This essay on global political economy will present answers to the attached questions. The answer to the first question will illuminate the exact functions of World Trade Organization (WTO), the problems associated with the body, such as market access in developing countries, tariffs, and impacts of subsidies, barriers that make developing countries face, agricultural policies, and agricultural agreements.
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The answers to the second question will illuminate the World Bank’s resolve to reduce poverty. While still on the second question, the paper will highlight the basic roles of the World Bank including its lensing function and its general goals. Millennium Development Goals will be discussed in light of its specific policies and the hindrances to achieving these goals. Under this context, corruption will also be discussed.
The answer to the third question will revolve around the European Union and the single market. In this respect, Greece will be brought into perspective. Questions relating to basic principles of single market, what single market really is, the problems that Greece is facing will be answered. More importantly, Greece’s debts, people’s lack of confidence in her financial market, her social and economic instability, and how her instability has impacted other countries in the Euro zone and the general world economy will be discussed.
What WTO does
World Trade Organization looks at global rules that govern trade between different nations. It ensures that trade is carried out smoothly between nations and guarantees trading partners of predictability and freeness in trade undertakings.
WTO and market access too developing countries
Power politics that characterize activities of WTO remain a major hindrance to developing countries benefiting from trade: the WTO does not permit adequate public participation in its activities. The organization never lives up to its claims of free, open, and democratic activities as it appears more lenient to large corporations as compared to smaller, local organizations. Developing countries that are signatories to the WTO have no say as to how certain goods are manufactured.
An example of its impartiality is seen in Guatemala, which toiled to reduce infant mortality rates to comply with the WHO guidelines and to counter aggressive marketing that baby food companies embarked on to convince mothers that they were selling nutritious products that guaranteed protection from diseases more than the mother’s milk would do. In a twist of events, affected companies reported this to the predecessor of WTO, GATT.
The law was reversed because Guatemala was threatened with sanctions. A similar example regards Canada’s complaint to the WTO about France’s ban on asbestos. The victim’s woes are rarely attended to by the WTO. The multilateral trading systems do not benefit developing countries, or those with weaker economies, in any way. The predecessor of WTO, GATT, that only addressed agricultural trade erred in allowing countries to make use of non-tariff measures like import quotas and using subsidies. This move distorted agricultural trade that had hitherto relied heavily on export subsidies.
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This did not resonate well with the WTO principles of fair competition. Developing countries were expected to cut their subsidies and lower their tariffs just as developed countries did. This move did not guarantee fair playing grounds for these trading partners. In fact, before the Uruguay Round, unfair competition was characterized by restriction imposed on agricultural imports by quotas and other non-tariff measures. This made domestic prices be higher than the world prices.
The agreement was initiated to reform trade and come up with policies that are market oriented to improve predictability and security for both importing and exporting countries. The new rules border on market access, domestic support, and export subsidies. These rules and commitments endeavor to tackle trade restrictions that cloud imports and make exports artificially competitive. Under this agreement, governments are obligated to support rural economies by coming up with policies that do not distort trade.
The agreement intends to guarantee flexibility in implementation of commitments. Developing countries must not cut their subsidies or lower their tariffs to conform with developed countries as it was initially. Least developed countries are totally exempted from all these regulations. Countries that heavily rely on imports have their interests catered for in the Agriculture Agreement.
World Bank and Poverty
What the World Bank does in general, the body’s role of lending, and its general goals
The World Bank offers technical and financial assistance to developing economies the world over. The World Bank is committed to fighting poverty by providing resources, sharing knowledge, building capacity, and creating partnership in the private and public sectors. By undertaking in these activities, the body aids poor nations. It has two development institutions (IBRD and IDA) that helps it to realize its goals. IDA focuses on the World’s poorest countries where as IBRD marshals resources towards reducing poverty in middle income and credit-worthy poor nations.
The Bank provides low interest loans, interest free credits, and grants to developing countries. These funds can be used in education, health, public administration, infrastructure, and other areas of economy.
World Bank’s MDGs
The MDGs were conceived at the United Nations Millennium Summit in 2000. The goals included commitment to eradicate extreme poverty, achieving universal primary education, promotion of gender equity, reducing child mortality, improving maternal health, combating HIV/AIDS, malaria, and other diseases, fostering environmental sustainability, and developing a global partnership for development. The World Bank is alive to the realization of these goals.
World Bank’s specific policies on MDGs
With respect to eradication of extreme poverty and hunger by 2015, the World Bank provides technical and financial support to various countries. The bank has since established Global Food Crisis Response Program to assist countries hard hit by hunger. The bank also does zero-interest development financing. The bank measures education outcomes for the poor, offers innovative incentives to keep kids in schools, establishes standards for schools, and trains teachers who work in disadvantaged areas.
The banks promotes gender equity by strengthening nutrition, initiating disease prevention programs, improving girl child education, and expanding women access to credit facilities. The bank tries to reduce child mortality by strengthening national health systems and protecting the poor from ill health. To improve maternal health by 2015, the bank works towards developing effective and efficient national health systems.
The WB works towards combating HIV/AIDS, malaria, and other illnesses by developing stronger national health systems. Towards environmental sustainability, the bank endeavors to improve management of water resources and reducing the impacts of climate variability and change. Finally, the bank intends to develop a global partnership for development by 2015 by reducing low-income countries’ burden of external debts through debt relief.
Challenges to achieving MDGs
A major challenge to attaining millennium development goals has been the impacts of global economic crisis. This has put developing countries in some serious financial constrain occasioned with weak demand in advanced economies and modest capital inflows. Advanced countries have since embarked on increased borrowing. This has made borrowing costs to skyrocket that has crowded out developing countries borrowers.
Development in developing countries has also been lowered by tighter financial conditions. Attainment of millennium development goals faces potential threat in global financial crisis. It was estimated that those living on less than a dollar were to hit a record 64 million. Higher unemployment rates and lower remittances that have characterized global financial crisis threaten to increase poverty levels. Layoffs have been caused by collapse in global demand. Some of the challenges that hinder the realization of the MDGs include capacity building, infrastructure development, and development of financial systems, and corruption that continues unabated in developing countries.
Impacts of corruption on poor countries
The World Bank is investing a lot of energy towards fighting corruption because corruption makes public administration dysfunctional. The World Bank intends to promote accountability and transparency. Corruption undermines policies and programs intended at alleviating poverty. For poverty levels to be reduced in developing countries, it is pertinent that corruption is attacked.
European Union and the single market
What are the basic principles of a single market/what is a single market about?
A single market is a trading bloc that allows for free trade with similar policies on product regulation and the freedom of movement of factors of production. A single market endeavors to create a scenario where there is free movement of labor, capital, labor, and goods between member countries. The physical borders, the taxes levied are done away with to allow free trade. The four factors of production are supposed to freely move between member countries without any form of restriction.
Problems that Greece currently faces
Greece currently suffers from a huge public debt because of the balance of trade deficit that it suffers. This deficit stems from her decision to join European Union Trading bloc. In the process, Greece lost her competiveness. The problems that Greece faces had been occasioned by the previous governments’ resolve to misreport her official economic statistics to be in EU monetary union guidelines. The governments spent beyond their means and concealed their deficits.
Greece’ public debt was 120% of its GDP in 2010, the highest ever in the world. The international community lost confidence in the country’s ability to repay her debts. To avert this crisis, the European Union member countries and the IMF agreed to offer rescue package. Greece was subsequently given 45 billion pounds in bail out. In total, Greece has received 110 billion pounds in austerity funds aimed at salvaging the country’s economy and that of the entire Euro zone.
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