Global Economic Development
This week we will read about the historical development of a more globalized economy. Further, we will explore the development of the International Financial Institutions (IFIs), which were intended to assist the global economy by stabilizing global financial markets, and to help to create world peace by preventing further world wars and economic collapse. However, they have now become widely criticized by the anti-globalization movement, as they are often resented and seen as having imposed Westernized methods of capitalism on developing countries in irresponsible ways.
Read the following overview describing the increase in economic globalization over the past several decades:
Glob and Trade – pdf
Read the following issue brief through the Levin Institute that describes the development, purpose, and criticisms of the International Financial Institutions (International Monetary Fund and World Bank):
Glob101 – pdf
Here is a summary of this week’s reading:
Merchandise trade after WWII marks the biggest growth period in economic globalization. The main forces driving globalization include:
- Technological innovations (e.g. discovery of large oil fields in the Middle East, 1948)
- Broader political changes (e.g. the establishment of the United Nations in 1945)
- Economic policies (e.g. the establishment of Bretton Woods – IMF, World Bank, 1944 – 1971)
Development of the IMF and World Bank:
- Conference at Bretton Woods, New Hampshire, to address concerns about the stability of global economic markets
- IMF is controlled by its 187 member-countries, each of whom appoints a representative to the IMF’s Board of Governors
- The IMF has three main activities: surveillance, financial assistance, and technical assistance
Why is the IMF Controversial?
- Some critics say that the conditions of the loans are too controlling and don’t give the receiving country enough freedom to do things the way they feel is necessary
- Some critics say that the IMF imposed the policies of the Washington Consensus without understanding the complexities of the nations they were working with
- Some critics are displeased that the policies are imposed all at once
- Some critics say that the IMF was not transparent or open to constructive feedback when developing their policies
World Bank Development and Structure:
Originally known as the International Bank for Reconstruction and Development (IBRD)
- IBRD was founded at Bretton Woods
- Structure is basically the same as that of the IMF; the majority of voting power is held by the U.S.
- The mission of the IBRD claims that it “aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development, through loans, guarantees, and non-lending-including analytical and advisory-services”
World Bank Initiatives:
- The International Development Association (IDA) was organized by the World Bank in 1960 to provide additional financial assistance to the poorest developing countries
- The International Finance Corporation (IFC) was established in 1956 and is now the largest public source of financial investment for private sector projects in developing countries
- The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to provide risk-balancing insurance services to foreign direct investment projects in developing countries
- The World Bank established the International Center for Settlement of Investment Disputes (ICSID) in 1966 to encourage both investors and governments to undertake and receive foreign direct investment by providing a neutral dispute resolution system
Criticisms of World Bank:
The World Bank has been criticized for lending to projects that caused environmental damage and social problems, as well as for causing too high of debt for developing countries.
You are not required to read or view the resources included here. However, you can find new ideas and/or questions raised to enhance your discussion posts and written assignments.
Video – Economic Globalization (IMF):
Films Media Group. (2012). Economic Globalization. [Video File.] Films on Demand. Retrieved from: http://digital.films.com/play/LC4NG7
Video has closed captioning or transcript available,
- Review the eight goals Millennium Development Goals and suggest some improvements to the goals. As of this year, how would list the Millennium Development Goals? Would the list from 1 to 8 stay the same, be switched around, or would some of the goals change completely? Be sure to include your rationale.
Please write an essay of complete and well composed paragraphs (250 word minimum for the entire essay) Be sure to use in text citation and provide references for your sources. Wikipedia is not a source.
The Olympics of International Financial Institutions’ Projects
Various projects are handled by international financial institutions (IFI) on a yearly basis. It is your task to give one gold, one silver, and one bronze medal to each chosen project.
For each medal you give out, you must state the following:
- Name and detailed description of the project.
- Name of the IFI that handled the project.
- Type of medal (gold, silver, or bronze).
- Positive impacts and how they could have been even more impactful.
- Negative impacts and how they could have been avoided.
Please make sure your assignment is double-spaced using Times New Roman, 12-point font, and 1” margins. Be sure to cite any references in APA Format.
Each case paper will be assessed on the following:
- Be sure to follow the directions, by stating the medals, names, details, IFIs, as well as the positive and negative impacts.
- Strong examples, valid points, and ideas on the topic
- At least two additional resources cited in APA format
- 2-3 pages in length
Proper grammar, spelling, and punctuation
Consider the criticisms of the IMF and the World Bank. Do you feel that their practices are required for accountability purposes, or do you believe that they unfairly threaten the sovereignty of certain nations? Furthermore, how would you shape the policies of the IMF and the World Bank, if you had the proper authority to do so?
The journal entry should be about a page in length. If applicable, be sure to cite any resources you use to support your writing.
Wikipedia is not a source.
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