Global governance and development: Toward equitable burden sharing and agenda-setting
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Article summary
- Design of international financial architecture has limited the UN’s ability to influence financial policy, including of the Bretton Woods Institutions.
- Global South remains trapped in a cycle of dependency and unequal power, resulting in reoccurring debt crises and lack of economic transformation as neoliberal economic policy persists.
- Global South and allies must push reform through, despite setbacks at spaces such as FfD4.
The United Nations is in crisis (see Observer Autumn 2025). As calls from multiple actors for Security Council reform grow louder and fragmentation threatens multilateralism, a deeper structural problem remains unaddressed: the systematic erosion of the UN’s authority over development financing, including, crucially, in norm-setting. Last year’s Fourth UN Conference on Financing for Development (FfD4) in Seville illustrated this vividly: developed countries blocked proposals for a UN Framework on Debt behind closed doors, ignoring calls from civil society and heterodox economists (see Observer Summer 2025, Spring 2025). Why does this keep happening? The answer lies in how global governance has been built to be deliberately unbalanced since 1945.
The original sin
Post-World War II architects imagined two complementary systems. The Bretton Woods Institutions (BWIs; i.e., the World Bank and IMF) would handle the “hard” aspects of state-building: monetary policy, financing and reconstruction. The UN would manage the “soft” side: the social security system and parallel institutions.
The 1970s marked a turning point – substantive changes in the international political landscape, from independence struggles to oil shocks, led to transformations of the political-economic context. Challenges to state-led industrialisation projected the neoliberal model as the main road to development, preceding the rise of financial neoliberalism, and transferred power from production to finance via market-based loans and credit. The World Bank and IMF began imposing Structural Adjustment Programmes (SAPs) requiring privatisation, austerity, deregulation and market opening in exchange for aid – despite the fact that developed countries themselves used protectionist measures during their own development (see Observer Springs 2025).
Meanwhile, the UN was relegated to a “damage control” role – providing technical assistance and humanitarian initiatives. The low level of countries graduating from access to International Development Association financing (IDA; the World Bank’s low-income country lending arm), persistent commodity dependence, and rising inequality (see Observer Autumn 2024), inter alia, demonstrate that this financing model has not – and cannot – produce economic growth in an equitable and just manner. It cannot deal with poverty, is not capable of promoting redistribution, is not universal, and generates new problems due to its extractivist logic. Not even the UN’s precautionary measures can divert the neoliberal character of the main political-economic governance organisations.
In contrast to the BWIs operating on a “one dollar, one vote” system – giving wealthy nations firm control – the UN operates on “one country, one vote“, a principle that became threatening to Global North powers as newly independent Global South countries gained voice. The result was a vicious circle: powerful countries withheld resources from the UN, declared it “incompetent”, and used this as justification to channel funding through institutions they controlled. What emerged was an institutional asymmetry where the UN manages humanitarian fallout while the BWIs dictate macroeconomic policy – and despite numerous resolutions affirming and re-affirming the integrity of rights, in practice, the UN has been hampered in its ability to counter the negative human rights consequences of an unfair economic structure. Countries from the Global North have worked to strengthen the BWIs and incapacitate the UN.
The financialisation of development: The debt trap and its consequences
Today’s international financial architecture has produced unprecedented income concentration, debt crises, and qualitative poverty (total numbers of people living in impoverishment dropped, however, we still have extremely poor populations, living in inhumane conditions) – 204 new billionaires emerged in 2024 alone. Debt is the cruellest mechanism, perpetuating neocolonialism through the World Bank, the IMF and the wider financial system, forcing developing countries to prioritise external debt repayments over social investments. In Latin America, Brazil and Mexico adopted severe austerity during the 1980s debt crisis – including wage freezes, privatisations and social spending cuts. Ghana and Zambia saw health and education investments slashed during 1990s reforms. Still to this day, African countries tend to spend more on debt repayments than on social services, leaving 60 per cent of the continent’s population living in countries that spend more on debt payments than on education and health.
Erin Graham’s research shows how conditional financing has transformed international organisations. By 2012, earmarked resources, i.e. those provided only for specific purposes chosen by donors, represented 30 per cent of contributions to all multilateral organisations, reaching 70 per cent in the case of UN agencies. Donors chose to direct funds to projects aligned with their interests, not global or necessarily local, priorities. This transforms multilateralism from egalitarian to contractual and fragmented – the UN’s transformation into a system of bilateral contracts weakens its ability to represent Global South interests.
The path forward: 2026 is the battlefield
FfD4 in Seville could have been used to advance more equitable debt management mechanisms. Instead, developed countries blocked these proposals in closed-door discussions. That said, it is important to note that the Framework Convention on International Tax Cooperation is still under discussion and that combined efforts by states from the Global South and global civil society managed to assure the creation of the borrowers platform. This shift to a UN centred system could open space for long needed dialogues, such as on debt audit and cancellation.
Initiatives like BRICS and the New Development Bank represent efforts to create centres of power to challenge Global North dominance of existing systems though they still depend on Northern monetary resources and have their shortcomings. The Amazon Fund and Green Climate Fund face similar constraints. The task is not to abandon these mechanisms but to transform the governance structure that contains them.
As we face major neoliberal‑fuelled imperialist movements – from Venezuela and Cuba to Gaza and US President Donald Trump’s Board of Peace project (see Observer Spring 2026) – we have the motives, we have the allies, and we have the tools: non‑capitalist alternatives are everywhere. Let’s hope we don’t lack the will to act.
