rituals. Nearly a billion viewers watched this showcase worldwide. However, few would ever be privy to the dark side behind this façade. Debate on the event was largely dominated by questions related to the capacity of South Africa to host such a mega event, as well as discussions on business profits, or socio-political and symbolic benefits. FIFA reported that it was the most commercially successful World Cup ever. The event was ironically hosted in the world’s poorest continent and hence brought to fore the contradictions of opulence and poverty. It raised questions on who really benefited from the event and what it represented. Did it make any contributions in alleviating the plight of the workers and the poor? This column is a ‘snap-shot’ of some of the debates and contradictions.

What does wage-led growth mean in developing countries with large informal employment?

Jayati Ghosh

The past decade has been one in which export-led economic strategies have come to be seen as the most successful, driven by the apparent success of two countries in particular - China and Germany. In fact, the export-driven model of growth has much wider prevalence as it was adopted by almost all developing countries.

This was associated with suppressing wage costs and domestic consumption in order to remain internationally competitive and to achieve growing shares of world markets as far as possible. Managing exchange rates to remain competitive, despite either current account surpluses or capital inflows, became one of the major elements of this strategy. This was associated with the peculiar situation of rising savings rates and falling investment rates in many developing countries, and to the holding of international reserves that were then sought to be placed in safe assets abroad.

Reform Options for Financial Systems

Rainer Stachuletz

Hansjörg Herr

The neoliberal globalisation project gained momentum in the late 1970s through free market policies in the United Kingdom and the United States. Domestic and international financial systems have been increasingly liberalised and deregulated with the following important results:

a) Integration of financial systems

The deeper integration of international financial markets resulting from the deregulation of capital flows, together with the switch to flexible exchange rates after the breakdown of the Bretton Woods System, created a new source of shocks and uncertainty, as well as a new field of speculation.