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Sample Essay on the Effects of International Bodies on Poor Countries

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Sample Essay on the Effects of International Bodies on Poor Countries

The global financial systems have in the past relied on the support of some international bodies and the world’s superpower, which have helped in streamlining the operations of the monetary system, including advocating for develop in partner countries. These international bodies have however been a subject of speculation with most powerful nations that derived the agenda for the creation benefiting than other poor countries which out to receive either trade, political and financial support. This establishes how these bodies have prevented poor nations from developing economically, socially, infrastructure and politically

            These international bodies regulate certain membership requirements placing stringent regulations on other countries, which allow them in one way or the other to sideline economic, political and trade developments within other non-member and member states and other poor states in the least developed world.

            These organizations are established based on certain laws that are enacted to help steer trade, funding aspects and other monetary assistance, though have in the recent past been bodies of speculations in terms of providing support in monetary form to facilitate development.

The World Trade Organization (WTO)

            The World Trade Organization was established to help check and govern several aspects of international trade (Davey, 2012). It was instituted after its predecessor, the General Agreement on Tariffs and Trade (GATT), in order to advocate for favorable agreements, which aimed at facilitating smooth international trade through establishing a platform where countries would trade across different economic boundaries. The organization has over 160 members drawn from Europe, Asia, Africa and other continents. Despite the intention of forming this organization, there has been numerous mischievous attempts that have seen it sideline certain trade objectives by implementing policies favorable to the super powers and such would not assist other poor member States and other trading entities. This case is an example of such bodies stymied development rather than helping to spur trade. Policies that have been implemented by major key partners have sidelined trading efforts, with the Great Depression era being an example. In this case, the major member partner, the United States of America enacted the Smoot-Hawley Tariff Act, which was adopted. On the other hand, led to the rise in tariffs on imported goods. The enactment was counterproductive in that it raised tariff levels that led to the spread of protectionism among trading countries (Irwin, 2011). The act led to discriminatory aspects, in which many US trading partner’s diverted goods to the US to other favorable countries, which led to the collapse of the economies of some neighboring countries such as Cuba and Canada.

            This organization undermines other developing countries in the detriment of the major member states. The implementation of such a law in the United States resulted in tariff differences and tariff war that were unsustainable to other small countries, where other participating countries would reduce trade involvement (Narlikar, 2005). Such a trade organization has in the limelight been accused of sidelining other smaller developing economies of the world, with countries with close proximity and those in the Caribbean and Africa being affected by threats to their economies.

            The bigger trading partners have led to a state of marginalization, a state in which competing states from other developing areas are not in a position to fully integrate into the international trading system.

 

 

This is because the colonial rules, which the major member states have taken the first slots, being policy makers, enacting policies and rules that deprive other smaller countries the ability to make progress. This led to the major players participating in major trade agreements that would suit their trading practices, making smaller parties find it hard to participate in such major decision making agreements, a state known as third world schizophrenia. For example, countries such as Brazil and India had less bargaining power due to the restrictions placed which in a form benefited the major players. 

            A major notable incidence involved China, which wanted to be involved and allowed to make special provisions as a developed country was denied such rights. This would allow China to be involved in participating in bilateral talks that would help diffuse the developed country’s notions, which in many instances enacted policies and regulations that established how they participated in the international trade.

            The World Trade Organization continues to exhibit non-democratic situations especially involving smaller and bigger countries. The recent trade embargo placed on India because of its involvement in trade with Iran. The trade organization could not effect laws pertaining the case that would level the playing field between the US and India, due to infiltration caused by the United States.

            This is because the sanctions imposed on India were discriminatory since the US imposed sanctions without taking into consideration of free trade policies among member states. This was a major show of might towards other countries. This placed the credibility of the World Trade Organization in terms of advocating for fare trading practices between major and other smaller member countries in the limelight.

The United States in its action has violated certain provisions in order to exercise its power over other smaller countries, hence overruling against India’s democratic rights in free and fair trade ought to have been strictly adhered to by the United States. Various incidences have proved that such a body only deprives other developing country of their growth in terms of trade.  

            The unjust practices leveled on other developed countries such as South Korea and China establishes the fact that the World Trade Organization is undemocratic towards the developing of other trading partners. There are numerous rules enacted in the WTO that sear to prevent losses that may occur in American industries and businesses (White House to File Case against China at W.T.O. Over Subsidies for Exports). This establishes facts that the World Trade Organization tends to be undemocratic by participating in unfair trade acts, which are mainly perpetrated by the major member states. This deprives development in terms of trade, especially when there are disputes between major and smaller partners, where the rule of law is always one sided and tends to favor the super powers.

The International Monetary Fund (IMF)

            The International Monetary Fund (IMF) is an international body based in Washington D.C, United States, with its objectives for the formation being to enhance and promote monetary corporation on the global front. It is tasked with enhancing international cooperation while removing obstacles related to foreign exchange (United States, General Accounting Office). It also provides liquidity to countries operating on trade deficits in order to reduce tariffs as well as remove other trading barriers.

 The organization in the recent times has faced credibility issues, with major member status dictating its operations, and as such negatively affecting the monetary system’s ability to remain democratic on the global front.

            The International Monetary Fund main responsibility of lending money has faced credibility, with many powerful nations including the G7 countries having an upper hand in the decision-making process that awards certain countries more money while disregarding others. This through the organizations board has seen many politics as major member states directing the operations and the lending strategies of beneficiaries in terms of funding allocation in response to financial crisis and other events that need immediate bailouts. During the recent global financial crisis, the major stakeholders interfered with the organization lending patterns that dictated which major allies got bigger financial incentives due to the social-political interest in those countries.

            Major western countries controlling major stakes influenced the funding allocation, hence curtailing the growth efforts of other countries. This is because they influenced funding to major partners they have an interest in, spending more financial resources in an undemocratic manner hence curtailing economic development in other poor states. This clearly shows how the organizations goal towards promoting other countries to grow economically is being prevented by other major global economies, hence weakening the economies of those countries which they ought to bail out or help in the midst of financial storms (The G20 and international financial institution reform: Unfinished IMF reform, 2009).

            The IMF is an undemocratic organization that drives its acts through undesirable practices. Major countries have severally influenced the organization, with this benefiting them through stabilizing their trading partners in the exchange of monetary funding.          

            Notably many underdeveloped countries continue to struggle with debts, leading to poverty that keeps affecting their progress. These countries are over dependent on such undemocratic monetary institutions. The growing burden with regard to debt continues to weigh down their developmental efforts, with finances that could be used in projects being used to pay large premiums.

             These poor countries over depend on such monies, mainly approved by the international monetary fund major country stakeholders, rather than helping such countries in economic development by constituting measures to reduce dependence on such reserves.

This is because such organizations like the International Monetary Fund employ strict regulatory requirements that constrain their financial capabilities, hence depending on the foreign aid, which indirectly benefits the major countries, especially in instances when major countries have interests in these poor nations.

            In the recent Greece financial crisis, major countries like Germany declined the proposal to grant Greece bailout that would act as a debt relief in order to relieve the country from its deep financial crisis (IMF Warns of €11bn Greek bailout shortfall). The debt that would have been paid would have been channeled to more projects within the country that would uplift the social and economic status of the country now.

            This clearly shows the uncommitted nature of the major players in uplifting the economic standards of the poor countries, but rather preventing growth in most of the nations through stringent laws that mostly affect the poor nations.

            On the other hand, the major super power gain more in monetary terms. The country, in which the lending currency is majorly the dollar, continues to gain a lot since its currency is mostly used. Higher premiums and lending rates also continue to hamper the economic development in poor countries, with the exchange rates of dollar rising to the highest. The United States dominance in currency use aims at protecting its interests in ensuring that they benefit from currency dominance. This gives them an upper hand in sabotaging the financial capability, as well as stability of most poor nations. They can enact currency laws for their betterment in terms of being able to influence the financial-monetary systems and other organizations such as the IMF. The dollar currency used in lending and bailouts continue to affect more pressure on poor and developing countries. Arguably, it results in massive inequality between major countries such as the United States giving the room to gain much by being able to make their economic system much stable. While on the other hand depriving less developed countries the income, which would be used in economic development, hence stagnating the economies of such countries, and in the end benefiting them.

            On the other hand, various programs relating to structural governance continue to curtail the smooth economic development in poor nations by enforcing proposals that hinder the economic development of many poor nations (Imam, 2007), by resulting in economic imbalances, especially in nations that face economic turmoil.

            This clearly elaborates the parties that benefit at the expense of the others. The major players directly benefit from the international funding bodies, curtailing developmental efforts in many poor nations.

The World Bank

         On the other hand, another global institution that supports the monetary systems and poor countries in the world is the World Bank. The World Bank is located in Washington D.C in the United States, with its formation aimed at helping in the re-construction of countries that had been ravaged by the post-war period (Sayward, 2006). The World Bank heart in operations mainly consists of activities aimed at reducing poverty through providing monetary assistance to poor nations in the world. Its special branches, the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD), achieve this with the IDA’s responsibility being to help extremely poor countries while the later is charged with reducing the levels of poverty in some states classified as middle and creditworthy States (International Monetary Fund, 1998).

            However, this organization has recently been under pressure from the Worlds major stakeholders, with them controlling more decision-making activities that positively impact on their countries, with major protests seen in Quebec, Genoa and Seattle due to the World Banks unresponsive strategies towards poverty reduction. This has been facilitated by the organization imposing privatization programs on poor countries that decrease their ability to accomplish developmental objectives rather, participating according to rules aimed at sustaining the monetary system of the major western states.    

Through their lending strategies towards poor countries, the bank also imposes premiums at different rates rather than waive the fees for extremely poor countries at the expense of the major stakeholders, countries having debts required to pay as much as equal amounts close to the Treasury Bonds of the United States.     

            The organization composes of both the rich and poor countries though its laws tend to deprive the poor nations substantial participation in developmental matters. The major rich countries constituting members of the World Bank tend to ignore pleas from the developing countries, they have the authority to pass or determine the amount of developmental loans or assistance issued to other countries despite an equal playing platform that intends to benefit all participating member states. Loan approvals and distribution are unequal, with poor countries that have no representation suffering most from the bank’s policies, hence preventing poor countries from developing (Drachman and Shank, 2003).

            This occurred during the 1980’s. Where, major powers like the United States had much influence on the lending of the Bank towards poor countries due to perceived interests, with the organization playing part in domestic politics, only lending funds to perceived allies while constraining developmental goals of other countries, due to geopolitical issues between the Union of Socialists Soviets Republic (USSR) and the United States. The organization is the main source of funds for the poor countries, but its stringent policies in funding and waiver continue to stagnate the development of other poor countries.

            These countries, which depend on these organizations, accumulate substantial debts. Which continue to curtail the growth rates of other poor countries, putting them to repay loans at the expense of undesirable policies enacted by the mightier and richer countries, hence continue to depend and lag behind in terms of social infrastructure, where money that could have been used to spearhead development is used to repay the loans.  

            Since the start of the bank’s operations, the United States had much influence in the World Bank operations, which led to the establishment of a United States capitalistic economy, an economy operated by individual entities in order to make profits (Mueller, 2012). This type of system was majorly practiced in the United States, with the organization majorly funding political allies of the United States despite its autonomy in its operations. In other instances during the South Asian crisis of 1979, the American government under the Nixon’s administration demonstrated complete sabotage of the World Banks operation by curtailing the efforts of the bank to lend money to India during the time the country suffered an economic failure as a result of the oil shock (Patrick, 2013).   

            The American administration gained a lot by depriving other poor nations of their development. This was because of congressional interests in the operations of the bank, which directed its operations specifically on how sources of funds from the American government could be used, and lent to which nations, since it was a major country that majorly contributed to the operations of the World Bank.

            There have been many instances of poor management and governance in the World Bank operations, with instances in which major super powers approve while reject specific loans to other poor countries. This has been because of political interest between member states cooperating towards a specific course, for instance, the great rift that occurred between India and Pakistan, an American ally.

            The World Bank operations have faced credibility because the United States oversees and makes rulings on major loans, especially if the management collides with the American government. This was seen in various attempts of the Nixon’s administration of attempting to cape the banks operating budgets due to the continued operations of the bank and America’s perceived enemies at that time. The organization has faced strong opposition in issues of social life, with the Obama administration threatening to withdraw funding to some poor nations, because of policymaking initiatives that are not in tandem with the World’s superpowers objectives. In Africa’s Uganda, the US curtailed the funding efforts after the country’s leadership filed to agree on gay rights, an issue that the US administration did not like. The leadership of the bank failed to honor the organizations moral obligation towards funding policies in respect to how partner states handled certain moral values pertaining gayism (Fengler and Kharas, 2010).  

            There are legitimate problems with the World Trade Organization (WTO), World Bank and the International Monetary Fund (IMF) (Merle, 2013). There are many nations affected by the decisions majorly emanating from the great infiltration that occurs in such international bodies.

            The infiltrations have caused many poor countries, in terms of development due to over-influence by the super powers in the major lending and funding activities of such global organizations.

            In the global front, the organizations have been influenced by many circumstances hence giving partial donor assistance, coupled with stringent measures in debt repayments, hence constraining all the funds that could have been used to facilitate growth in many poor nations.

            This highlights why many poor and developing nations such as Kenya, going to the East for assistance in order to attain the millennium development goals.

            The International Monetary Fund, World Bank and World Trade Organization have prevented development of trade, infrastructure in many poor countries, due to the interests of the superpowers who are the major partners in these organizations.

 

 

 

 

 

 

 

 

 

 

 

 

References

Davey, W. J. (2012). Non-discrimination in the World Trade Organization the rules and exceptions. [The Hague], Hague Academy of International Law. http://site.ebrary.com/id/10648724.

Drachman, E. R., & SHANK, A. (2003). You decide!: controversial global issues. Lanham, Rowman & Littlefield Publishers.

Fengler, W., & KHARAS, H. J. (2010). Delivering aid differently lessons from the field. Washington, D.C., Brookings Institution Press. http://public.eblib.com/choice/publicfullrecord.aspx?p=583778.

Financial Times | Error | Akamai Error. 2015. Financial Times | Error | Akamai Error. [ONLINE] Available at: 

International Monetary Fund. (1998). Official Financing for Developing Countries 1997. Washington, D.C., 

IMF reform: An unfinished agenda | VOX, CEPR’s Policy Portal. 2015. IMF reform: An unfinished agenda | VOX, CEPR’s Policy Portal. [ONLINE] 

Imam, P. (2007). Effect of IMF structural adjustment programs on expectations the case of transition economies. Washington, D.C., International Monetary Fund, African Dept. 

Irwin, D. A. (2011). Peddling protectionism Smoot-Hawley and the Great Depression. Princeton, N.J., Princeton University Press.

Mueller, D. C. (2012). The Oxford handbook of capitalism. Oxford, Oxford University Press.

Merle, J.-C. (2013). Spheres of global justice. Volume 1, Volume 1. Dordrecht, Springer. 

Narlikar, A. (2005). The World Trade Organization a very short introduction. Oxford, Oxford University Press. .

Sharma, P 2013, ‘The United States, the World Bank, and the Challenges of International Development in the 1970s *’, Diplomatic History, 37, 3, pp. 572-604, Academic Search Premier, EBSCOhost, viewed 4 March 2015.

Sayward, A. L. (2006). The birth of development: how the World Bank, Food and Agriculture Organization, and World Health Organization changed the world, 1945-1965. Kent, Ohio, Kent State University Press.

United States. (1999). International Monetary fund observations on the IMF’s financial operations : report to congressional committees. Washington, D.C. (P.O. Box 37050, Washington, D.C. 20013), U.S. General Accounting Office.

Weisman, Jonathan, and Keith Bradsher. “White House to File Case Against China at W.T.O. Over Subsidies for Exports.” The New York Times. The New York Times, 11 Feb. 2015. Web. 02 Mar. 2015.

 

 

           

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