International Institutions

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International Organisations and Globalisation

Various international political and economic organisations are very important in the advancement of globalisation.

Bretton Woods institutions

Intergovernmental organisations (IGOs) like the World Trade Organisation (WTO), the International Monetary Fund (IMF) and the World Bank promote free trade policies to encourage FDI and to accelerate globalisation.
Since World War 2, these organisations have worked together to remove tariffs and quotas on goods that act as barriers to free trade.

Bretton Woods institutions cont.

As more developing and emerging countries join the organisations, their actions to encourage free trade arguably continue to accelerate globalisation. China joined the World Trade Organisation in 2011.
These IGOs are collectively referred to as the ‘Bretton Woods institutions’ after the place in America where they are established.

BRIC institutions

BRIC refers to Brazil, Russia, India and China.
New alternatives or rivals to the Bretton Woods institutions are rising as the BRICs gain global influence and set up their own organisations - such as the China Development Bank.
In 2015, the BRIC nations set up the New Development Bank to rival the World Bank.

BRIC institutions cont.

By 2017, this New Development Bank had given loans of $1.5 billion dollars to member countries. Most of these loans went on developing renewable energy in these countries.
China is particularly influential in Africa, where Chinese money funds lots of infrastructure projects in the likes of Kenya.

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 founded in 1944. It aims to help stabilise global currencies and it provides loans to developing countries to reduce poverty.
In return for a loan, a country must enforce a Structural Adjustment Program (SAP).
A SAP ensures that capitalism is promoted within the country and it can require a country to impose cuts to public services and privatise many state industries.
- Many countries (particularly those in Africa) can see the IMF as a lender of last resort.
- Many people also argue that SAPs and loans from the IMF result in the worsening of poverty for many developing countries as they can then become trapped in a cycle of debt (paying back debt & interest).

The IMF cont.

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 cont.

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.