Role of World Bank, World Trade Organization and International Monetary fund in global economy

Authors: Iloka Benneth Chiemelie 

Published: 8/12/2013

Analyse the roles played by the World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank in the world economy

Stability is very essential in any economic system, and as such making it necessary to establish a body that will regulate the way businesses are undertaken in any given money and the way move moves around in the economy. However, there is an increase in globalization and internationalization of businesses, now making it very important that such body be established in the global form. This is where the WTO, IMF, and WB come into play. These three bodies undertake functions that are interrelated and they are as discussed below.

Functions of WTO

Trade negotiation (WTO, 2013) – the WTO trade agreement encompasses goods, services and intellectual property rights. Since there are differences in terms of how these factors are defined, the WTO comes into play as the negotiator by basing judgement on the agreements to provide the right background for business transaction between countries or international businesses.

Dispute settlement (WTO, 2013) – even when business transactions have been undertaken in the right setting, the ending might be filled with conflicts as the business partners struggle to define a base of understanding and the right way to perform the business. In the international level, this can come in the form of power struggle and unarguable platform for sharing revenue generated from the business. As such, the WTO comes into play with the set rules and regulations that govern its member states to resolve such issues.

Implementation and monitoring (WTO, 2013) – basically, this is their primary function and it involve implementing new laws on how businesses will be undertaken within its member states and monitoring the business process in these member states to ensure that they are adopted in these countries with respect to international trade.

Functions of the IMF and WB

These two platforms are combined in this analysis is because they undertake common functions and their functions are as described below.

Fund assistance for trade liberalization (IMF, 2013) – this main function of this body and it is in line with the efforts to support process under the WTO’s Doha Round of trade talks. These bodies make available the necessary funds for supporting trade liberalization and helping falling economies to regain their stands.

Technical assistance and training (IMF, 2013) – the IMF works WTO to provide necessary training for its member states on the skills and scopes for managing economies in order to ensure sustainability and stability.

Why do their actions often generate hostility?

Datawise (2013) presented the right definition of factors that yield to hostility in the actions of the three bodies discussed above, and their argument is that there are high levels of partiality and favouritism given to the more advanced nations than the poor countries even as they both maintain the same ground. This raises a sense of hostility and injustice in the countries that are victimized and it influences their policy with regards to business operation for foreign firms in their home country. Such influence can come in the form of increased tax for imported goods and other political influences which will create an unfavourable condition for international businesses to exist in it.

Is it deserved?

While hostility can be argued to be underserved as the law contained in the trade act provides equal ground for all member nations, it is important to understand that these favoured nations such as the EU and the USA provide much of the funds in the IMF and WB purse – making it somewhat justifiable for them to be given upper treatment in the way these funds are used with respect to trade liveralization.

Conclusion

From the above case, it can be seen that WTO, IMF and WB play important role in the maintenance of economic stability in the global economy. However, the use of these funds are somewhat differential but the understanding is that the countries with the highest volume of contribution are always given the upper hand with respect to decision making and expenditures – which is somewhat justifiable on the grounds of “benefit as much as you contribute,” but should not be the modus operandi of their operations as the main purpose of to enhance trade liberalization and sustainability across the globe.

References

Debatewise (2013), “WTO, IMF and World Bank: UN or US?” Available at: http://debatewise.org/debates/2841-wto-imf-and-world-bank-un-or-us/ [Accessed on: 25/07/2013].

IMF (2013), “The IMF and the World Trade Organization.” Available at: http://www.imf.org/external/np/exr/facts/imfwto.htm [Accessed on: 25/07/2013].

WTO (2013), “Understanding the WTO: what we do.” Available at: http://www.wto.org/english/thewto_e/whatis_e/what_we_do_e.htm [Accessed on: 25/07/2013].