Journal Detail

Journal 7 – Trust

August 2003

This issue focuses on how the credibility of governments, financial markets, and corporations has been damaged by recent events and aims to provide prescriptive guidance on how we can get a better understanding of the root causes of these crises and how to best manage them.

Our world has rarely experienced the kind of crisis of confidence that it is facing today. Providers of capital are more apprehensive today about parting with their assets than at any time during the past half-century. Not only are they questioning the functioning of the checks and balances within the corporate sector, but they have also witnessed how questionable macro-economic policy can destroy economies and eliminate hard earned national reserves. It is the diminishing of trust in the overall economic infrastructure that has stimulated this issue of the journal.

In this issue we are focusing on how credibility at the level of governments, financial markets, and corporations has been damaged by the recent events and aim to provide prescriptive guidance on how we can get better understanding of the root causes of these crises and to best manage them.

The first section of this issue questions many of the previous assumptions about the relationship between economic policy tools placed at the disposal of national governments and economic development. In recent years, we have seen that despite tremendous international investments in improving economic modelling, few strong relationships can be established. Emerging markets remain in the developing mode and the biggest currency union has yet to institute controls that are adequate to protect member countries against each other's intransigence.

In part two, we review a number of crises currently facing global financial markets, with trust being the most important one. The articles in this section question many of the long held views of the functioning of capital markets and suggest alternative ways of assessing their performance.

In the final section, we look at how the corporate sector has been tarnished by recent crises and provide some guidance on how it can be better managed. Regaining investor trust is essential for the long-term development of a well functioning capital market, and the corporations who need to access it must find ways to improve their reputations in the eyes of investors.