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Unformatted text preview: Consider the WTO, IMF, and World Bank. When were each founded, and why at that particular moment? What do each of these institutions do, and what are their goals? Be sure to include a brief discussion of the DSP and SAP. Name a couple of critics of these institutions and outline their arguments. What is your view and why? IMF and World Bank Founded in 1944 as part of Bretton Woods as an outgrowth of WWII to stabilize the world economy to prevent war through interdependence. Established gold standard IMF purpose to administer an international monetary system Goal: stabilize currency and enforce a fixed exchange rate World Bank initially designed to provide loans for Europes post-war reconstruction - investments and aid packages to foster development Goal: development, stabilize currency 1950s purpose expanded to fund various industrial projects in developing countries around the world In 1971 Nixon took US off gold standard, economic crisis in 70s Changed role of IMF The IMF now works to intervene in economies that are in trouble During the Cold War, the IMF and World Banks function of providing loans for developing countries became connected to the Wests political objective of containing communism After the Cold War, the neoliberal policies of IMF and World Bank were called the Washington Consensus [1990s the Consensus is collapsing with rise is anti-Americanism, but it is still intact] Offers conditional loans to countries that will accept the Structural Adjustment Program (SAP), based on the Washington Consensus SAP requirements:- to open markets, encourage free trade, and emphasize exporting- to get rid of capital market controls so that private investors are more likely to put capital into the country --- capital market liberalization- to promote fiscal and monetary austerity cutting budget deficits by cutting government spending and raising interest rates to stabilize currency - make country encourage privatization and deregulation including privatizing industries formally run by the government- to implement labor market flexibility IMF and World Bank criticism: Stiglitz (former chief economist of World Bank, resigned) The general criticism of World Bank is that it follows IMF policy too closely The way the IMF pushes for trade liberalization is problematic leads to unemployment and poverty The IMFs SAP make job creation impossible These programs are accompanied by high interest rates that cause jobs and...
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- Spring '08