General

4 aims of the Bretton woods conference

1. establish rules for international economy, including world trade

2. stabilise world currencies and reduce wide fluctuations in their value

3. prevent repeat of the great depression

4. bolster capitalism against the rise of communism in the soviet union

3 main Bretton woods institutions and their founding objectives

• IMF - established the US dollar as the basis for valuing other currencies, stabilising the world currencies

• World Bank - provide investment for middle -income states

• WTO - forum for trade deals and international trade rules

4 current aims of economic GG

• reduce poverty and foster development

• promote free trade

• single currency

• forums

Examples that show that IGOs and states are trying to work towards common development targets

• MDGs and SDGs

Most notable free-trade agreements that the have resulted from economic global governance

• single market of the EU

• NAFTA now replaced with USMCA

• The Trans-Pacific Partnership (TPP) - countries of the Pacific Rim 2016 - although Trump withdrew in 2017

When did the EU come into circulation and how many countries is the EU the currency of

• 2002

• 19/27 EU states

What does the Eurozone do

• provides strict economic rules

• States unable to set their own interests rates

• States give up their economic sovereignty To the supranational institutions - ECB

Which 4 actors are involved in economic global governance

• IGOs - WB, UNDP, IMF

• Informal intergovernmental forums - G20 and G7

• MNCs

• Multilateral forums - World Economic Forum (WEF)

How many NSs are members of the IMF

191

Who are the largest contributors to the IMF

• USA, Japan, France, Germany, Italy and UK

Size of the fund of the IMF

$1 trillion

Original aim of the IMF

• Monitior and stabilise global currencies

Current role of the IMF

1. Assist economic stability by providing financial support and loans

2. Monitors the economic outlook of both the world economy and individual member countries

3. Advises members on how best to manage their economies - particularly less developed countries lacking technical economic expertise may be lacking

How much did the UK borrow from the IMF in 1976 during the winter of discontent

US $3.9 Billion

Which european countries have received IMF loans since 2000 to avoid debt default and bankruptcy

• Greece

• Portugal

• Spain

what is the nickname for the IMF

“Lender of last resort”

IMF warnings to UK government in 2022 and 2024

• 2022 openly criticised the UK gov for tax cuts plans and then warned that rising prices would be worse in the UK

• 2024 warned the UK government against further tax cuts

IMF warning to Mexico

• told them they are too dependent on oil revenue and needs to diversify

2015 IMF warning to African countries

• they need to reduce public spending to compensate for reduced Chinese growth rates

Who does the IMF’s technical advice go to

• 80% goes to low and lower middle income countries in particular in Sub-Saharan Africa and Asia

How IMF is helping Ghana

• providing the bank of Ghana with advice on how to improve financial stability

How IMF is helping Peru

• advising Peru on methods of tax collection and public spending

How IMF is helping Kosovo

• offered technical aid in areas such as budget planning public financial management and economic legislation to strengthen Kosovo’s economic institutions

Who is the managing director and since when

• Kristalina Georgieva

• since 2019

Why the IMF faces claims of being undemocratic

• weighted voting power based on financial contributions

• leads to more influence for economically powerful states

4 major recent financial crises that the IMF has helped with

• the Asian financial crisis 1997

• Emergency leading to Brazil in 1998 and Argentina in 2000

• Eurozone Crisis from 2008 onwards

• 2008 global financial crisis

Examples of IMF loans in 2024

1. Columbia: $8.3 billion under the flexible credit line 

2. Egypt: extended fund facility by about $5.1 billion 

3. Ghana: $3 billion through the extended credit facility 

4. Mexico: $36.2 billion under the flexible credit line 

5. Pakistan: $7 billion through a standby arrangement

4 free market reforms that SAPs promote

• Selling government owned assets to private ownership – privatisation 

• Short-term increases to personal taxes so that the state can pay for public services 

• Reducing public sector wages or state pensions 

• Open markets to FDI (foreign direct investment) 

How did the IMF help India and proof

The IMF loans that India received in the 1990s encouraged them to diversify into New Growth Sectors – it is now the 5^th largest economy  

How did the IMF help South Korea

1997 – South Korea was successfully bailed out with a $55 billion aid package 

How the IMF helped Russia

1998 – the Russian Rouble was on the verge of collapse and so an IMF loan stabilised confidence in the Russian economy  

Criticisms of the IMF

• voting method

• commitment to classical development theory

• too dominated by western interests - 85% of vote is needed to reform the IMF’s constitution and US has an effective veto of 16.5% vs

• every managing director has been European

• every head of the world bank has been an American citizen

• free-market reforms promoted by SAPs may not be appropriate in the developing world

Negative of SAPs e.g. Argentina 2023

• the wave of austerity measures in Argentina was welcomed by the IMF in return for $44 billion loan

Success of IMF in Asian financial crisis 1997/98

• did not spread as countries such as South Korea were saved from bankruptcy by IMF loans

How much did the IMF provide in loans after the 2008 Financial crisis to 2019

• $325 billion to restore confidence in nation states and prevent contagion

2008 Failures of the IMF

• failed in surveillance, not warning members that their deficits were too high, making them vulnerable to global financial shock

• global impacts after the collapse could’ve been adverted

Joseph Stiglitz - economist - quote on the IMF and criticism

• “the IMF reflects the interest and ideology of the Western financial community”

• criticised the one size fits all approach of the IMF, arguing that economic liberalism doesn’t take into account the diverse needs of nation states at different stages of development

SAPs - why controversial

• the shock therapy can damage already weak economies

• human cost of austerity can be unacceptable - high unemployment levels and cuts in public spending harm those most dependent on welfare support

IMF conditionality in Argentina

• before receiving over $56 billion

• Argentina was required to put forward a plan to increase taxes, court spending and create an independent watchdog for budget responsibility

IMF conditionality in Pakistan

• with over $100 billion owed to international lenders

• Pakistan agreed to another 3 years of IMF loans accounting to $6 billion

• had to make further reforms

negatives of SAPS (6)

• Privatisation can increase company profits without benefiting wider society

• Economic growth may lead to greater inequality and political instability

• Indirect taxes (e.g. sales tax) often affect poorer people the most

• Reforms in the formal economy may not help people working in informal/subsistence sectors

• Foreign investment can weaken local industries and trap countries in low-wage economies

• Structural adjustment reforms can conflict with national sovereignty and democratic policies

IMF and Greek Debt Crisis - Case Study

• Greece built up large debts due to high public spending and weak economic growth. The 2008 financial crisis made repayment difficult.

• In 2010, the IMF, European Central Bank, and European Commission (“the Troika”) provided a €110 billion bailout.

• In return, Greece introduced austerity measures, privatisation, and debt reductions for private banks.

• Opposition grew, and the anti-austerity party Syriza won power in 2015.

• A 2015 referendum led by Alexis Tsipras saw 61% reject bailout conditions.

• Greece later accepted another bailout to avoid leaving the Eurozone (“Grexit”).

5 positive impacts of the IMF on the world economy

• The IMF provides loans to help countries avoid economic recession

• It helps stop economic crises spreading to other countries

• Member states pool funds to support countries in need

• The IMF monitors economies and identifies risks and opportunities

• It encourages economic reforms linked to growth and development

5 negative impacts of the IMF on the world economy

• IMF conditions can limit state sovereignty

• It promotes a neoliberal, Western-focused economic model

• SAPs often benefit corporations more than the poorest people

• Critics argue it mainly serves developed states’ interests

• The IMF failed to prevent the 2008 global financial crisis

Original function of the World Bank

• provide loans for reconstruction and development after WW2

Current aim of the WB

• long-term development projects, particularly in developing countries outside of Europe

• end extreme poverty to 3%

• promote shared prosperity

How many full time staff does the WB have

12,000

How the WB focuses on human and social development

• building schools

• access to clean water

• mitigating climate change

How many members of the IMF are there

• 189 members

• all states must be members of the IMF

Differences of the IMF and the World Bank

• IMF provides long term loans to nation states

• WB concentrates on long-term development

• IMF emphasis on global economic growth vs WB ending extreme poverty and sustainable development

• IMF focus on emergency assistance vs WB long term help - grants vs loans

• both technical assistance but IMF on economy and WB on developmental needs

USA voting power in the WB

• 17.25% of the vote

• no other state has more than 5%

• voting is related to funds contributed

The president of the WB is always

An American citizen

• WB is always firmly associated with western theories of economic development

Where do the loans from the WB to middle income countries vs poorest nations come from

• Middle income - WB’s international bank for reconstruction and development

• Poorest nations - Wb’s international development agency

World Bank’s loans interest

• no or very low interest repayments

• in return the loan recipient nation states are usually expected to introduce free market SAPs

Criticisms of the WBs SAPs

• encourage neo-colonial dependency

Example of WBs focus on the environment and human rights

• cutting carbon emissions

• encouraging gender equality

• improving education and social cohesion

• combating infectious diseases such as AIDs

WB loan to India How much and for what

• $700 million and to develop solar energy projects

what other bank rivals the power of the WB

AIIB - Asian Infrastructure Investment Bank

Members of the AIIB

• 103 members

• China, India, Russia, Canada and the UK

• USA is not a member China holds the most votes in the AIIB, India the second

6 ways the WB has been successful

• Focus now on human and sustainable development, helping reduce global poverty.

• Africa’s share of World Bank funding rose from 15% in 2000 to 45% in 2024.

• Committed $106 billion to Africa in five years and increased African staffing by 40%.

• Provides technical expertise to help projects succeed effectively.

• Helped states develop economically, e.g. South Korea received nearly $15 billion and later became a major donor state.

• Shifted from strict conditional loans towards grants and less economic reform pressure.

How much has Africa’s share of the WB funding risen from 2000 to 2024

• 15% to 40%

How much has the WB committed to the African countries in the last 5 years

$106 billion

3 Weaknesses of the WB

• The World Bank faces competition from banks like AIIB which offer loans without neo-liberal reform demands.

• This competition has reduced the World Bank’s influence and power.

• “Shock therapy” and SAPs in states like Argentina and Russia were criticised as undemocratic and too focused on imposing a US-led economic model.

WB helping send girls to school example

• gender quality strategy ensures projects encourage female education and create opportunities in work

• In Sub-Saharan Africa girls attending primary school rose from 76% in 2000 to 95% in 2017

How much did the IDA give to help poor countries respond to Climate change

• Between 2013-2017 the IDA committed $2 billion to help poor countries adapt to climate change

• $1.7 billion to mitigate the impacts of climate change in poor countries

whats the IDA

International development association

From 2004-2013 how many people were involuntarily resettled due to SAPs

3,400,000

World systems theory and why it applies to the WB

• Ha-Joon Chang argued that the developing countries cannot protect themselves from becoming peripheral states trapped in neo-colonial dependency

• which is promoted by the WB

When and why was the WTO established

• 1995

• encourage free trade and remove trade barriers between NSs

What did the WTO succeed

GATT

• General agreement on tariffs and trade

WTO members and how much do they account for world trade

• 166 members

• accounts for over 98% of world trade

What liberal principle is the WTO based on

• Dell Theory of conflict prevention

• free trade encourages global prosperity and discourages nationalism and conflict

WTO rule

• all members should equally engage in free trade with each other

Role of the WTO

• It checks states are following rules  

• Resolves disputes to avoid conflict  

• Produces research on global trade  

6 key principles of the WTO

• Non-discrimination – equal and fair trade  

• free trade - low tariffs  

• Predictable and transparent: MSs should not raise barriers without warning, ensures stability  

• More competitive: MSs should not interfere in order to give themselves an unfair competitive advantage e.g. subsidising exports  

• More benefit for less developed countries  

• Protection of the environment 

Average tariff on manufactured products in 1947

40%

Average tariff on manufactured products in 2000

3%

Value of global trade in 1950

$296 Billion

Value of global trade in 2023

$31.1 Trillion

CASE STUDY – BOEING AIRBUS TRADE ROW  

• The United States and European Union disputed subsidies for Airbus and Boeing.

• In 2019, the World Trade Organization ruled the EU had illegally supported Airbus, allowing US tariffs worth $7.5bn.

• In 2020, the WTO ruled US support for Boeing also broke trade rules, allowing EU tariffs worth $4bn.

• Both sides later removed subsidies and adopted a more cooperative approach after Joe Biden replaced Donald Trump.

Doha Development Round - case study - criticisms and gridlocks

• 2001 aimed to cut EU/US farm subsidies and improve trade for developing states.

• Talks failed due to resistance from both developed and developing countries.

• Criticised as evidence the World Trade Organization struggles to overcome protectionism.

• Limited success only on customs reforms; key subsidy issues unresolved.

• Abandoned in 2015 as states pursued other trade deals like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Who were the main countries involved in the recent trade wars?

US and China

When were trade wars especially significant?

During Trump’s first term

How much did the US tariff China during the trade war?

The US imposed about $550 billion of tariffs on China.

How did China respond to US tariffs?

China retaliated with around $185 billion in tariffs on US goods.

What was/ is Trump’s trade policy approach?

“America First” — prioritising US national interests over free trade.

How does Trump’s approach criticise free trade?

He argued free trade harms domestic jobs by exposing national firms to global competition.

What trade agreements did Trump prefer instead of global free trade?

Bilateral trade agreements that directly benefit the nation-state

What percentage of the EU budget does the CAP take up?

The Common Agricultural Policy takes around 40% of the EU budget.

whats the CAP

the Common Agricultrual policy

What is the aim of the CAP subsidies?

To help EU farmers sell produce competitively outside the EU.

Why is the CAP criticised as protectionist?

It ignores free-market rules by supporting farmers even when demand falls, causing overproduction.

Why is CAP spending criticised?

Nearly half the EU budget is spent on agriculture, despite farmers making up under 5% of the EU population.

How does the CAP affect developing countries?

Subsidies make it harder for developing countries to compete in global markets.

How has the WTO promoted trade?

It helped liberalise trade, with exports in 2016 being 250× higher than in 1948.

How did WTO membership expand?

Membership grew from 124 states in 1995 to 166 now

How has WTO expansion reduced conflict?

Increased dialogue and cooperation between countries reduced risks of conflict.

What did the Uruguay Round (1986–94) achieve?

Liberalised trade in intellectual property, telecoms, and banking.

What was agreed at the 2013 Bali Ministerial Conference?

The Agreement on Trade Facilitation to reduce border administration and boost trade.

What was the WTO Aid for Trade programme?

From 2005–19 it provided $340 billion to developing countries for trade support.