International Monetary Fund, World Bank, and World Trade Organization

The rapid development of international institutions was initiated after the end of World War II. The primary objective for founding global organizations was seen in preventing military conflicts of similar scale in the future, building up channels for international communication, and establishing the foundation for worldwide cooperation.

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This paper aims at studying three international organizations: the International Monetary Fund (IMF), the World Bank, and the General Agreement on Tariffs and Trade that later was reshaped to become the World Trade Organization (GATT/WTO). Specific attention will be paid to their functions, accountability, how they benefit participating states, the main criticism of their activities, structures, and their role in the global environment.

Analysis of the International Monetary Fund

The International Monetary Fund was founded in 1944, during one of the United Nations conferences. Its initial purpose was to guarantee economic cooperation and avoid economic turmoil similar to those caused by the World Wars and the Great Depression.

Since then, its functions remained, for the most part, unchanged, focusing on maintaining the global monetary system stability. However, in 2012, the area of responsibilities was redesigned, adding the stability of macroeconomic and financial sectors to the competence of the organization (The IMF at a glance, n.d.).

The IMF is composed of the Board of Governors advised by two Ministerial Committees (the Development Committee and the International Monetary and Financial Committee), and the Executive Board. It is held accountable to each of its 188 member-states.

However, the established decision-making mechanism might sow the seeds of doubt in the equal right to accountability granted to every participating state.

Because the influence in the organization is determined in relation to the state’s financial contribution to the IMF’s budget, its activities and decisions usually benefit the largest contributors such as the United States, the United Kingdom, Germany, Japan, France, China, and Russian Federation (IMF Members’ Quotas and Voting Power, and IMF Board of Governors, 2016).

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The IMF, in most cases, is criticized for failing to sustain the operation of the global economy. For example, the global community attacked the IMF for being unable to predict massive balance-of-payments crises. Moreover, the US Congress criticized its lending programs that are seen as too large and grant loans to developing countries that are potentially unable to repay them for too long credit terms (Aobuin, 2007).

Even though it is harshly criticized, its role in the global environment cannot be underestimated because the organization adds to international financial and economic stability and contributes to the development of the least developed countries through its lending programs.

The World Bank Overview

The World Bank was founded in 1944. It is more often referred to as the World Bank Group comprising of five institutions, namely The International Bank for Reconstruction and Development (IBRD), The International Development Association (IDA), The International Finance Corporation (IFC), The Multilateral Investment Guarantee Agency (MIGA), The International Centre for Settlement of Investment Disputes (ICSID).

They have different functions but altogether follow a single strategic objective – reducing poverty throughout the globe and boosting shared prosperity (About the World Bank, n.d.). The number of participating states to the organization depends on the institution. That said, there are 188 member states to IBRD, 173 to IDA, 184 to IFC, 181 to MIGA, and 152 to ICSID (Member countries, n.d.).

The organization is held accountable to the Boards of Directors consisting of the World Bank Group President and 25 Executive Presidents (About the World Bank, n.d.).

However, just like the IMF, the World Bank benefits those who contribute the most to the institution’s capital, i.e., hold the biggest amount of capital stock. It means that the United States, Germany, France, Japan, Russian Federations, China, the United Kingdom, and India have the largest voting power and can control the decision-making process.

The World Bank is often criticized for its policies. For example, the US Congress attacked it for the focus on long-term development, ignoring recent challenges and short-term issues (The United States Congress, 2010).

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However, it is most criticized for failing to frame a safe and healthy environment in which people would be free to express their dissatisfaction with and protest against ineffective programs backed up by the World back without the fear of being harassed or imprisoned (Human Rights Watch, 2015).

Nevertheless, the organization benefits the least developed countries providing them with the chance to develop through financial and knowledge and learning initiatives.

The Set-Up of GATT/WTO

The GATT/WTO system was established in two stages: first, the creation of GATT in 1948 and, second, redesigning it to the WTO in 1996. Even though there were two phases of the institution’s development, its objective remained unchanged – to manage international trade relations and enhance free trade.

The WTO achieves this goal by operating as the negotiating forum for its 162 members, monitoring trade policies, and solving trade disputes (What is the WTO? n.d.).

The WTO comprises of such bodies as the Ministerial Conference, the General Conference, three Councils – for Trade in Goods, Trade in Services, and Trade-Related Aspects of Intellectual Property, and three committees – on Trade and Development, Balance of Payments, and Budget. It is held accountable by its highest authority, the Ministerial Conference, which consists of representatives of all member states.

Promoting free trade and liberalizing trade, the WTO benefits all member states because the institution creates equal opportunities for developing trade relations. Nonetheless, the WTO is criticized in the context of opposing free trade. The main criticism centers on the belief that free trade imports hunger and poverty to the least developed countries.

Leading to the growth of consumption and demand, it destroys the natural environment. Moreover, the WTO is criticized for binding its ‘most favored nations’ provision upon the participating states leaving the local government with less authority in decision-making procedures and weakening national sovereignty (Top reasons to oppose WTO, n.d.).

Nevertheless, the advantages of free trade outweigh its drawbacks. That is why the WTO plays a positive role in the global environment because it directs the process of the further development of trade relations and eliminates potential bottlenecks by handling trade disputes.

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In conclusion, it can be said that the operation of these international organizations is as well-motivated by the globalization of public, political, and economic spheres of life. They are often criticized by the supporters of the anti-globalization movement, who claim that globalization has a negative impact on society on both ideological and economic dimensions of life (Ball, Geringer, Minor & McNett, 2012).

Even though sometimes they fail to carry out their functions effectively and are harshly attacked, their role in the global environment is, for the most part, positive. That is why it is necessary to sustain the operation of these international organizations.

References

About the World Bank. (n.d.).

Aobuin, M. (2007). Fulfilling the Marrakesh Mandate on coherence: Ten years of cooperation between the WTO, IMF and World Bank. Geneva, Switzerland: World Trade Organization.

Ball, D. A., Geringer, J. M., Minor, M. S., & McNett, J. M. (2012). International business: The challenge of global competition (13th ed.). New York, NY: McGraw-Hill Education.

Human Rights Watch. (2015). At your own risk: Reprisals against critics of World Bank Group projects.

IMF Members’ Quotas and Voting Power, and IMF Board of Governors. (2016).

Member countries. (n.d.)

The IMF at a glance. (n.d).

The United States Congress. (2010). The international financial institutions: Call for change (S. PRT. 111-43). Washington, DC: Author.

Top reasons to oppose WTO. (n.d.).

What is the WTO? (n.d.).

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StudyCorgi. (2020, September 21). International Monetary Fund, World Bank, and World Trade Organization. Retrieved from https://studycorgi.com/international-monetary-fund-world-bank-and-world-trade-organization/

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"International Monetary Fund, World Bank, and World Trade Organization." StudyCorgi, 21 Sept. 2020, studycorgi.com/international-monetary-fund-world-bank-and-world-trade-organization/.

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StudyCorgi. "International Monetary Fund, World Bank, and World Trade Organization." September 21, 2020. https://studycorgi.com/international-monetary-fund-world-bank-and-world-trade-organization/.

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StudyCorgi. 2020. "International Monetary Fund, World Bank, and World Trade Organization." September 21, 2020. https://studycorgi.com/international-monetary-fund-world-bank-and-world-trade-organization/.

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StudyCorgi. (2020) 'International Monetary Fund, World Bank, and World Trade Organization'. 21 September.

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