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Understanding IMF, World Bank & WTO: Global Financial Institutions Explained

Delve into the functions and roles of IMF, World Bank, and WTO in avoiding economic crises, lending practices, decision-making processes, and trade coordination. Explore their significance in the global economy landscape.

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Understanding IMF, World Bank & WTO: Global Financial Institutions Explained

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  1. WHAT IS THE INTERNATIONAL MONETARY FUND, AND WHAT DOES IT DO TO AVOID INTL. ECONOMIC CRISES? Is the IMF an intl. central bank? Where does it get its money from? A quick bit about Bretton Woods (NH, 1944) The IMF used to fix exchange rates; now markets do for the most part (floating) The IMF collects and disseminates uniform economic data It monitors the health of the global economy and those of all member countries Now, it is a lender of last resort (+ /- 100 b in loans before the crisis; presently has a 400b deficit); Many of these loans are for balance of payments issues. It protects currencies against coordinated attacks; & laundering What is conditionality (the Washington Consensus), and what are the debates about it? What is the Heavily Indebted Poor Countries (HIPC) Initiative? What is moral hazard, and what are the debates over the IMF activities and dealing with international crises?

  2. WHAT IS THE WORLD BANK, AND WHAT DOES IT DO? It lends around $ 25 billion annually, but it leverages much more The International Bank for Redevelopment: Just a bank that lends in unstable situations> The International Development Association: No interest loans for human development The International Finance Corporation: Loans for enhancing capitalism The Multilateral Investment Guarantee Agency: Leveraging private development loans Who gets WB aid? The BRIC State capitalism and the decreasing importance of the WB

  3. HOW DO THE IMF AND WORLD BANK MAKE DECISIONS? Who gets to rule the world? Europe and the US Voting shares: 3% of the membership casts 39% of the votes (although this is changing) Developed countries=55% of the votes Supermajorities required 2008 “reforms”: The developing world gained 2.9% additional voting power

  4. WHAT DOES THE WORLD TRADE ORGANIZATION DO? Why do economists think countries should trade? (What is comparative advantage?) Why does the world need an international organization to coordinate trade? Why did the GATT form more slowly than the IMF and the WB? What are trade “rounds”? And why are they so difficult to negotiate? What is the Doha Round? What are the main differences between the WTO and its predecessor the GATT? How are the decision-making processes and the political structures of the WTO different from that of the IMF or the World Bank?

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