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Main organisations for facilitating globalization

The International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) are some of the international organizations which have facilitated the process of globalisation.

The International Monetary Fund (IMF)

It was organized in 1946 and commenced its operations in March, 1947. The IMF is an autonomous organization affiliated to the UNO which started with an initial membership of 31 countries. As of July 2010, it has a membership of 188 countries.
Objectives of IMF
  • To eliminate or reduce existing exchange controls
  • ƒTo establish and maintain currency convertibility with stable exchange rate
  • ƒTo extend multilateral trade and payments
  • ƒTo solve short-term balance of payments problems faced by its member nations
Sources of finance
  • It is financed by all the participating countries, with each country’s contribution fixed in terms of quotas according to the relative importance of its prevailing national income and international trade
  • ƒThe quotas of all countries constitute the total financial resources of the IMF
  • ƒThe contributed quota of a country determines its borrowing rights and voting strength
Functions of the IMF
  • Functions as a short-term credit institution to meet the balance of payments situation
  • ƒProvides machinery for the orderly adjustment of exchange rates
  • ƒGrants loans for financing current transactions
  • ƒActs as a reservoir of currencies of all member nations who can borrow the currency of other nations
  • ƒProvides a forum for international consultations
  • ƒProvides a mechanism for altering the par value of currency of a member country in some situations
  • ƒMonitors economic and financial developments of its members and also provides policy advice aimed at crisis prevention

The World Bank

World Bank, was formed at Bretton Woods, 1945, as a part of the deliberations at Bretton Woods in 1945. The World Bank is also known as the International Bank for Reconstruction and Development (IBRD). It is an inter-governmental institution, corporate in form, whose capital stock is entirely owned by its member governments.
World Bank group
World Bank group consists of


Main objective
The International Development Association (IDA)
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Providing interest-free credits and grants to boosts economic growth, reduce inequalities and improve the standards of living. Hence it is known as ‘Soft Lending Arm of W.B.”
The International Finance Corporation (IFC)
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Provides investments and advisory services to build the private sector in developing countries
The Multilateral Investment Guarantee Agency (MIGA)
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Encourages foreign investment in developing countries by providing guarantees to foreign investors against loss caused by non-commercial risks
The International Centre for Settlement of Investment Disputes (ICSID)
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The International Centre for Settlement of Investment Disputes (ICSID)


Objectives of the World Bank
The World Bank was initially formed for giving loans to member countries, for the reconstruction of their war- hit economies. But now, its objective has shifted towards the development of the economies of the poorer member countries.
It provides its 188 member countries, long term investment loans on reasonable terms and gives structural adjustment loans to the heavily indebted countries. Its other major objectives are:
  • To emphasize the need for investing in the people, through basic health and education
  • ƒTo focus on social development
  • ƒTo protect the environment
  • ƒTo support and encourage private business development
  • ƒTo promote reforms to create a stable macro-economic environment, conducive to investment and long-term planning
Functions of the World Bank
The main functions of the World Bank are:
  • ƒBy facilitating the investment of capital for productive purposes, it is helping its member countries in the reconstruction and development of their territories To encourage private foreign investment and credit by providing guarantee of repayment of the private investors.
  • ƒTo promote the long term balanced growth of international trade and the maintenance of equilibrium in balance of payments of its member countries.

The World Trade Organisation (WTO)

WTO came into existence on 1st January, 1995. It is a powerful body which aims at making the whole world into one global village where there is a free flow of goods and services and where there are no barriers to trade. It is the only global international organization which deals with the rules of trade between nations.
Features of WTO
  • WTO agreements are negotiated and signed by the bulk of the world’s trading nations and ratified in their Parliaments
  • ƒIt is the main organ of implementing the Multilateral Trade Agreements (MTAs)
  • ƒIt has a membership of 159 countries and with many others considering accession
  • ƒIt is the third economic pillar of world-wide dimensions, along with the IMF and World Bank
  • ƒIt provides for aforum for negotiations among its members. Here, the member nations discuss issues related to the MTAs and associated legal instruments. It is also the forum for negotiations on terms of the Plurilateral Trade Agreements (PTAs)
  • ƒIts scope is wider than its predecessor, GATT (General Agreement on Tariffs and Trade). It brings the concepts of trade in service, intellectual property protection and investment into the multilateral trade system
  • ƒIt administers a unified package of agreements to which all members are committed
  • ƒThe decision making under WTO is carried out by consensus. If a consensus is not arrived at, the issue is decided by voting. Each member has one vote
  • ƒThe representatives of the members and all officials of the WTO enjoy international privileges and immunities
Functions of WTO
  • ƒFacilitates the implementation, administration and operation of world trade agreements
  • ƒProvides a forum for trade negotiations among its member countries
  • ƒHandles trade disputes
  • ƒMonitors national trade policies
  • ƒProvides technical assistance and training to developing countries
  • ƒCooperates with the IMF, IBRD and their affiliated agencies to achieve greater coherence in global economic policy making

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