Who runs the Global South?

Global bureaucracies, shrinking sovereignty and the future of the Global South: As the Bretton Woods system celebrates its 80th anniversary, the architecture of international development stands bloated and overstretched.

Institutions once built to provide financial stabilisation and project finance – the IMF, World Bank, IFC and UNDP – have quietly transformed into sprawling bureaucracies intervening in governance, climate, social protection, urban planning and even private sector management.

This mission creep, while often justified as necessary to address interconnected global challenges, has eroded the policy autonomy of developing countries. More alarmingly, it has crowded out local research ecosystems, weakened national policymaking and marginalised civil society. Development is no longer just about financing roads and schools; it has become an intricate exercise in administrative compliance, increasingly divorced from the real priorities and capabilities of the societies it aims to serve.

At the recent Institute of International Finance (IIF) forum, US Treasury Secretary Scott Bessent agreed with this widely held perception in the poor countries, asserting that “mission creep has knocked these institutions off course”. Bessent emphasised the need for these institutions to refocus on their core mandates of promoting global monetary cooperation and financial stability, rather than engaging in areas like climate change, gender and social issues.

From financial stabilisers to policymaking engines: The IMF, once the lender of last resort for balance of payments crises, has ventured deep into domestic governance and climate policy. Pakistan’s most recent bailout came not only with demands for fiscal tightening but also conditions on governance and 2 missions have assessed governance even though they have no expertise or measure met criteria for doing so. Similarly, Barbados’ debt restructuring was tied to climate adaptation measures, shifting the IMF into the realm of environmental policymaking without the institutional expertise to match.

The World Bank has followed a similar trajectory. Once synonymous with infrastructure finance, it now intervenes in municipal governance, public sector reform and social safety nets. Kenya’s urban development programmes, funded by the Bank, required cities to adopt budgeting reforms modeled after OECD standards – regardless of local fiscal realities. In Pakistan, World Bank funding for education reforms stipulated digitisation of teaching in rural districts that barely have electricity.

Meanwhile, the International Finance Corporation (IFC), the World Bank’s private-sector arm, has shifted from catalysing investment to actively advising on privatisation deals, such as Pakistan’s airport privatisations. IFC advisory services in Brazil, Serbia and Madagascar have similarly reshaped regulatory frameworks, privileging global investors over domestic stakeholders.

As scholars Vijaya Ramachandran and Charles Kenny argue, the IFC’s evolution “raises concerns about whether it is sticking to its original mission of catalysing private investment where it is most needed or acting increasingly as a corporate consultant”.

The SDG machine and administrative overload: The UNDP, charged with coordinating the Sustainable Development Goals (SDGs), has created a complex, overlapping framework of 17 goals, 169 targets, and over 230 indicators. Governments are now expected to align national plans with this global agenda, collect endless data, and submit detailed monitoring reports.

An official from Ghana summarised the situation candidly: “We spend millions preparing SDG progress reports, while villages still wait for clean drinking water.”

In Pakistan, national planners have similarly complained that complying with SDG indicators diverts resources away from actual service delivery and into building administrative reporting infrastructures that primarily serve donor audits.

This phenomenon echoes Lant Pritchett and Michael Woolcock’s concept of isomorphic mimicry: governments adopt the appearance of globally approved institutions and policies without necessarily improving actual functionality. A country may create an anti-corruption commission or a green financing strategy, not because it emerges from domestic policy debate, but because multilaterals require it as a funding condition.

The IFC has also created Mortgage Refinance Corporations copying the Fannie Mae model in many developing countries sometimes in spite of local opposition which argued that a) poor countries need to grow into a mortgage environment and b) global crisis showed that pussing for a Fannie Mae too early would be difficult to manage.

The shrinking space for domestic research and civil society: As global bureaucracies expand, domestic policy research institutions and civil society organizations find themselves increasingly marginalised. National think tanks in Africa and South Asia struggle to compete with foreign-funded policy consultants attached to donor programmes.

Civil society organisations that once independently advocated for rights and reforms are increasingly tied up in implementing externally defined development agendas, from SDG targets to climate frameworks. Governments, dependent on donor financing, often prioritise foreign compliance over indigenous debate and experimentation.

The result is a hollowing out of local policymaking capacity, creating states that look externally ‘perfect’ – full of the right laws, agencies and strategies – but internally fragile and disconnected from their citizens’ real needs.

Reclaiming policy sovereignty: If multilateral institutions genuinely seek to foster resilient development, a radical rethink is necessary. The IMF should prioritise macroeconomic stabilisation. The World Bank should return to funding tangible development infrastructure. The IFC should catalyse real, risk-bearing private investment, not manage privatisations.

Rebuilding local research ecosystems: Aid should finance independent domestic research institutions and support civil society advocacy, rather than subcontracting policy production to global consultancies.

Reducing bureaucratic burdens: Reporting systems should be simplified. Countries should be allowed to set their own priorities, with development assistance flexibly aligned to national strategies.

Promoting genuine partnerships: Rather than prescribing reforms, multilaterals should co-create solutions with local actors, respecting local political, social and institutional contexts.

As development economist Dani Rodrik warns, “good policy is always context-specific”. No single blueprint, however carefully designed in Washington, DC, Geneva or New York, can substitute for homegrown knowledge, agency and innovation.

The greatest challenge at Bretton Woods’ 80th anniversary is not simply scaling up climate financing or strengthening debt management but redefining the role of global institutions in a way that restores, rather than undermines, national sovereignty.

Development must be driven by those who live it, not those who audit it. If the world’s most powerful multilateral institutions cannot learn to do less while empowering more empower more, the fragile illusion of global governance will fracture under the weight of its own contradictions.

The writer is a former deputy chairman of the Planning Commission. He tweets/posts @Nadeemhaque and his Youtube account is @SIAlytics