International Institutions

Question 1

Background

Answer 1

End of 19th Century, Europe dominated world trade
End of ww1 = european domination = huge casualties
Great Depression in the 30s
ww2 global trad and finance had fallen apart and needed reconstruction

Question 2

World Bank and the IMF Forming

Answer 2

Both emerged from conference at Bretton Woods July 1944, an attempt to rebuild the world financial system after ww2 and stabilise economic systems
- Third institution meant to be formed to govern international trade relations (didnt happen till 1955 (the WTO))

Question 3

The IMF

Answer 3

• Since July 1944
• Originally in charge with managing global regime of exchange rates and international payments
• Later after the collapse of fixed exchange rates it promoted free market ideologies
• 190 members as of 2022 (44 originally)
  They do their job through:
  Lending- Fund gives loans to member countries that are struggling to meet international obligations
  Surveillance- Formal system of review monitors the financial and economic policies of member countries offering financial policy advice
  Technical Assistance- Practical support and training directed mainly at low and middle- income countries help manage their economies.

Question 4

The Stiglitz Criticisms on IMF

Answer 4

• Same policies not applicable for all countries
• Deflation, cutting budget deficits, high interest rates work some countries but not all (south america in 80s, not Africa in 90s)
• Excess emphasis on liberalisation of financial markets not appropriate for some countries
• Excess emphasis on privatisation of industry not appropriate if done in short period of time

Question 5

IMF Successes

Answer 5

• Asian financial crisis of 1997-98: allowed countries to recover quickly and laid foundations for sustainable growth
• Brazil 2002: intervention allowed IMF loans to be repaid ahead of schedule

Question 6

IMF Criticism

Answer 6

• Quota System: each country is assigned a quota in reflection to its size in global economy (this determines their voting power = wealthier = more power)
  The voting power distribution through quota system institutionalises borrower subordination and creditor dominance

Question 7

World Bank

Answer 7

• Established 1945: two connected agencies (IBRD and IDA)
• 189 countries represented by a board of governors who make the policies
• Governors make specific duties to 25 Executive Directors (meet 2x week)

Question 8

World Bank Goals by 2030

Answer 8

1. End extreme poverty by decreasing % of people living on less than $1.9 a day to no more than 3%
2. Promote shared prosperity by fostering income growth of bottom 40% countries
3. Improving education, health and infrastructure

Question 9

The IBRD and IDA

Answer 9

The IBRD: provides loans to reduce poverty in middle-income and poorer countries
The IDA: provides finance to the worlds 81 poorest countries - interest free credit and grants aimed at countries with no capacity to borrow on market terms

Question 10

World Trade Organization (WTO)

Answer 10

• Established in 1995 based in Genova
• Deals with global rules between trading nations: aims to promote free movement of trade flows
• Activities are highly controversial amongst anti-globalisation protestors

Question 11

The WTO aims

Answer 11

• Handle trade disputes
• Monitors national trade policies
• Provides technical assistance and training for developing countries

Question 12

WTO ‘most-favoured nation clause’

Answer 12

WTO members must treat each other the same, no preferential trade benefit to any member without giving it to all
- Developing countries receive preferential treatment, without having to return it.
^ fail to accommodate to developing countries in trading system which became a burden (GATT designed for more limited scope of trade negotiations amount wealthier countries)