To what extent do organizations like the IMF, WTO, and World Bank challenge the nation state’s ability to shape domestic economic and social policy? This should not be a paper about the history of these organizations.
The International Monetary Fund (IMF), the World Bank, and the General Agreements on Trades and Tariffs(GATT), which turn into the World Trade Organization(WTO), are the main organizations that deal with the stability of the global economy. They have done this but promoting trade, issuing loans to countries in economic trouble and allowing international investing. The problem that has arisen from these organizations is that they have sacrificed the domestic economy of many countries in order to support their global agenda.
A quick over view of how the WTO, IMF and the World Bank started and operate. Post World War II, many countries looked to rebuild the financial structure of the global economy without losing their power in the economy. The three organizations each share a common goal of international policies. The IMF was created to maintain global monetary cooperation and stability by making loans to countries with balance of payment problems, stabilizing exchange rates and stimulating growth and employment, the WTO deals with international trade, both formalizing trade and settling disputes between countries, and the World Bank has steadily increased its original mandate of providing long term loans for reconstruction, to funding multimillion dollar infrastructure projects in developing countries.
These individual organizations have come under much scrutiny for their involvement in the international economy. They have been accused of negatively affecting the economies of its participating countries instead of helping. Many policies set forth by these groups have shown a drastic change in the growth of the domestic economy and social policies. These policies mostly affect less developed countries’ economies since the IMF and the World Bank are control by few, wealthy nations like the “Big Five”(U.S., UK, Germany, Japan, and France) who look to remain the controlling powers in the global economy. The reason for this uneven voting power is because the IMF and World Bank are set up so that the voting power is distributed by the financial strength of countries. Unlike the IMF and World Bank, the WTO does in fact have equal voting power through its participating members. Less developed countries do not have the resources and government power, like these more developed countries. So even with the equal voting power, these less developed countries still fall victim to these more developed countries.
The IMF, World Bank and WTO are often interconnecting because how they each contribute to international policies. For example, a country that is looking to increase its domestic economy will turn to the World Bank for a loan in order to invest in a project. More often than not, these project result in more debt for this country than profit. By putting themselves in a bigger financial hole, this country must now turn towards the IMF in order to keep them from becoming bankrupt. Before the IMF issues a loan, this country must agree to certain conditions that often require economy policies to be adjusted. These conditions allow for foreign corporations to invest and control the economy of this country. The WTO joins in by maintaining trade agreements set up by them. “The WTO has the authority to prevent, overrule, or dilute and laws of any nation deemed to burden the investment and market prerogative of transnational corporations.” (ROTHENBERG pg 450) This allows for the WTO to maintain its control over this country. The major factor in this process is the IMF’s terms and conditions that they require from their participating members. These conditions are greatly detrimental to the domestic economy of these countries because once these conditions are satisfied, these countries are...
Cited: Danaher, Kevin. 50 Years Is Enough: The Case against the World Bank and the International Monetary Fund. Boston, MA: South End, 1994. Print.
Goldman, Michael. Imperial Nature: The World Bank and Struggles for Social Justice in the Age of Globalization. New Haven, CT: Yale UP, 2005. Print.
Rothenberg, Paula S. Beyond Borders: Thinking Critically about Global Issues. New York: Worth, 2006. Print.
Please join StudyMode to read the full document