Superpowers & IGOs

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Intergovernmental Organisations (IGOs)

Lots of IGOs founded by the USA have a key influence on the global economic system. The World Bank and IMF are called Bretton Woods institutions (this is where they were established in 1944).

The IMF

The IMF was conceived of in 1944, and formally founded in 1945. It aims to help stabilise global currencies and provides loans to developing countries to reduce poverty.

The IMF cont.

In return for a loan, a country must enforce a Structural Adjustment Program (SAP).
An SAP ensures that capitalism is promoted within the country and it can require a country to impose cuts to public services and privatise state industries.
- Many countries (particularly in Africa) can see the IMF as a lender of last resort.
- Many people argue that SAPs and loans from the IMF result in worse poverty for many developing countries as they can become trapped in a cycle of debt.

Structural Adjustment Programs

Although the IMF is a global IGO, 8 countries control 47% of the total votes between them and these are the global superpowers.
So, through their control of the IMF, the superpowers have significant influence over the global economic system.
Recently, there have been reports of countries being loaned money from China in order to meet the conditions needed for further loans from the IMF.
- This is an example of China’s growing influence as a superpower and an alternative to the IMF.

The World Bank

The World Bank was founded in 1944.
Similarly to the IMF, the World Bank aims to support capitalism.
It also provides loans to developing countries and provides finance following natural disasters and humanitarian emergencies.
Whilst aiming to reduce poverty, the World Bank also wants to achieve sustainability.

The World Bank Contd.

Sustainability is the ability to meet the needs of the current generation without compromising the ability of future generations to meet their own needs.
The World Bank is currently working towards two goals for the world to achieve by 2030:
- To end extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%.
- To promote shared prosperity by ensuring that the income of the bottom 40% in every country increases.

IGOs - WEF and WTO

The World Economic Forum and World Trade Organisation are also important IGOs in trade and economic development.

World Economic Forum

The WEF is a slightly different IGO as it works with businesses and governments.
It is a Swiss not-for-profit organisation that was founded in 1971. It holds an annual conference in Davos, Switzerland that promotes public-private co-operation.
The WEF is an IGO that wants to bring together businesses and governments and other members of society to ‘improve the world’.
The WEF has a wider remit than the other IGOs as it discusses wider issues like corruption and terrorism.

World Trade Organisation

The WTO focuses on trade and the rules of trade. It wants to ensure that capitalism thrives and so trade is free, allowing the market to act independently of government involvement.
The WTO negotiates free-trade agreements.
- In 2016, it had 164 members. Over three-quarters of its members are developing or the least-developed countries.
It is noticeable that North Korea, as a switched-off country is not part of the WTO.

World Trade Organisation cont.

Some people argue that the explosion in global trade since 1950 is a sign of the WTO’s success.
Others argue that this explosion in global trade is the result of globalization, rather than the work of one IGO.