11.4.3

IGOs and World Trade

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IGOs and World Trade

Three IGOs established after the Second World War have controlled the rules of world trade and financial flows.

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The institutions

  • The main three institutions are:
    • The World Trade Organisation (WTO)
    • The International Monetary Fund (IMF)
    • The World Bank (WB)
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Aims of the institutions

  • The three IGOs have helped to maintain the dominance of 'western' capitalism as the dominant paradigm in the globalised economy.
  • They support free trade and economic development.
  • They initially established a fixed exchange rate system based on gold and the dollar, aiming to help increase international FDI and capital flows.
  • Increasing the funding and capital available to developing countries helped them to develop and grow.

The World Trade Organisation

The WTO aims to reduce the trade barriers between different countries.

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Global agreements

  • The WTO tries to get all countries internationally to agree to the same terms that help to create free trade.
  • The latest round of talks began in Doha in 2001, but have not yet been concluded.
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Tariffs

  • According to the WTO 'tariffs give a price advantage to local producers'. They are effectively a tax on imports.
  • The WTO tries to reduce barriers to trade (like tariffs). The WTO tries to persuade nations to reduce their tariffs on a range of goods and services.

The IMF and World Bank

The International Monetary Fund (IMF) promotes global economic and financial stability. The World Bank lends money to fund development.

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The IMF

  • The IMF encourages developing countries to accept foreign direct investment (FDI) and open up their economies to free trade.
  • The IMF is often criticised for promoting a 'western' model of economic development that works in the interests of developed nations and TNCs.
  • In 1976, Britain had to borrow $3.9bn from the IMF when it faced an inflationary crisis.
  • In 2018, Argentina accepted a $50bn loan from the IMF after their currency, the Argentinian peso, weakened materially.
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The World Bank

  • The World Bank lends money to the developing world to fund economic development and reduce poverty.
  • The World Bank has helped developing countries develop connections with the global economy.
  • It is sometimes criticised for having policies that prioritise economic development over social development.

Jump to other topics

1Tectonic Processes & Hazards

2Option 2A: Glaciated Landscapes & Change

3Option 2B: Coastal Landscapes & Change

4Globalisation

5Option 4A: Regenerating Places

6Option 4B: Diverse Places

7The Water Cycle & Water Insecurity (A2 only)

8The Carbon Cycle & Energy Security (A2 only)

9Superpowers (A2 only)

10Option 8A: Health & Human Rights (A2 only)

11Option 8B: Migration & Identity (A2 only)

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