The International Monetary Fund and the World Bank were created as a result of the Bretton Woods Conference. Both provide assistance to countries suffering economically. While the IMF is a cooperative institution that aims to create an organized global system of payments and receipts, the World Bank is an institution that aims to help developing countries (Driscoll 1). Both play a part in the economies of struggling nations with the goal of reducing their burden and helping them to survive in the global economic system. Unfortunately, in many cases their practices within developing nations have been seen to create more harm than good. This is possibly because both institutions use a one size fits all approach when aiding countries rather than gaining a deep understanding of each country they are involved in and catering their approach as a result. In this paper I will examine the practices of the IMF and World Bank in developing nations that have led to failure and the effects the policies had on these countries.
The IMF was created at the end of WWII in order to create a framework for global economic cooperation without creating a second Great Depression. Since its creation it has evolved to tackle a variety of economic issues. The goal of the IMF is to help the governments of member countries “take advantage of the opportunities- and manage the challenges- posed by globalization and economic development more generally.” It tracks global economic trends and performance, alerts member countries of potential problems, provides of forum to discuss policy, and helps governments in times of economic hardship. It provides policy advice and financing to member countries suffering from economic adversity. Additionally, it aims to create...
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...y agendas in that they attempt to help countries in need and promote economic stability and development. However, their one size fits all policies can sometimes harm the countries they are trying to help, especially for developing countries. Their neoliberal policies often create problems in the soft sectors including education, health, and housing. This problem could be credited to the institutions, especially the IMF, which are largely comprised of macro-economists who specialize in short-term macro-economic stabilization, when developing countries need fundamental reform for the long term (Murtaza 2). These institutions should also take into account the unique circumstances of each individual country they work with in order to create policies that cater to the specific interests of each country and prevent as many negative consequences for the people as possible.
The Structural Adjustment Programs (SAPs) are economic policies imposed on countries that borrow loans from the World Bank (referred to as “the Bank”) and the International Monetary Fund (referred to as “the Fund” or IMF). Originating from the right-wing neo-liberalism ideology of the Bank and the Fund (which are the International Financial Institutions or “IFIs”), the SAPs were created to establish a free market economic system in the borrowing (developing) countries, which lead to privatization within those countries. The Bank and the Fund tell the critics that the SAPs help ensure that the money lent will be spent in accordance with the overall goals of the loan and help in re...
...lance of trade and consistent revenue. The UN can help these countries build their economies if they can improve their trade. The UN can do all of this by implementing a single policy. The policy that will have to be passed is a distribution policy. If this policy is passed, the money generated from trade could be used in projects for the future and help these countries develop as a whole. This distribution policy will take time to pass due to other actors, but these actors are not a big issue. This distribution policy benefits the economies of developing countries such as Somalia. It helps the countries develop a balance of trade and generate revenue. Food will become more available to the Somalia people, and less people will be affected. Everyone in Somalia will have the opportunity to provide food for themselves and others. The hunger in Somalia will cease.
Massachusetts Institute of Technology. (2000). The IMF and the World Bank: puppets of the neoliberalism onslaught. Retrieved April 05, 2014, from MIT website: http://www.mit.edu/~thistle/v13/2/imf.html
Towards the end of World War Two, the Allies powers, especially Britain and United States, saw the world in need of a new economic system to help prevent future conflicts and prevent trading restrictions between nations. The end of the war was fast approaching and the world would need to rebuild and loans would be needed for this. In 1944, the US would invite forty-four nations to come together and agree upon the creation of international banking entities such as the International Monetary Fund (IMF), The World Trade Organization (WTO), and the International Bank of Reconstruction and Development (later established as the World Bank). It would be the ladder that world fund loans, first to exclusive nations, then in 1974, the World bank would look to help develop third world nations in need. According to a United Nations report in 1998, over 100 developing nations reported no significant change in their economy, even to the loans from the World Bank and About twenty percent of those nations also saw social indicators decline, a 500 percent increase from the prior decade. The one region not benefiting from any of the International agreements, is Sub Saharan Africa.
New economic institutions such as the World Bank, sought to spread the principles and practices associated with free market economies throughout the world by creating programs and lending money to countries, which allowed the people of that country to practice free market economic principles. The World Bank was originally created to help rebuild Europe from the vast destruction caused by World War Two. During the post WWII period the World Bank lent money to many European countries which has greatly helped them recover from their losses from WWII. For example the World Bank lent $250 million to France in 1947. That loan helped France rebuild its economy by creating jobs and infrastructure which later helped push the countries stagnant economy into the stronger free market economy of today.
The World Bank and the International Monetary Fund are two organizations that are used interchangeably, but are function very differently from one another. Both the World Bank and the International Monetary Fund were created during the post-World War II era to help stabilize the international economy. The IMF focuses mainly on international affairs and finance of the whole world, where the World Bank directs its attention toward developing countries. The United States and The People’s Republic of China are two of major members of both the IMF and the World Bank, which contribute their efforts on expanding and solidifying the economies of the other member nations.
This makes us wonder, why are we approving this practice to consciously diminish limited resources in order to earn profit. This free market and free trade system allows for corporations to grow economically for the state without worry of future consequences on nearby countries. Neoliberal ideas at the national level have changed how states work in a tremendous way. The promotion of this economic practice created a market based economy that strives on the a competitive and on an efficiency scale. The neoliberal theory changed the way economic systems works, it led to states restructuring the way their market systems work, economic liberalization, and the demolition of the welfare system.
They argued that the market is able to ensure progress, innovation and general benefits. They also argue that the Government interference will only cause more economic instability than it cures (Heywood, 2017). Neoliberals tend to emphasise the importance of individual responsibility, while downplaying structural and societal impediments. They emphasise that the individual should be encouraged to be self-reliant (Ife, 2013). In addition, they do not only accept inequality but they welcome it.
The World Bank is a specialized agencies of the United Nations. Their stated purpose is to reduce poverty through low-interest loans, interest-free loans at banking and economic aid to developing nations. It is consist of 185 members. This organization was created in 1944 and it is headquartered at Washington, DC, United States.
Sabelli in their book Faith and Credit claim that is the very structure of the
the effect that the work of the IMF and the World Bank have had on the
The International Monetary Fund (IMF) is an international organization of 186 countries. It works to help the development of global monetary co-operation. It secures the financial stability and facilitates international trade. It reduces the high unemployment rate and promotes the sustainable economic growth. Main goal of IMF is to reduce the poverty around the world. IMF works to help development of global growth and economic stability. It provides policy advice and financing to its members, in economic difficulties. It also works with the developing nations to help them in achieving macroeconomics stability and reducing poverty. [1]
Many critics and even followers of the IMF do not even know what the IMF really is. It is not a development or even a central bank. It is a credit union. It pays interests on deposits it receives from member nations. The IMF lends money to members having trouble meeting financial obligations to other members, but only the condition that they undertake economics reforms to eliminate these difficulties for their own good and that of the entire membership. Some people believe that if the IMF tells a country to do something, they must do it. This statement is false. The IMF has no authority over the domestic economic policies of its members. The IMF is a cooperative institution that 182 countries voluntarily joined because they see the advantage of consulting with one another to maintain a stable system of buying and selling their currencies.
Rowden, Rick. 2009. The Deadly Ideas of Neoliberalism: How the IMF Has Undermined Public Health and the Fight Against AIDS. London | New York: Zed Books.
Fifty-one countries established the United Nations also known as the UN on October 24, 1945 with the intentions of preserving peace through international cooperation and collective security. Over the years the UN has grown in numbers to include 185 countries, thus making the organization and its family of agencies the largest in an effort to promote world stability. Since 1954 the UN and its organizations have received the Nobel Peace Prize on 5 separate occasions. The first in 1954 awarded to the Office of the United Nations High Commissioner for Refugees, Geneva, for its assistance to refugees, and finally in 1988 to the United Nations Peace-keeping Forces, for its peace-keeping operations. As you can see, the United Nations efforts have not gone without notice.