Thursday, August 30, 2012
Multinational organizations
For today's assignment look at multinational organizations, Go To:
Globalization 101 then go to IMF/World Bank read through the links and take the quiz by the end of the period. If you have time, browse through any of the other issues of interest.
Blog two pieces of takeaway information and add your comment on should multinational organizations exist at all, or are they an undue threat on a state's sovereignty?
Other Multinational Organizations to be at least aware of:
United Nations
World Trade Organization
European Union
African Union
You don't need to be expert on these, just be aware that they exist and influence sovereign nations in the world.
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15 comments:
1. Essentially, there are 3 views you can take on the whole IMF debate. Either you think they are awesome, they need heavy reform to be effective, or they need to be completely irradicated in order to benefit the poorer countries of the world.
2. If you fall into the second of the two categories (like myself), it is often because you disagree with the amount of state sovereignty that these institions destroy, and with their immense bias towards the higher powers of the world. Essentially, the United States carries full veto power, which is very backwards to me.
3. In my opinion, the IMF needs to be heavily, heavily altered to be effective. Yes, globalization is unavoidable and neccessary in today's world. But it is only helpful when it benefits everybody. Their policies need to revolve more around getting the undeveloped world developed, and decreasing the outlandish majority of power that is shared by the devloped nations.
Although many people criticize the IMF or the World Bank for catering to the developed or extremely rich countries, I still think both organizations put in a lot of effort, time, and money in trying to help the underdevloped transition into this fast paced and globalizing world. Stiglitz was concerned with these institutions being unfair, which in many cases is true, but if you look at the WTO blog, it says that Korea recently donated 350000 USD to training programs for underdeveloped countries. Without these institutions this would have never been possible. Any effort to help progress these countries is a valuable effort.
A couple things I found interesting from the IMF/World Bank activity:
1. The managing director of the IMF is a woman, Christine Lagarde of France. I guess it's not much controversy but just something random I found interesting.
2. It's kind of ironic that the IFI's are based off the "Washington Consensus" when Washington (and America) aren't doing so great economically right now. But I guess we're still better off than most of the rest of the world.
I think that the IFI's are beneficial institutions. I think that the Washington Consensus has the right ideas behind it and some of the arguments and controversy are invalid. For example, the article mentioned that the World Bank was to blame for the displacements of Indians for funding a dam-building project. Just because that is where the money came from does not mean that it is responsible for the logistics of the project, such as the location or who was to be affected by such a project. I don't have a problem with them, I just think they're a little bit broke.
Takeaway Information:
1. I thought it was interesting that the World Bank is accused of causing debt in multiple countries, rather than doing the opposite. It seems that, as the World Bank gives loans to benefit developing countries, it wouldn't charge high interest rates, as it clearly realizes that the countries it benefits are in a negative financial situation.
2. The fact that countries dislike the IMF's policies/changes to their fiscal and monetary policies was interesting as, although these countries clearly understand that terms under which they are given a loan to pay off their debt, they still agree to giving up the majority of control over their fiscal and monetary policies. Given the current state of the economy, it makes one wonder, how much control will the IMF have over countries in a few years, if the economy doesn't improve?
The Benefits of Multinational Organizations:
I think multinational organizations should exist as, while they do infringe on a nation's sovereignty, it is not to a great extent, and joining multinational organizations is commonly a voluntary action, so the nation itself decides whether or not it is willing to give up part of its sovereignty. I also believe that multinational organizations bring nations together, causing them to focus on actually helping nations in need of assistance, rather than being selfish and focusing on only themselves.
I think its interesting that the United States has the most weighted voting power in the IMF and in the World Bank. They are exchanging contributions for power, which is the source of alot of the controversy. However, on the other hand, it makes sense that those most invested in the project hold the most power.
Also, in 1988 when the World Bank began relieving poorer countries of their debt, I think it shows that some changes need to be made to the system- and even the World Bank itself is acknowledging that.
I do think that multinational organizations are a good thing, but just like any major production they need to go into effect and work out their flaws, in order to test what is the most effective.
While both the IMF and the World Bank may put in the time and effort to try to do things to benefit the world, I still believe that they really only benefit the developed countries of the world. Countries such as the United States, Great Britain, and China are always on the board (as they have permanent positions) and really they are always the ones making the decisions for everyone else. Both the IMF and the World Bank were created to do good and while in some ways they are doing good, I think that there are still ways to improve them so that most, if not all countries, can benefit instead of just the powerful countries of the world.
"Although intended to benefit the global economy and contribute to world peace, the World Bank and the IMF, collectively referred to as international financial institutions (IFIs), have become primary targets of the anti-globalization movement. In many countries, they are resented and are viewed as imposing Western-style capitalism on developing countries without regard to the social effects." I find it interesting that these two organizations who's goal is to do nothing but provide financial aid for countries and istitutions that need is seems somewhat bogus. It is true that many times the aid provided by the IMF and World Bank is perceived as something that it is not; people speak out against these organizations because they are "corrupt". The system is corrupt but it is still followed by those who it helps. That is what the rest of the world should do.
1. The policies that the World Bank and IMF institue are highly based on U.S. economic custom. Since the World Bank and the IMF are some of the only options for debt-ridden countries, it kind of forces them into a more capitalistic system whether they are ready for it or not.
2. The representation of the countries that are benefiting from the IMF and World bank is far less than it should be. Although the Western countries do give the funds that make things happen, the U.S. probably shouldn't be the dominating voice in both the World Bank and IMF. Equal voicing of all member countries would probably end up with a fairer organization overall.
3. The principles that the IMF and World Bank are based in are good ones, I'm always up for helping those who have less advantages. However, there should be more flexibility in the terms of conditions that allow more sovereignty.
The IMF and World Bank were originally created to stabilize global markets and help with reconstruction and development of Europe after WWI. Now people question their purpose as to whether they're beneficial or not, back then when the Berlin wall came down the IMF helped East Berlin transition into the global market and capitalism. Now the IMF and World Bank trap countries with structural adjustment policies and make it impossible for them to pay off loans and to grow economically.
Although these two organizations may sometimes threaten a certain countries sovereignty, I personally don't see any problem with binding two nations together through organizations like these. It increases the cooperation between any two nations. Which in the coming century is going to be more important than ever before. Yes, it does have the ability to make the rich richer and the poor poorer. But in the long run it isn't trying to make the world economy collapse? It's trying to be a positive influence on the world.
The only issue that I see with things like this is that the people that are the leaders aren't elected officials. These people have WAY too much say in what happens in the world to just be 'appointed'. These people pretty much have all the money in the world at their disposal, and with money comes power. We should focus more on the minds behind the madness than the organization itself.
Two Pieces of Take-away Information:
1) It was interesting reading about the similarities and differences between the IMF and World Bank. My general impression was that the World Bank has sectors that focus more selectively on eradicating poverty, hunger and enacting reforms on developing nations. Microloans and smaller scale projects seem to be more their mode than compared to the IMF.
2)The voting power in the IMF is determined by the size of the country's economy. The United State's say holds more influence than other nations because it has the largest economy.
Supranational organizations like the IMF or World Bank are necessary (they were created originally for a reason) but the conditions they attach to loans and the plans they establish for nations need to be reformed to be both more practical and better fit each state's personal situation.
I thout that it was interesting that in both the imf and the world bank the voting power was determined by economic size. This puts all of the power in the larger countries like say america even though these organizations are now primarily used to help developing countries. In order to allow equality throughout the world and to be able to come up with economic statutes that will benefit the entire world each country should just have the one vote.
I can see the benefits that come from a national money tree. Some take-away notes were the controversies these supranational organizations.
The topics: economic & political sovereignty, structural adjustment, One-size-fits-all policy, and lack of communication. These are simply some concerns that surround the organizations.
The money that they lend to these lower tier countries often comes with a hidden agenda. In the fact, that it compromises the independence of the countries because of the fact that the loan can act as a whip for policy reform.
The fact of the matter is that the IMF and World Bank do seem to be a tools that can enact development in LDCs or NICs. What seems to be a hindrance is how that process is being handled. As a whole the organizations show promise, it just requires some sort of reform that would benefit the countries that could use the financial relief, without binding conditions that negate any positive effects.
(Um ok.... I'm positive that I posted a comment on 8/30 but I guess it didn't go through because I forgot to put in an ID before I closed the window??...great. awesome. Anyways.)
One thing that was interesting in these articles was simply learning the exact differences between World Bank and IMF. Sounds lame, but I never really knew the distinguishing features of either besides the fact that they're both powerful multinational institutions dealing with economics/finance. Another thing that was interesting was that the World Bank has funded several big projects that actually led to social/environmental complications...one would think that such a large organization would do a little more research beforehand?
I kind of have mixed feelings on multinational organizations. While IMF/World Bank have definitely helped some developing nations (Tanzania, for example), they've definitely also completely messed up other countries long-term in the financial perspective, giving already-poor countries an even huger amount of debt. I think multinational organizations are good in theory, but they fall short in practice due to lack of foresight, discrimination, and the lack of consideration for important native cultural/economic/political factors in the nations they're lending to. They need serious improvement before they can be considered truly effective and efficient.
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