Economic global governance

Question 1

What is economic global governance ?

Answer 1

Global governance is a system whereby regional and global institutions tackle collective problems and common aims ie economy. Economic global governance is the process where..

Question 2

Is economic global governance needed ?

Answer 2

Economic global governance is needed because

Question 3

What is the significance of the Bretton Woods conference ?

Answer 3

• e need for more effective economic global governance was first seen close to
  the end of the Second World War at the Bretton Woods Conference, held in the
  USA in 1944 ld’s financial
  systems and trade could be managed in peacetime. Many of today’s global
  economic governance institutions were founded at the Conference, including the
  IMF and the World Bank.

Question 4

What is the IMF?

Answer 4

The International Monetary Fund was founded in 1994 with the aim to finance the rebuilding of Europe after the second world war , saving the world from economic depressions such as the great depression

Question 5

What is the role of the IMF ?

Answer 5

• To maintain global economic stability
• Provide loans to help states restart their economies
• Prevent mass unemployment

Question 6

What has the IMF evolved to ?

Answer 6

The 1980s the IMF evolved to

• Prevent global economic instability
• Focus on the transition of former soviet bloc countries in Europe to market economies

Question 7

What is the World bank ?

Answer 7

The world bank also known as the international bank for reconstruction and development focused on post war reconstruction but evolved in the 1960s-1970s to focus on development and tackling poverty

Question 8

What is the role of the world bank

Answer 8

The role of the world bank is to
- provides grants and low interest loans

• Offers policy advice and technical assistance to developing countries
  Co-ordinates projects with governments

Question 9

What is a sap ?

Answer 9

This is known as structural adjustment programs which are loans that were made with conditions
- Sap’s are normally given to undeveloped courtiers such as south Africa

Question 10

Name some strengths of the IMF and World bank

Answer 10

• IMF and the world bank were both successful in marinating the stability of the monetary system from 1945 to the 1970s which resulted in economic growth and increasing world trade with post war western Europe reconstructed
• They have 189 member states and have become a principle source of funds for developing countries, this contributes to democracy and helps develop countries economically this has been successfully seen in Jordan , south Korea and Chilie
• since the global financial crash of 2007-2009 the imf has taken on the role of global surveillance which identify risks to stability and proposes solutions while the world bank has expanded

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Question 11

Name some weaknesses of the IMF and the world bank

Answer 11

The IMF and the World Bank are dominated by the USA and Europe as vote share is calculated based on the size of the economy . For example the USA has around 16.8 % vote share in the IMF which is effectivley a veto as decisions are based on 85% support. Furthermore the IMF headquarters are in Washington in the USA and the IMF managing director is a European . This is a weakness because it symbolises a concentration of power and that they are likely to put their interests

• SAP’S aren’t actually useful , in fact they do more harm than good in most countries for example in Tanzania loans did not improve their financials crisis but worsened them also seen in Thailand and Indonesian in 1997. and did not prevent the financial crisis in Asia from spreading to Russia in 1998.
• Conditional saps are motivated by powerful elites in northern countries to further their own objectives of opening up the markets
• Global stability in the last 25 years has decreased. IMF contributed to the 2008 crisis by encouraging the deregulation of international finance by promoting a neo liberal orthodoxy and was slow in recognising signs of a financial crisis suggesting that the IMF is weak in promoting its own goals

Question 12

Name some reforms and criticisms of the IMF and World Bank.

Answer 12

• Replaced SAP’S with poverty reduction strategy papers which are more flexible and seek to promote local ownership and control, are better adapted to particular needs and circumstances and focus on poverty reduction
• They have adapted there governance to ensure that the voice of developing countries are better represented

Question 13

Name some specific weaknesses of the world bank

Answer 13

• The US has to much influence over the policies in the world bank. This can be seen through appointments , they are not transparent for example the president of the world bank is normally a American with little to no experience or expertise of the developing world ie David Malpass the current world bank president. Although there have been appoi8ntments of presidents that understand the challenges of developing countries ie DR JIN
• Encourages poor countries to produce cash for crops. This is because instead of focusing on better ways to develop countries there are to many focuses on crops for export which worsens and creates poverty and a dependency which results in these countries to continue in a downward spiral of undevelopment. Csh for crops forces countries to become vulnerable to TNC which control the process and distribution of the crops. Furthermore THIS does not encourage sustainable development ist is in fact damaging to the environment as seen in Rawanda where trees have been cut down , landslides and soil erosion has increased due to these regimes
• Too little spent on development. The world bank doe not do enough to make a real fundamental change in these poor countries and because of this it is making it worse and doing a poor job. This is clarified by DR JIN who left his role as the president of the world bank because he beloved that he could not make real change because of the little money spent. Furthermore the USA spends around 700 B on military spending where as the world bank spends around 259 bl on global economic development in 2019 further illustrating where the prioritise lie

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Question 14

Summarise the weaknesses of the world bank

Answer 14

• Us domination - example appointments are not transparent , doe not appoint a president that understands the challenges of global development ie David Malpass.
• Cash for crops- increases the poverty and dependency of countries instead of making them better ie Rawanda- damaging to the environment because sustainable development is not encouraged
• Too little spent - not enough money is spent on economic development. example Dr Jin - this was the reason he resigned because he could not make a change

Question 15

What are some specific strengths of World bank

Question 16

Examine the criticisms that have been made of both the International Monetary Fund (IMF) and the World Bank.

Answer 16

Para 1 - Dominance of the US - the US has too much influence over the world bank and the IMF this includes policy issues. This is a significant criticism because it suggests that these institutions are unfair because the IMF or world are likely to put forward recommendations and policy’s that reflect the US’s interests. The dominance of the US can be seen in the world bank based on its faulty appointment system, for example the president of the world bank is an american ( David mapass) which raises questions on how serious the world bank is on developing countries when its president has no expertise or is aware of the challenge’s that may be faced when developing countries. This is similar to the IMF where the headquarters lies in washington dc in the US which further demonstrates the criticism of both the IMF and world bank are dominated by the us

Para 2 - Another criticism of the IMF and the world bank is its failure to maintain global stability. Global stability in the last 25 years has decreased because of the negative contributions of both the IMF and the world bank in times of economic crisis. This can be clearly illustrated in the 2008 financial crash where the IMF contributed to instability in the economy by encouraging the deregulation of international finance by promoting an neo liberal orthodoxy. Furthermore the world bank shares this criticism by encouraging poor countries to inhibit a cash for crops regime poverty is maintained therefore economic instability is increased. This can be seen in Rwanda where there attempt of economic development worsened there economy

para 3- A final criticism on the world bank and IMF is its poor contributions to global development. The world bank does not spend enough money in order to make a real change in global economies. This acts as a criticism because it goes against its fundamental role of there institution. This argument has been supported by former president of the world bank Dr Jin , because of the little money spent on global economic development , it meant that significant change could not be met which resulted in his resignation. Simai;lry the IMF has the same criticism , the IMF’s Structural adjustment programme was introduced to help global economies but in fact worsened it. For example in Tanzania loans did not improve their financials crisis but worsened them.

Question 17

Examine the main criticisms of the International Monetary Fund.

Question 18

What is the WTO(world trade organisation)

Answer 18

This is an economic organisation that was formed to replace the general agreement on trade (GATT) and tariffs.

Question 19

What is the aim of the WTO ?

Answer 19

The WTO aims to promote a multilateral trading system that was built around the principle of free trade

Question 20

What are the significant strengths and weaknesses of the WTO?

Answer 20

Strengths
- Successfully reduced trade barriers. The average tariffs on imported goods was previously 40% in 1947 but fell to 3%b in 2000. This benefits developed countries

• Democratic - unlike the IMF and the world bank the WTO is democratic with decisions made by consensus amongst all members , its rules are negotiated by member states and enforcement is carried out in agreement with all memberS. This ensures the protection of developing countries which makes up around two thirds of the membership
• Produces innovation and breeds success. Due to liberal trade policies competition is sharpened , inspiration and innovation are breeded across the globe this is known as comparative advantage according to david Ricardo an english economists. This suggests that states prosper first by using their assets to focus on what they can produce best

Weaknesses

• ELITISM- wto lacks legitimacy because it favours the interests of the rich , industrially advanced states are favoured over the undeveloped states . Protectionists policies on agriculture in the north are often tolerated but are strongly opposed when adopted by developed countries. Both the US and the EU approach on cap ( common agriculture policies) USE QUOTAS and tariffs to block imports of foreign food stuff while subsidising exports to undermine the livelihood of farmers in competitor countries
• WTO is too powerful - can compel sovereign states to change laws and regulations by declaring these to be in violation of free trade rules
• Widens global inequality- because of the wto’s principle of free trade has been responsible for widening global inequality as industrialised countries gain access to the markets of developing states without facing the prospect of growing foreign competition affecting them

Question 21

What is the main aim of G7

Answer 21

• The main aim of the G7 was to establish a forum that allows informal discussions around global issues

Question 22

What is the origin and development of the G7 and G8

Answer 22

the G7 was formed in1975 s from the seven leading industrial states at the time including china , USA, UK ,France ,GERMANY , Italy ,Canada and japan

• The G8 included russia. Russia was added in 1998 however it was later expelled in2014 for the annexation of Crimea .

Question 23

When was the G20 formed?

Answer 23

The G20 was formed in 1999 but the first meeting was in 2008 because of the financial crash.

Question 24

What are the main strengths of the G7 ?

Answer 24

Strengths
- Reinforces honest open discussions. This is necessary in a democracy and to maintain global order and stability because it means that world leaders have the ability to have discussions around economic issues in an informal setting and device new policy in a way that could not be done in other forums or organisations ie UN.

• Easy to meet agreements- Because it is so small ( only includes 7 members) it means that agreements can be made much easier without harsh disagreements
• Representative - represents states with similar political liberal and democratic goals and economies which also facilitates a consensus

Weakness
- Elitist- membership of the G7G8 is historically rooted so it does not reflects the changing nature if power in the global economy. Does not acknowledge developing countries ie china , India or Brazil which suggests that the G20 can be seen as a more effective tool for coordinating global governance

• Has been divided and unable to deal with emerging global issues such as climate change and growing inequality. There has been a lack of delivery ie in 2021 there was commitment of 100 b to help tackle climate change which has not happened.
• Russia’s suspension has not been effective. has not reversed the overthrow of Crimea or ended Russian intervention in Ukraine

Question 25

Is it possible for there to be a shift from the G20 to the G7 ?

Answer 25

Yes because f the current 2020 war in Ukraine there may be a shift from the G20 to the G7

Question 26

What are the main strengths and weaknesses of the G20

Answer 26

Strengths
- legitimate - it is legitimate because it reflects the changing nature of the global economy and shows global economic order far better than the G7 and the World bank , and the IMF.

• Inclusive - includes nearly all the leading economies accounting for 85% of the world GDP , has a good regional balance that represents the interests of industarlised and emerging economies and global population
• Successful- this can be seen in the response to the global financial crash. measures to enjec 748b into the global economy were agreed as was a clean up of the financial markets and the reform of the world bank and the imf. stronger voices for the developing world , greater resources and a stronger rile in supervising the global financial system

Weaknesses
- No voice to the poorer states - Although the G20 is more representative it gives little voice to pooer countries and its ideology remains that of te liberal otherdoxy theory of development which is seen by many to have failed. this has lead to the G20 becoming a target for the anti globalisation movement

• To wide - because the G20 FOCUS on ealing with many global issues such as debt , climate chnage , inequality , global crisis etc it is likely to give a rise to divisions , limiting its ability to act