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World Bank & imf. Do they help or hurt the developing world?. WELCOME!. Please grab your journal and take your seats!. JOURNAL. When are you willing to loan money to someone? What type of people will you loan to? What people WONT you loan to?
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World Bank & imf Do they help or hurt the developing world?
WELCOME! • Please grab your journal and take your seats!
JOURNAL • When are you willing to loan money to someone? • What type of people will you loan to? • What people WONT you loan to? • Does it matter what the person wants to do with your money? • Do you expect to get your money back… and if so, when?
JOURNAL • What is, to you, a “livable” salary Honestly!! • Think about what’s “essential” to you • How much do these essentials cost? How cheaply can you get them? • What’s the bare minimum you could make as an adult and survive in the US? • What do you think the poverty line is in the US? • What about in developing countries???
POVERTY LINE • $22350 for a family of four in the US • $1.25 a day in developing world (per person)
Objectives • Describe differences and similarities between the IMF and WB • Explain the purpose of both organizations • Understand the complex issues surrounding international aid and development
VOCABULARY + ABBREVIATIONS • IMF- International Monetary Fund • IBRD- International Bank for Reconstruction and Development (World Bank org.) • IDA- International Development Association (World Bank org.) • Bretton Woods Convention: 1944 meeting during which the World Bank and IMF were created • Gross National Product: Value of goods and services produced in a country during one year • Globalization: The spread of ideas, practices, and knowledge across the globe
What’s the international monetary fund? • “An organization of countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.” Quite a mission!…..So… are they trying to save the world?
IMF Basics • 188 country members • Headquarters in Washington, DC • NON-members include: • Cuba, N. Korea, Andorra, Monaco, Liechtenstein, and Vatican City • Made up of mostly economists & financial experts • Leader is always European • 2300 staff members
Goals of imf • Maintain a stable global economy • Loan small amounts of money to countries who need to stabilize their economies • Promote exchange of foreign currencies • Advise all countries on financial matters
What do you need to do to join? • Require countries to relinquish sovereignty • Their currency must be able to be freely exchanged with other foreign currencies • Most inform IMF of major changes in $$$ policy • Take advice of IMF • So… why join? • You can get help if you need it!! • INSIGHT • You know about the economies of alllll other nations! This is good info to have.
Who do they loan to & where does the $$$ come from? • IMF will loan to ANY member country that needs help • Developing OR developed. • SMALL, short-term loans… Pay them back within 3 years, 10 maximum. • Majority of IMF $$$ comes from members’ dues.
Criticisms of imf • They’re “clueless” about the culture and monetary situations within the countries they loan to • Some citizens get mad when their leaders give in to IMF requests and requirements…. It circumvents nation’s sovereignty • Some say funds are anti-developmental. They’re a short-term fix for larger problems, especially in the developing world. • Not all countries that need help are granted it.
What’s the WORLD BANK? • A lending organization that seeks to promote the economic and social development of the world’s poorer countries by providing financial and technical support to countries.
Wb basics • Provides loans to developing countries for capital programs • Reduce poverty • Made up of two programs • IBRD-187 members • IDA- 171 members • Over 7,000 staff members • Always led by a U.S. Citizen
Wb goals • Focus on developing the following in developing countries: • Roads • Dams • Power Stations • Agriculture • Industry • Clean Air
Who do they loan to, and where does the $$$ come from? • They ONLY loan to poverty-stricken countries!!! • GNP of less than $865 per person. (ie: When each person makes only $865 a year) • Money comes from investors, individuals, institutions, and other member nations • LONG TERM , low-interest or interest-free loans… generally loans are paid within 12-15 years
Criticism of the world bank • Same as the IMF- they don’t know much about the countries they loan to. Sometimes the help isn’t “sustainable” • Voting Power • US has 15.85% of power, followed by Japan, China, Germany, UK, France, Russia and Saudi Arabia. • “Shock Therapy”