This paper analyzes the problems of creating and expanding national macroeconomic policy space and economic governance for the developing countries in particular within a framework of overall global and regional financial architectures. It develops a critical constructivist evolutionary theory of international financial institutions and arrangements within a framework of dynamic complex adaptive economic systems(DCAES), and applies this particularly to the current problems of developing countries. More specifically, the paper analyzes the following aspects:• Proposed BASEL III reforms for more stringent capital requirements and their implications for the developing world in particular. • BIS proposals for better regulation of financial derivatives, including commodities futures, by moving away from OTC transactions towards organized exchanges. • The IMF’s response to recent and emerging global economic and challenges, and the evolving nature of its role.• The most appropriate role of regional arrangements in financial stabilization, based on experiences with such arrangements in this and prior episodes of crisis.The Basel reforms and the BIS proposals for regulating the derivatives markets have many positive features. However, they have not been designed with the needs of DCs and LDCs in mind. The consequences of Basel I and II and proposed Basel III are analyzed from the perspective of the developing countries. It turns out that specific concerns of developing countries have not received adequate attention within the Basel Reform Initiatives and more can be and needs to be done. Most importantly, the role of IMF under the present globalization arrangements and repeated financial crises is studied by following such a critical constructivist evolutionary theory of international financial institutions within a rigorous DCAES framework. Here, too, the key finding is that much more can be done to help the developing countries than has been done so far. Furthermore, the potential for such global reforms in the wake of the global financial crisis and the great recession is analyzed from a dialectical social constructivist viewpoint that combines the power of --sometimes conflicting-- norms and ideas with the underlying structural contradictions to produce a “critical-constructivist” analysis of the potential for change. It is shown that IMF must and can change in a direction which allows for greater national policy autonomy. It is also shown that the IMF needs complementary regional institutions of cooperation in order to create a stabilizing hybrid global financial architecture that will be more democratic and pro-development in terms of its governance structure and behavior. Thus regional financial architectures will need to be integral parts of any new global financial architecture (GFA).The tentative steps taken towards regional cooperation in Asia since Asian financial crisis are discussed to illustrate the opportunities and challenges posed by the need to evolve towards a hybrid GFA. The opportunities and challenges arising from the current global crisis are also analyzed in this context.
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