INTERNATIONAL ECONOMIC

INSTITUTIONS – IMF AND

WORLD BANK – WTO – REGIONAL
ECONOMIC CO-OPERATION

ZTC, Belapur
 INTERNATIONAL MONETARY
FUND

• Initiated in 1944 at Bretton Woods Conference

• Created in 1945 by 29 member countries

• Goal was to assist in the reconstruction of the world’s

international payment system post-world war II

• Countries contribute money to a pool through a

quota system from which countries with payment
imbalance can borrow funds temporarily.
 IMF

The IMF must represent the interests of all of its

188 member countries, from its smallest
shareholder Tuvalu, to its largest, the United
States. Unlike the General Assembly of the United
Nations or the World Trade Organization, where
each country has one vote, decision making at the
IMF was designed to reflect the position of each
member country in the global economy. Each IMF
member country is assigned a quota that
determines its financial commitment to the IMF, as
well as its voting power .
 IMF

• In recent years, emerging market countries such as China,

India, Brazil, and Russia have experienced strong growth
and now play a larger role in the world economy. In
December 2010, the IMF agreed on reform of its
framework for making decisions to reflect the increasing
importance of emerging market and developing
economies.
• When fully implemented, the reforms will produce a shift
of more than 6 percent of quota shares to dynamic
emerging market and developing countries. The reform
contains measures to protect the voice of the poorest
countries in the IMF. Without these measures, this group
of countries would have seen its voting shares decline.
 IMF

• 188 members of IMF include 187 members of

the UN and the Republic of Kosovo.

• All members of the IMF are also international

Bank for Reconstruction and Development and
vice versa.

• Apart from Cuba the other united states that do

not belong to the IMF are Andorra, Monaco,
Nauru, North Korea & Liechtenstein.
 IMF FUNCTIONS

• WORKS TO FOSTER GLOBAL GROWTH AND

ECONOMIC STABILITY.

• It provides policy advice & financing to

members in economic difficulties.

• Works with developing nations to help them

achieve macroeconomic stability and reduce
poverty.
 PRIMARY FUNCTIONS

• To oversee the fixed exchange rate arrangements

between countries.
To provide short term capital to aid balance-of-payments
 ALTERATION IN ROLE OF
IMF

• After the introduction of floating exchange rate

post 1971, IMF’s role was altered.

• Examining the economic policies of countries

with IMF loan agreements to determine if a
shortage of capital was due to economic
fluctuation or economic policy.

• Research what types of government policy

would ensure economic recovery.
 ALTERATION IN ROLE OF
IMF

• New challenge is to promote & implement policy

that reduces the frequency of crises among the
emerging market countries, especially the middle
income countries that are open to massive capital
outflows, so the role broadened instead of only
exchange rate now manages economic policy.

• IMF negotiates conditions on lending and loans

under their policy of conditionality – introduced in
1950, low income countries are provided with
loans for a period of time with no interest- ECF,
SCF & RCF
 ALTERATION IN ROLE OF
IMF

• Non-concessional loans provided through SBA ,

FCL, PLL
IMF provides emergency assistance via the newly
introduced Rapid Financing Instrument (RFI) to all
its members facing urgent balance of payment
needs.

• Surveillance of the global economy: Fund typically

analyses the appropriateness of each member
country’s economic & financial policies for
achieving orderly growth & assess the
consequences of these policies for other countries
• In 1995 the IMF began work on data dissemination
standards with the view of guiding IMF member countries
to disseminate their economic and financial data to the
public.

• IMF approved the SDDS & GDDS and guidelines issued.

Its is also part of World Bank Millennium Development
Goals & Poverty Reduction Strategic Papers.

• Primary objective of GDDS to encourage member

countries to build framework to improve data quality &
increase statistical capacity building .
 BENEFITS

• Member countries of the IMF have access to

information on the economic policies of all
member countries,

• opportunity to influence other members’

economic policies, technical assistance in
banking, fiscal affairs, and exchange matters,
• financial support in times of payment
difficulties,

• increased opportunities for trade and

investment
 THE WORLD BANK

• It is an International Financial Institution that

provides loans to developing countries for capital
programs

• The World Bank's official goal is the

reduction of poverty. According to its Articles of
Agreement (as amended effective 16 February
1989), all its decisions must be guided by a
commitment to the promotion foreign investment
and international trade and to the facilitation of
capital investment
 THE WORLD BANK

The World Bank comprises two institutions: the

International Bank for Reconstruction and Development
(IBRD) and the International Development Association
(IDA).
The World Bank should not be confused with the
World Bank Group, which comprises the World Bank, the
International Finance Corporation (IFC), the
Multilateral Investment Guarantee Agency (MIGA), and the
International Centre for Settlement of Investment Disputes
(ICSID
 THE WORLD BANK

• The World Bank was created at the 1944

Bretton Woods Conference, along with three
other institutions, including the
International Monetary Fund (IMF). The World
Bank and the IMF are both based in Washington
DC, and work closely with each other.

• Traditionally, the World Bank has been headed

by a citizen of the United States, while the IMF
has been led by a European citizen
 THE WORLD BANK

• (1944–1968) Before 1968, the reconstruction and

development loans provided by the World Bank were
relatively small. The Bank's staff was aware of the
need to instill confidence in the bank.
Fiscal conservatism ruled, and loan applications had
to meet strict criteria,
• (1968–1980) From 1968 to 1980, the bank
concentrated on meeting the basic needs of people in
the developing world. The size and number of loans to
borrowers was greatly increased as loan targets
expanded from infrastructure into social services and
other sectors
 THE WORLD BANK

• (1980–1989) During the 1980s, the bank

emphasized lending to service Third-World debt,
and structural adjustment policies designed to
streamline the economies of developing nations.

• UNICEF reported in the late 1980s that the

structural adjustment programs of the World Bank
had been responsible for "reduced health,
nutritional and educational levels for tens of
millions of children in Asia, Latin America, and
Africa".[14]
 THE WORLD BANK

• (1989-Present) Beginning in 1989, in response to harsh

criticism from many groups, the bank began including
environmental groups and NGOs in its loans to mitigate the
past effects of its development policies that had prompted
the criticism. [7] . Since then, in accordance with its so-
called "Six Strategic Themes," the bank has put various
additional policies into effect to preserve the environment
while promoting development. For example, in 1991, the
bank announced that to protect against deforestation,
especially in the Amazon, it would not finance any
commercial logging or infrastructure projects that harm
the environment.
In order to promote global public goods, the World Bank tries
to control communicable disease such as malaria, delivering
vaccines to several parts of the world and joining combat
 THE WORLD BANK

• The President of the Bank is the president of the

entire World Bank Group. The president, currently
Jim Yong Kim, is responsible for chairing the meetings
of the Boards of Directors and for overall
management of the Bank.
• Traditionally, the Bank President has always been a
US citizen nominated by the United States, the
largest shareholder in the bank. The nominee is
subject to confirmation by the Board of Executive
Directors, to serve for a five-year, renewable term.
While most World Bank presidents have had banking
experience, some have not.
 REGIONAL ECONOMIC COOPERATION

• One of the most important developments in the

world trade system in the 1990s has been the
emergence of regional cooperation. The end of the
Cold War reduced political tensions between
countries in Asia as well as globalizing production
processes and increasing vertical integration.

• Cities like Bangkok, Kuala Lumpur, and Singapore

have been lifting their populations out of poverty in
part through cooperative arrangements with
neighbouring countries. .
 REGIONAL ECONOMIC COOPERATION

Singapore has concentrated on becoming the technology centre for

Southeast Asia, sending labor-intensive operations to low-cost
neighbouring countries like Malaysia and Indonesia in special mutual
cooperative trade and development arrangements known as growth
triangles or growth polygons. The Southern Growth Triangle, also
known as SIJORI (Singapore, the Johore state of Malaysia, and Riau
Province of Indonesia), was formed in 1989 and covers a population
of about 6 million people. It attracted $10 billion in private sector
investments during its first five years. Such regional economic
cooperation has occurred in other Asian regions as well, spurring
economic development. Growth triangles are expected to be a
continued driving force for growth in Asian economies throughout
the 1990s. Four growth triangles have been established since 1989,
involving parts of 11 countries., there are currently eight growth
polygons in East and Southeast Asia, with additional triangles being
planned. For example, Cambodia, Laos, Myanmar, Thailand, Vietnam,
and China's Yunnan Province have been discussing ways to develop
the Mekong area since 1992.
 REGIONAL ECONOMIC COOPERATION

• As Japanese and U.S firms seek to reduce

the cost of their latest innovations, they
are outsourcing production to low-cost
contract manufacturers. China has a
growing number of low-cost parts and
components suppliers. With a minimum
of overhead and a large pool of low-cost
labor in China, there is a growing list of
high-quality vendors in China. The
continuing miniaturization of products
has lead to joint ventures with companies
 REGIONAL
ECONOMIC
COOPERATION

Hong Kong, Thailand, Malaysia, and China are

considered the home of lowest-cost manufacturing
competitors in the electronics industry today.
They offer limited component technology or
product design skills, but provide many low-cost
suppliers of generic, low-technology components.
Since low-cost manufacturing countries generally
lack the technologies required to become industry
leaders, they must follow the technology trends as
quickly as possible. OEM competitors from Taiwan
and Singapore are being forced to open branch
plants in China or other Southeast Asian countries
to produce the most labor-intensive, cost-driven
 THE WORLD TRADE
ORGANIZATION (WTO)

• is an organization that intends to supervise and

liberalize international trade. The organization
officially commenced on 1 January 1995 under the
Marrakech Agreement, replacing the
General Agreement on Tariffs and Trade (GATT),
which commenced in 1948. ] The organization deals
with regulation of trade between participating
countries; it provides a framework for negotiating
and formalizing trade agreements, and a dispute
resolution process aimed at enforcing participants
adherence to WTO agreements, which are signed
by representatives of member governments and
ratified by their parliaments. Most of the issues
 THE WORLD TRADE
ORGANIZATION (WTO)

The organization is attempting to complete negotiations on

the Doha Development Round, which was launched in 2001
with an explicit focus on addressing the needs of
developing countries.
 THE WORLD TRADE
ORGANIZATION (WTO)

As of June 2012, the future of the Doha Round remained

uncertain: the work programme lists 21 subjects in which
the original deadline of 1 January 2005 was missed, and the
round is still incomplete. The conflict between free trade
on industrial goods and services but retention of
protectionism on farm subsidies to domestic
agricultural sector (requested by developed countries) and
the substantiation of the international liberalization of
fair trade on agricultural products (requested by
developing countries) remain the major obstacles. These
points of contention have hindered any progress to launch
new WTO negotiations beyond the Doha Development
Round.
 THE WORLD TRADE
ORGANIZATION (WTO)

• As a result of this impasse, there has

been an increasing number of bilateral
free trade agreements signed. As of
July 2012, there were various negotiation
groups in the WTO system for the
current agricultural trade negotiation
which is in the condition of stalemate.
 THE WORLD TRADE
ORGANIZATION (WTO)

• WTO's current Director-General is Roberto

Azevêdo, who leads a staff of over 600 people in
Geneva, Switzerland.

• The GATT was the only multilateral instrument

governing international trade from 1946 until the
WTO was established on 1 January 1995. Despite
attempts in the mid-1950s and 1960s to create
some form of institutional mechanism for
international trade, the GATT continued to
operate for almost half a century as a semi-
institutionalized multilateral treaty regime on a
provisional basis.