For more information
Call 1-800-351-0222
Call 1-800-351-0222
THE WORLD BANK & INTERNATIONAL MONETARY FUND (IMF).
Term Paper ID:29475
Essay Subject:
A critical overview.... More...
14 Pages / 3150 Words
16 sources, 41 Citations,
APA Format
$56.00
More Papers on This Topic
Paper Abstract:
A critical overview. Created in 1944 as a mechanism to rebuild Europe after the devastation of World War II. Role the two institutions have played in economic development across the globe. {ir[pse to facilitate trade and assist poor countries. Theoretical orientation of both institutions. Their activities and mission. Criticizes the policies and accomplishments of IMF and the World Bank.
Paper Introduction:
A Critical Overview of the IMF and the World Bank
Introduction
The World Bank and the International Monetary Fund (IMF) were both created at the Bretton Woods Conference in 1944. The initial impetus for establishing both the World Bank and the IMF was to create a mechanism that was to rebuild Europe after the devastation of World War II (The World Bank Group: Overview, 2001). With 183 member nations, these institutions have played an increasingly significant role in the economic development initiatives undertaken across the globe. The first World Bank loan, in the amount of $250 million went to France in 1947 for post-war construction. Also in 1947, the World Bank was incorporated into the United Nations system and retained its focus on reconstruction while developing a new focus on poverty reductio
Text of the Paper:
The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper.
Mozambican organization calls for overhaul of IMF, World Bank.(2 1). Emergency lending in the wake of the Mexican and Asian financial and economic crises . Economic management as part of Middle East peacekeeping efforts . S., and Olivei, G. Many developing nations lack the marketinfrastructure along with the political institutions needed to move to openmarkets and meaningful participation in free trade regimes. The PRSPs, accordingto Guttal (2 ), have a leveraging role beyond debt relief andconsequently, have grave implications for the sovereignty of poor borrowingcountries. Many organizations feel thatthe tendency to limit assistance to countries with weak governance has theeffect of worsening the plight of the poor (World Bank lending..., 2 1).An independent review of IDA performance since 1994 concluded that povertytrends in most IDA recipient countries have been disappointing. Southeast Asia and the activities taken thereunder the aegis of the World Bank and the IMF serves to demonstrate how thestate can distort markets through price and regulatory controls, producingscarcity and skewed prices. Available atwww.worldbank.org/about/history/overview.htm. (1999). W. Calomiris (2 ) also maintains that the ineffectiveness of theIMF is an artifact of its crisis lending mechanism, which is not designedto fulfill the role of providing effective liquidity assistance.All that IMF and development bank lending accomplish is to transferresources to debtor countries during severe economic crises. As Dollar and Svensson (2 ) note, evaluation after thefact found that most of the policy measures were not implemented andeconomic results were poor. (2 ). In theory, the IMF and the World Bank exist not only to facilitatetrade and assist poorer countries in meeting their debt service burden, butalso to foster economic development and the creation of infrastructuremechanisms that will ultimately eliminate debt and maintain sustainableeconomic development. Often, these conditionalities require adebtor nation to eliminate vitally important programs that are necessary toguarantee a minimal quality of life for vulnerable populations. Guttal (2 ) argues that the policies of the World Bank and the IMFare riddled with internal contradictions. This is a problem thatmust be rectified in the near future. However, any number of criticisms have been leviedagainst these institutions by analysts who believe that the IMF and theWorld Bank actually serve the interests of their controlling members andnot the interests of poor nations or debtor nations. Generally, it will be arguedthat both the IMF and the World Bank have relatively poor records withrespect to ameliorating poverty, fostering development, and promotingequilibrium. Consequently, as any number of critics, including CharlesCalomiris (2 ) have suggested, reform is long overdue.Understanding the IMF and the World Bank The World Bank and the IMF were established at Bretton Woods as partof the post-war international financial architecture. Postwar Balkan reconstruction . Its grossdomestic product per capital is $325 per year, while its debt owed percapita is $183. Einhorn, J. Available at www.comtexnews.com. (1997). Rethinking the IMF: Anoverview. Available atwww.imf.org/external/pubs/ft/exrp/what.htm. Further, McGowan (1999) maintains that food production and otheractivities that provide income and sustenance to Third World householdshave been undermined by such policies. Guttal (2 ) claims that experience over the last 4 years hasproven that the IMF and the World Bank are at best irrelevant and at worstinimical to the goals of poverty reduction in the Third World. Further, African members of the World Bank and the IMF have severelycriticized structural adjustment programs that are perceived as having theeffect of strengthening elites in poor nations while failing to resolve theeconomic problems of the poor in these countries. Christian Science Monitor, 92(1 1), 2. More specifically, Einhorn (2 1) suggests that these institutions arenow being confronted with the necessity of recognizing that loans to buildpublic infrastructure coupled with structural adjustment do not necessarilyengender financial stability or private investment. Thesetransfers do not appear to improve securities markets or spur growth, butrather to facilitate bailouts of insolvent domestic banking and businessentities (Calomiris, 2 ). The system wasdesigned to avoid future world wars by ensuring an open internationaltrading system and global financial stability (Einhorn, 2 1). The notion that either theIMF or the World Bank and their policies can shape successful orunsuccessful outcomes is seen by Dollar and Svensson (2 ) as patentlyfalse. Under apolicy product of the organizations known as the Poverty Reduction StrategyPapers PRSP), these institutions have asked that 7 countries develop PRSPsby 2 1 in order to qualify for external assistance. Part of the problem is that theIDA has an index designed to assess countries needs and policies that isstandardized and not specific to each recipient country's reform prioritiesor needs (World Bank lending..., 2 1). (2 1). At the core of the IMF and WorldBank reform programs are a standard array of macroeconomic and structuraladjustment conditionalities. Availableat www.brettonwoodsproject.org/topic/adjustment/25 5. With 183 member nations, these institutions haveplayed an increasingly significant role in the economic developmentinitiatives undertaken across the globe. While even the most severe critic of the IMF and theWorld Bank would not deny that these organizations have had somespectacular successes, it is equally apparent that reform is long overdue.As long as the IMF and the World Bank are controlled by the G-7 nations,they will undoubtedly continue to impose a Western market and economicorientation on aid and loan recipients. Dollar, D., and Svensson, J. Bothorganizations have, as Einhorn (2 1) claims, become vast bureaucraticorganizations whose mission has expanded far beyond the original intent tothe Bretton Woods founders. Others argue that the focus of the World Bank should be redirected.Rather than loaning money for public works projects, the World Bank shouldconsider broader research on development. (2 ). Theproblem, according to this organization, is that while there are over 18 members of the World Bank, the members are far from equal. When will economics guide IMF and WorldBank reforms? Nearly five years later, however, Uganda continues to spend more onrepaying its debts than on schools and health services combined. (1999). Trade liberalization reforms and the WorldBank. In a meeting between theIMF and World Bank executives and leaders of 22 African countries held inFebruary 2 1, World Bank and IMF officials countered charges of favoritismby stating that they had taken steps to streamline their policy processes. Unfortunately, money is the vehicle used bythese agencies for policy advice (Einhorn, 2 1). American Economic Review, 87(2), 43-49. Further, the World Bank and theIMF should make human rights and environmental concerns to aid-giving,while recognizing that different cultures and nations understand humanrights and environmentalism differently (Scherer & Irwin, 2 ). Blueprints for redesigning theWorld Bank. Women's International Network News, 25(4), 19- 21. html. Loans to combat the AIDS epidemic in Africa. Neither the IMF nor the World Bank have indicated awillingness to grant full equality to all members. Little and Olivei (1999) contend that thepolitics of world monetary reform have been shaped in large measure by theGroup of 7 and are oriented more toward protecting venture capitalists andfinancial institutions in the West than toward truly resolving the economicdilemmas of the Third World. Further, Guttal (2 ) maintains that those IMF membersidentified as qualifying for the new PRSP initiatives often find themselvesforced to conform to foreign ideological pressures in order to qualify forassistance. Lisa McGowan (1999) has commented that in over 8 countries aroundthe world, the IMF and the World Bank routinely subjugate the social andeconomic rights of poor and working people, particularly women, to thepursuit of economic reform. (2 ). Scherer, R., and Irwin, N. As a result of its willingness to obey thenostrums of the West and the IMF/World bank, Uganda was the first nation inAfrica to see any of its international debt relieved under the HighlyIndebted Poor Countries (HIPC) scheme unveiled by the World Bank in 1996. Generally, Parrish (1999) also maintains that the businessand financial sector consequences of activities by these institutionscenter upon forced privatization of state-owned businesses and industries,mandatory participation in free trade and open market systems, anddevelopment projects that effectively create domestic elites. (1999). Edwards, S. Guttal (2 )believes that the dominance of the G-7 members ensures that assistance willmost generally be provided to those countries willing to adapt to themarket mechanisms and the political ideology of the West. However, the trouble today is that the IMF can nolonger offer bailouts to every investor, leading to a stampede amongcompeting nations for dwindling resources. For example, Einhorn (2 1) pointsto the following financial and business sector activities as evidence of"mission creep" in the World Bank's portfolio: . Available atwww.globalexchange.org/wbimf/facts.html. The end of imagination: The World Bank, theInternational Monetary Fund, and poverty reduction. For example, theMozambican Debt Group (GMD), a coalition of nongovernmental organizations(NGOs), churches, and individuals recently criticized both the IMF and theWorld Bank for failing to provide adequate voting power on their boards forpoor, African nations (Mozambican organization calls..., 2 1). Nevertheless, it is important to recognize, as does Einhorn (2 1),that in its economic activities, the World Bank and the IMF have bothstretched their mission to the breaking point. Available at www.aei.org/ct/ ctcalomiris.htm. (2 ). Little, J. Calomiris, C. Inparticular, it notes that the linkages between country programs and povertyoutcomes need to be better articulated and more needs to be done in termsof governance and institutional capacity. The initial impetus forestablishing both the World Bank and the IMF was to create a mechanism thatwas to rebuild Europe after the devastation of World War II (The World BankGroup: Overview, 2 1). Edwards (1997) argues that the World Bank has emphasized trade reformas a key component of loan guarantees. Restructuringoften imposes intolerable social costs on debtor nations, leading todemands for major reform in the World Bank and the IMF.Reforms Needed At the IMF and the World Bank Given the foregoing admittedly brief review of the activities of theIMF and the World Bank, it remains to identify needed reforms. The IMF tends, says McGowan (1999), to pleadignorance of such impacts and to pass the buck to the World Bank. Dollar and Svensson (2 ) have commented that the IMF and the WorldBank tend to be most successful when they are interacting with relativelynew and democratically governments. While it is difficult to determineprecisely how much the World Bank has contributed to the upsurge in tradeliberalization, Edwards (1997) believes that the major impact of theorganization in this area has been to push debtor nations toward marketliberalization, the elimination of non-tariff barriers, and the creation ofexport-driven economic systems. (2 1). World Bank/IMF questions and answers. The first World Bank loan, in theamount of $25 million went to France in 1947 for post-war construction.Also in 1947, the World Bank was incorporated into the United Nationssystem and retained its focus on reconstruction while developing a newfocus on poverty reduction (The World Bank Group: Overview, 2 1). Sweatshops, whoseworkers are predominantly women, have proliferated in these countries,specifically supported by IMF policies encouraging exports and free tradezones. In the case of Zambia in the 198 s, for example, the World Bank andIMF made available $212 million as a structural adjustment loan to supportpolicy reform. In Latin America, thedeleterious effects of inflation and macroeconomic instability have beenthoroughly demonstrated. Meaningful participation in aglobalized economy requires and equal voice in establishing policy andmaking decisions. It will also the business and financial sector ofsuch activities, and the demands for reform in the ways in which both theIMF and the World Bank fulfill their mission. This report will considerthe theoretical orientation of both institutions and provide a criticalexamination of the IMF and the World Bank and their activities indeveloping countries. Countries seeking financial assistance - whether it targetsdebt relief or economic development projects - have few options availablewhen it comes to austerity and structural adjustment conditions imposed bythe IMF. World Bank/IMF Fact Sheet. References About us: Overview. Created in response tothe need for post-World War II reconstruction, both institutions hadenormous promise. The IMF and the World Bank have beenempowered by the governments that control it to impose economic austeritypolicies in the countries of the Third World or the Global South.Controlling the IMF are the so-called Group of 7, which includes the UnitedStates, the United Kingdom, Japan, Germany, France, Canada, and Italy.These seven countries hold over 4 percent of the votes on the boards ofboth the IMF and the World Bank (World Bank/IMF Fact Sheet, 2 1). How IMF/World Bank policies damage womenworldwide. In Africa, incentives that switchland and labor to export crop production have had a devastating impact uponthe quality of life. The IMF was created to promote international monetarycooperation, facilitate expansion and balanced growth of trade, promoteexchange stability, assist in the establishment of a multilateral system ofpayments, shorten the duration and lessen the degree of disequilibrium inthe international balance of payments of members, and to make its resourcestemporarily available to members experience such difficulties (The IMF at aglance, 2 1). At thefounding, economist John Maynard Keynes called for an institution thatwould first focus on post-war reconstruction and, second, on development inpoor countries. The IMF has taken some stepstowards greater disclosure, but most of its actions remain shrouded insecrecy. Structuraladjustment at any and all costs has created a situation in many Third Worldcountries (particularly those in sub-Saharan Africa) in which developmentcannot proceed and vital social, educational, and health services are beingeliminated. Calomiris (2 ), forexample, contends that both agencies have a poor record of sponsoringsuccessful programs, whether these programs focus on development or debtrelief. The IMF was created as the central institution of the internationalmonetary system, or the system of international payments and exchange ratesamong national currencies that enables business to take place betweencountries (What is the IMF, 2 1). World Bank lending to poorest countries examined. The whole sub-Saharan African region has just 7 percent of the votes at both the IMF andthe World, which is equal to the voting strength of Germany. McGowan, L. In Central Asia, for example, women have been the targets ofdramatic job losses as state-owned companies are sold to the privatesector. Politicalinstitutions in this country are characterized as democratic, privatizationof formerly state-owned industries and businesses has proceeded apace foryears, the free market rules supreme, and the economic policies ofgovernment are conservative. The problem, Guttal (2 ) argues, is that the majority of themajor creditors are Group of 7 members who practically own the BrettonWoods family.It is these nations that are seen as dictating debt relief and povertyreduction or economic development strategies throughout the Third World. New Statesman,129(443 ), 2 -22. (2 1). (2 1). Together, both agencies are specialized units subsumed into the UnitedNations and have become increasingly significant economic actors in theglobal economic order (What is the IMF?, 2 1). The IMF officially came into existence on December 27, 1945, when 29countries signed its Articles of Agreement agreed to at the Bretton WoodsConference. Zambia at that time had an authoritariangovernment that was patently unlikely to make reforms. Specific reforms needed include eliminatingthe IMF approach of requiring conservative economic policies as aprecondition of IMF aid. They are far less likely to besuccessful in ethnically fragmented societies. Available atwww.globalexchange.org/wbimf/faq.html. (2 1). Hence, Dollar andSvensson (2 ) concluded that when the IMF and the World Bank aresuccessful, it is because of the ideological orientation of a recipientnation.The IMF and the World Bank in Developing Countries Any number of criticisms of the specific activities of the IMF andthe World Bank in developing countries can be identified. The World Bank's mission creep. P. Another major issue that must be addressed to achieve effective IMFand World Bank reform is reducing the power and influence of the G-7countries that currently dominate these two institutions. (1999). The fall ofthe fixed exchange rate system in the early 197 s created an opportunityfor the IMF to involve itself as a key determiner of policy in countriesapplying for bailouts. The Bank was established as what Einhorn (2 1)characterizes as the initial impetus for the great post-war experiment ofusing public loans for economic development. Consider the case of Uganda, regarded by World Bank and IMF as one ofits Third World success stories (Uganda and the aid game, 1999). The countrieswith the greatest need for World Bank and IMF assistance are those with theleast clout. Most critics, regardless of their attitudes towards the effectivenessof these two institutions, believe that these institutions need to be moreopen or transparent in their activities. New England Economic Review, November/December, 3-25. A form of authoritarianism and even paternalism is thereforereadily apparent in the activities and policies of the IMF and the WorldBank. Parrish, D. Available at www.foreignaffairs.org/articles/Einhorn 9 1.html. Many critics contend, with some legitimacy, thatthe IMF effectively bribes governments into cutting social benefits. A Critical Overview of the IMF and the World BankIntroduction The World Bank and the International Monetary Fund (IMF) were bothcreated at the Bretton Woods Conference in 1944. ForeignAffairs. The IMF and World Bank policies implemented in such countries asArmenia, Russia, Bulgaria, Croatia, and the Ukraine have led tounemployment rates of up to 7 percent for women. Any new wealth generated by Ugandan implementation ofstructural adjustment programs has, however, enriched the elites and notmet the needs of the poor in this country. Uganda and the aid game. While free markets may promote growth over the long run, recentexperiences have demonstrated that capital flows can be highlydestabilizing in the short run. Who rules the world? Xinhua News Agency. The World Bank inparticular is seen as taking on challenges that lie far beyond anyinstitution's operational capabilities. According to the World HealthOrganization (WHO), Ugandans have a life expectancy of 42 years, and 46.3percent of Ugandans consume less than 3, calories per day in food(Uganda and the aid game, 1999).Business and Financial Sector Consequences Parrish (1999) claims that from a promising beginning, both the IMFand the World Bank have begun to falter, in part because there have been somany balance of payments crises and in part because both organizations havetended to foster a dependence culture damaging to the economic prospects ofpoor countries. Available atwww.focusweb.org/publications2 . (2 1). The World Bank is mosteffective in countries with newly elected and democratic governments.Available at www.res.org/uk/media.dollar.htm. What is the International Monetary Fund? Guttal, S. World Press Review, 46 (1 ), 1 . This has the effect of hampering efforts to assess IMF activitiesand hold it accountable (Scherer & Irwin, 2 ). Women's formal sector unemployment hasincreased due to IMF-induced recessions, privatizations, and governmentcutbacks. Aidshould be awarded with fewer strings attached (Scherer & Irwin, 2 ). Eliminating these attitudes and practices is therefore a necessity.Conclusion This report has examined the functions of the IMF and the World Bankand specifically considered the ways in which these institutions haveimpacted upon debt-ridden or developing nations. Nevertheless, many NGOS and others are raising questions about therole and the effectiveness of lending through the World Bank'sInternational Development Association (IDA).
If this paper is not what you are looking for, you can search again:
or
We can write a Custom Essay just for you.
Browse Essays by Subject