economic global governance

four main roles of the imf

supervising exchange rates

‘lender of last resort’

surveillance

technical assistance

what is supervising exchange rates

originally responsible for managing the system of fixed exchange rates

this system was abandoned in 1971, and exchange rates have been free floating - plays a supervisory role

what is ‘lender of last resort’

provides low-interest or no-interest short-term loans

1976 - uk received $3.9 billion loan

what is surveillance?

monitoring trends in the global economy and ensure members have sensible policies

imf warned liz truss

what is technical assistance

many states lack expertise - imf provides support and advice

members of imf?

191

members of world bank?

189

initial role of the world bank

help reconstruction in western europe following ww2

developing role of world bank

concentrated on the developing world - loans to fund capital projects

more emphasis on human and social development - Millennium Development Goals and the Sustainable Development Goals to end extreme poverty

current role of world bank

focuses on preventing environmental degradation, imporving healthcare, protecting rights, promote gender equality - programmes to tackle HIV, TB and malaria

$12 billion to fund COVID vaccines

similarity btwn IMF and World Bank

provide training and advice to assist development

when were IMF and WB set up

bretton woods conference in 1944

how are imf and wb unfair

give greater voting power to the richest states

decisions need an 85% majority

USA accounts for 16% of voting power

developing countries have little power

head of the WB has always been from the USA

director of IMF always from Europe

headquarters in washington DC

structural adjustment programmes

loans that require privatisation, public spending cuts and encourage free trade

aimed to reduce poverty, encourage growth and attract great foreign direct investment

criticisns of SAPs

don’t fit every country

undermine sovereignty and democracy

can adversely impact the poorest

accused of neo-colonialism

success of imf

adaptability, longevity and near universality

2022 - $140 billion distributed

south korea and india have benefitted

voting rights being amended

shortcomings of imf

failed to predict or prevent credit crunch or asian crisis

us veto

washington consensus - states have to adopt neo-liberal policies

can harm economies - argentina and mexico in 1980s

successes of the world bank

adaptability, longevity and universality

SAPs replaced by poverty reduction strategy papers

loan conditions made in consultation with states

shortcomings of world bank

high funding to fossil fuel production

comparatively small funding

involuntary resettlement controversial - maasai group persecuted and evicted in tanzania

aim of WTO

promotes free trade by encouraging reduced tariffs and subsidies

the most favoured nation principle - best trade terms apply to all members

adjudicator of trade disputes

strengths of WTO

growing membership - 166 members now

representative - 2/3rds of members are developing states

over 98% of world trade is now under remit of the WTO

former eastern bloc members have become free-market economic systems

nine trade rounds have been held so far

gatt and wto have reduced average tariffs, can now cut subsidies - raise standards of living

increased levels of trade have reduced poverty

can resolve trade disputes

weaknesses of WTO

failure to agree on the doha round on further trade liberalisation

western domination - eu and us

not always able to prevent disputes - trump

threat to sovereignty

neo-colonialism

neglected environmental issues and labour rights

g7 countries

usa, uk, france, japan, west germany, italy - canada joined 1976, russia joined and left

role of g7

discuss economic, political and pressing matters

strengths of g7

global leaders discuss and agree how to tackle urgent matters

agreement likely - like minded

invites representatives

success - wrote off $40 billion debt of 18 poor countries in 2005, 2021 - committed to provide 870 million vaccines to poorer nations

weaknesses of g7

no binding promises

can fail to agree

excludes major global actors - club for the rich

no organisation or permanent structure

g20 formation

formed 1999 after world economic crises

strengths of g20

range of membership - lead role in response to 2008 - stimulus package

vowed to avoid protectionism

broader agenda - climate change, terrorism

more representative

voice for developing states and global south

weaknesses of g20

can’t enforce promises

no permanent organisation

exclusive and arbitary