10. Evaluating the IMF World Bank and WTO

Question 1

What is the role of the IMF?

Answer 1

The IMF’s primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other.

Question 2

What are the World Banks 2 main goals?

Answer 2

1. End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%.
2. Promote shared prosperity by fostering the income growth of the bottom 40% for every country.

Question 3

What is the role of WTO?

Answer 3

The WTO sets the global rules concerning trade between nations.
Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

Question 4

Overall summary of the 3?

Answer 4

IMF- is kind of like the life-guard of the world economy- making sure no economy drowns.

World Bank- is kind of like a social worker, helping to solve the problems of the vulnerable.

WTO- is kind of like your Head of Key Stage- settling arguments, imposing new rules for the playground.

Question 5

What has the IMF achieved?

Answer 5

1. Loans and broader financial support from the IMF have been largely responsible for saving different economies from bankruptcy over the years.
2. In other words, the IMF has helped to create a culture where governments are far less inclined to run large uncontrollable budget deficits and account for the money they spend.

Question 6

What are the successes of WTO?

Answer 6

1. The WTO has enhanced the value and quantity of trade and has also helped in significantly reducing trade and non - trade barriers.
2. WTO has also broadened the trade governance scope to trade in investment, services and intellectual property (e.g copyrights/patents).
3. The WTO system helps resolve these disputes peacefully and constructively therefore encouraging the development of more sustainable trade between world economies
4. WTO has reduced some inequalities, giving smaller countries more voice, and at the same time freeing the major powers from the complexity of having to negotiate trade agreements with each of their numerous trading partners.

Question 7

What is the evaluation of IMF?

Answer 7

It has contributed to more stable economic management in many developed countries and in some of individual developing countries. Such as Kenya. However, it has little or not involvement with non-growth aspects of development.

Question 8

What are criticisms of the IMF?

Answer 8

1. Their economic forecasts are famously unreliable.
2. Debtor countries to the IMF are often faced with having to put financial concerns ahead of social ones.
3. By encouraging countries to look for greater inward FDI the IMF has allowed foreign corporations to often exploit the situation by taking advantage of local cheap labour while showing no regard for the environment.
4. The IMF is focused on a narrow set of economic and political doctrine (e.g. privatisation/austerity) which many economists believe is wrong and which may be contributing to deepening inequalities across the world.

Question 9

What are criticisms of the World Bank?

Answer 9

1. Like the IMF, the World Bank has been criticized for its part in promoting programmes focused on austerity measures that hurt the poor, while allow big corporations to flourish.
2. The World Bank is often accused of ignoring the environmental and social impact of projects it supports. Most famously, a World Bank project in the 80’s arguably set in motion the events that led towards destruction of the Amazon rain forest.
3. Although the World Bank’s loans are intended to help countries, they also cause those countries to take on debt that they must pay interest on and remain under the conditions of the institution. Some say the World Band has contributed to a predicament of perpetual debt in developing countries.

Question 10

What are the criticisms of the WTO?

Answer 10

1. Many argue that the WTO has failed to confront ethical issues, such as the use of child labour and poor working conditions in developing economies.
2. Similarly, many argue that it has failed to tackle environmental issues, such as the depletion of global fish stocks, deforestation, and climate change.
3. Critics also complain that the WTO takes too long to arbitrate and settle disputes.
4. Critics also argue that the WTO has an inbuilt bias favouring developed and powerful nations and trading blocs such as the USA.
5. Many countries prefer to bypass the WTO (multilateral) process, and deal directly with other countries.