The WTO, the IME and the World Bank What do the WTO and the IMF stand for, and w

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The WTO, the IME and the World Bank What do the WTO and the IMF stand for, and what do Joseph Stiglitz, a Nobel Prize-winning economist e World Bank? You don't have The WTO stands for the World Trade Organization, was set up to encourage world trade by bringing down existing trade barriers. It also oversees trade and former chief economist for the World Bank, wrote a highly critical book about the practices of the IME and, to a lesser degree, the World Bank and the WTO they do? And what is th a clue? Don't worry-you are not alone which Over the years since its inception, the IMF has changed markedly. Founded on the belief that markets often worked badly, it now champions market supremacy agreements reached by member nations and rules trade disputes among them with ideological fervor. Founded The International Monetary Fund (IMF), an organi- zation of more than 150 natio a lender of last resort to discourage member nations ecnomic policies -such as from on the belief that there is a need for international pressure on ns, was set up in 1944 as devaluating their currency. For example, the IMF would lend dollars to Japan if the Japanese yen were falling relative to the dollar. Let's say that 100 yen were trading for one dollar and the yen fell to 105 for one dollar, and then to 110 for one dollar. The IMF would countries to have more expansionary increasing expenditures reducing taxes, or lowering interest rates to stimulate the economy-today the IMF typically provides funds only if countries engage in policies like cutting deficits, raising taxes, or raising interest rates that lead to a contraction of the economy. lend reserves to Japan to stabilize the yen The IMF has played an increasing role in providing n when it became clear to international lenders that corporations were unable to repay the Since countries approach the IMF only when they loans to countries in financial crisis. For example,i 1997, Korean banks and loans they had taken on, the IMF arranged for $55 bil ment enterprises. While these reforms are sometimes lion in loans. But IMF loans do come with certain strings necessary, Stiglitz maintains that the IMF's represent attached, such as a balanced budget and a tight monetary atives are often oblivious to the human suffering they policy.* In 2013 over 80 percent of the money lent out cause are desperate for money, the fund has a good deal of leverage, which it uses to force governments to cut their budget deficits and shut down or sell off govern- has gone to just three troubled economies-Portugal, Greece, and Ireland. Some critics feel that by standing by as an international lender of last resort, the IMF actu on the web If you would like to learn more ally encourages irresponsible behavior. Borrowers may about what these three organizations do, g take risks they would have otherwise not taken, knowing imf.org, www.wto.org, and www.world that the IMF stood ready to bail them out. bank.org The World Bank, also created in 1944, makes long term, low-interest loans to developing countries, mainly Tight monetary policy and a balanced budget will be discussed in to build highways, bridges, dams, power generators, and Chapters 12 and 1 water supply systems. In addition, it acts as a guarantor ty of repayment to encourage some private lending. 4, respectively tor Joseph Stiglitz, Globalization and its Discontents (New York: w. w Norton, 2002), pp. 12-13.

Explanation / Answer

World Trade Organization (WTO):

The WTO was established as a successor to GATT, and it places the global trading system on a firm constitutional footing. It paved the way for further liberalization of international trade with the shift from the negotiation approach to the institutional framework. The distinguished features of WTO include, it is a legal entity, it is not an agent of the United Nations, absence of weighted voting and all WTO members have equal rights, and all agreements under WTO are permanent and binding to the member countries. Moreover, WTO has a wider coverage and its approach is rule-based and time bound. There are three councils and all these councils along with their subsidiary bodies carry out their specific responsibilities. Its main objectives are to ensure reduction of tariffs and other barriers to trade, eliminate discriminatory treatment in international trade relations, to facilitate higher standards of living, and to facilitate the optima use of world’s resources for sustainable development.

International Monetary Fund (IMF):

The IMF was officially established in December 1945, and it was initiated because of the steep decline in world trade that lead to lower living standard of the people and also because of world economic breakdown. The main function of the IMF is to encourage the cooperation in international monetary and stability of exchange rates, and to assist member countries to overcome difficult situation in their balance of payments. It has its own organizational structure, but is a specialized component of the United Nations. The IMF keeps record of its member countries and their economic conditions, signals them about the risks involved in any particular financial activity and provides advice on framing economic policies. It also has collaborated with many international organizations that work for the growth and in reducing poverty. The IMF has helped the oil exporting countries in repaying its debts. The IMF also provides technical assistance to its member countries in many different forms according to the need of the country.

World Bank: The International Bank for Reconstruction and Development (IBRD) is also known as the World Bank. Its main objectives include assisting the development of its member nations’ territories, and promoting and supplementing private foreign investments and also promoting long-term balanced growth in international trade. The World Bank, since 1960s, shifted its focus from the industrially advanced countries to developing third world countries. The bank provides financial assistance to member countries for economic reconstruction and development. It also provides guarantee for loans granted to small and large units and other projects of member countries. In the absence of venture capital, the IBRD provides loans for productive activities on considerate conditions.

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