The World Bank and the International Monetary Fund (IMF) were created to stablize the global economy and to manage the diverse economies across nations through loan making and technical assistance. A part of their strategy is to reduce poverty - which has generally presented itself as labor, trade and agreements to utilize natural resources. U.S. media has speculated on the impact of both institutions. The World Bank Group has set two goals for the world to achieve by 2030:
The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Created in 1945, the IMF is governed by and accountable to the 188 countries that make up its near-global membership. Watch the videos below. Pick a country from either the IMF or the World Bank website. In your original post explain how the
Answer the following prompts (Use the videos and your textbook as a source.)
Original Posts 250 words (minimum). Respond to three other students 50 words (minimum). Original post due Thursday @ midnight. Responses (3) due Sunday @ midnight.
24 Comments
Michael Stevens
3/8/2016 05:51:04 pm
The treasuries of the United States and Britain came together in order to draft the blueprint for the IMF built upon the philosophy of Keynesian economics (video 1). The result bailed out Europe in the form of the Marshall plan. This lead to American companies becoming lending predators to various countries oversees. The dependence on the IMF and World Bank hinders a budding nation’s ability to create and manage its own national banking system. Although it could be perceived as a world organization that can help struggling nations grow through the approval of loans, it has become a form of post-colonialism where the end-result is a bunch of foreign investors in charge of a country’s financial system. Governments can force a country to fall into debt, then countries will need to borrow from the IMF; once a country borrows from the IMF, then they will have to cut back on education spending (video 1). Once education is cut, this will lead to more chaos within the country, and the cycle continues. Now, public works can become privatized in order to make a dent in the national debt. Thus, oftentimes, the main beneficiaries are companies from first-world countries rather than the third-world countries it is meant to improve; for example, 50% of the Ecuadorian budget was allocated to paying its debts (video 1). These institutions have also contributed to the growing income equality taking place around the world. Since the IMF has close ties to America, the first world nation that benefits the most from IMF loans are American bankers and financial experts. The WTO is related to the IMF and World Bank because loans and loan requirements are oftentimes related to world trade such as tariffs and arrangements with private contractors for public works.
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wenli zhou
3/20/2016 01:44:10 pm
HI Michael,
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Mary Rasooli
3/25/2016 08:37:03 am
The fact the the US companies have essentially become as you stated (lending predators) is a sickening thing to see. for the US to be the country that people seek aid from and then to have huge investors from the US operating in the IMF to completely strip away a small countries independence is absolutely another form of post colonialism. Good thoughts!
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Megan Fernandez
3/13/2016 04:25:22 pm
Globalization has created the need for closer cooperation between the multilateral institutions with key roles in the formulation and implementation of different elements of the framework for global economic policy, in particular, the International Monetary Fund (IMF), the World Bank and the World Trade Organization. Each organization has a mandate for cooperation in the agreements under which they have been established. They also have signed agreements among themselves, for mutual cooperation and regular consultation, which identify means to foster greater coherence in global economic policy-making. The World Bank and IMF’s desires for greater coherence in global economic policy-making through closer cooperation between the WTO is expressed in a number of agreements, ministerial declarations and decisions. The International Monetary Fund and the World Bank were both created at the Bretton Woods Conference in New Hampshire, US in 1944.
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Thu-Thao Ho
3/14/2016 08:23:23 pm
I really like the way you explained how these financial institutions tie in with world policy making. It's a fact that the WTO and the IMF work very well to increase mutual support. Also it is very interesting to see how the IMF impacts our multilateral trade with other nations as well. The financial institutions being involved deeply in our international world truly solidify the fact that money does impact how we live our lives.
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Michael Stevens
3/16/2016 07:21:37 am
Hello Megan,
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Mark De Martini
3/16/2016 09:34:59 pm
Megan,
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wenli zhou
3/20/2016 02:05:30 pm
Hi Megan
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Mary Rasooli
3/25/2016 08:43:28 am
Thanks for the detailed look into the relationship of the IMF, WTO and WB. It is interesting to see how these groups are related and organized. Awesome!
Mark De Martini
3/13/2016 09:27:22 pm
The World Bank and the IMF were instruments of the post WWII's new world order. The world economy has always operated on money and loans since the middle ages. America and England were expert on international financial and lending practices since both traded heavily on the world market. The total destruction brought on by WWII provided an opportunity to reshape the world to benefit American interests. Historically, the winners of wars set the rules and the vanquished or weak comply. The World Bank was established as a financial reserve to facilitate loans for European countries recovering from the war under the Marshal Plan. The mandate expanded to help developing nations secure loans for advancing human development. The IMF worked in tandem with the World Bank to administer loans and provide plans for counties in debt. John Perkins in The Economic Hitman explains the World Band and the IMF have become predatory on developing nations by enticing them with attractive loans they can't pay off. Once in debt, the IMF forces developing countries to restructure, devalue their currency, turn over national assets to transnational companies and surrender autonomy. The pattern is little different from banks enticing an individual with credit cards with generous credit limits until that person is buried under a mountain of debt. For whatever good the IMF and World Bank intended to do I believe the result is based on corporate greed. The IMF and World Bank have the potential to do great good by advancing human development through foreign aid but the process is exploited. I think a real risk is when debtor nations refuse to pay the loans and nationalize their assets. The system could collapse and plunge the world into a financial crisis. The WTO is there to set the rules of trade and advance good governance. Because 162 nations are members, maybe the WTO can resolve some of the inequity and friction created by the World Bank and IMF. This may be overly optimistic since wealth is being consolidated in the hands of the rich. The advantages of working with the World Bank and the IMF is securing loans that can be used to invest in infrastructure that supports future economic growth (Keynesian Economics). The disadvantage, or risk is unsustainable debt. The debt leads to a loss of national autonomy, and the exploitation of natural resources factors into future poverty.
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Michael Stevens
3/16/2016 07:39:48 am
Hello Mark,
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Mark De Martini
3/16/2016 09:33:14 pm
Michael,
wenli zhou
3/20/2016 02:33:41 pm
Hi Mark
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Mary Rasooli
3/25/2016 08:47:15 am
Hi Mark!
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Thu-Thao Ho
3/14/2016 08:18:19 pm
The IMF and the WTO are originally created to restore the world order. They have long since been providing financial assistance to nations in need. Two of key developed nations that play a huge role in regulating these financial markets are the United States and England. Under the Marshall Plan, the World Bank served to grant loans to European nations in order for them to recover from WWII. However, both the World Bank as well as the IMF have provided huge loans that are nearly impossible to pay off. The IMF deals a lot with countries who suffer greatly from massive debt by potentially decreasing the value of a nations currency. The major problem with this is that too much debt can lead to the state of Germany after WWII which was massive inflation. Both the IMF and MTO share 150 nations respectively (video 1), and such stron ties could lead to investments that can greatly increase economic growth. However, there are huge risks in sustaining large debts. Underdeveloped nations do not have enough resources in order to export and place the earnings to paying off debt. The financial institutions are not a bad idea, but when it gives nations the right to borrow so much money and not be able to pay it off, that leads to a worldwide case of bad credit and interest.
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Michael Stevens
3/16/2016 07:45:30 am
Hello Tina,
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Mark De Martini
3/16/2016 09:22:48 pm
Thu-Thao,
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wenli zhou
3/20/2016 01:37:11 pm
The relationship between the Bank and the IMF are more like a twin intergovernmental pillars which supports the structure of the world's economic and financial order. The Bank and IMF exhibit many common characteristics. Thus, they do have functions overlap. Virtually every country on earth is a member of both institutions. Both institutions concern themselves with economic issues and concentrate their efforts on broadening and strengthening the economies of their member nations.Staff members of both the Bank and IMF often appear at international conferences, speaking the same recondite language of the economics and development professions.
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Sharelle smith
3/21/2016 12:04:22 am
This further proves that the u.s is a big international bully. The government pretends to help these impoverished nations while on the back end are creating a new plan to steal more resources. The u.s preaches about democracy but at the same time when the u.s has influence on the choice of future leaders it's not a real democracy. And creating situations for more war is putting more devastation to the lives of the citizens that live in these countries. This is a shame because in other countries you hear the citizens say how much they love the u.s when the u.s is exacerbating the problems and issues that they are dealing with on a everyday basis.
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Sharelle smith
3/20/2016 11:59:45 pm
From the video it basically shows that the world bank and Imf are the same thing. A global scheme to keep other countries from decolonizing to continue to grow the u.s empire. They were first set up so that Europe and the u.s could support each other financially. It was then used for the u.s to be a creditor for other nations. A creditor with other countries serving a indentured servitude that would never end. They loan money to other impoverished countries knowing that they can repay the loan and that they would eventually have to pay the loan back with their natural resources. Which make sense as to why the u.s never burns the oil in the Middle East because it belongs to the u.s anyway because of the tremendous debt. This creates a need for payment from other countries which in turn causes war. Mean while the people are dealing with war and corrupt leaders. I don't see any advantage to this for other countries at all. The only benefit is the illusion of infrastructure being built and a false sense of security that isn't there. The countries because of colonization have lost there way and continue to find it difficult to break away from colonialization because of this. Borrowing money from the world bank blocks their effort of ever being self sufficient and being able to establish a true government because they are fighting issues at home and that is distracting in itself. Selling their resources is of no value because the u.s or world bank isn't purchasing the resources for its real value. So they further dismantle and destroy the value of the countries currency and stability. If the country wants to rebuild its government they would have to find a way on its own which makes it impossible because the u.s will block any opportunity or chances for that to happen. They will cover it up and make it seem like they weren't doing that. It's also terrible because the focus is about paying the debt while other programs are defunded like health care and education.
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Final Exam
3/21/2016 07:08:27 pm
Do we have in-class Final Exam?
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Anteo Swenson
3/22/2016 07:26:37 pm
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Mary Rasooli
3/25/2016 08:49:24 am
Thank you for providing the example about Brazil and how they gave up their natural resources like the rainforest to international corporations. It is disgusting to see this much exploitation under the IMF, an institution that was meant to help restore order globally.
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Michelle Bounkousohn
3/26/2016 09:31:15 am
The IMF is intended to be a global financial cohort seeking to address international trade and development, the World Bank is a financial institution that loans money to developing countries (video 2), and the World Trade Organization exists to facilitate international trade. Their functions overlap largely in that international trade and development are interconnected as facets of international commerce, and that international trade is often dependent on the labor and natural resources of developing countries. While the desire to loan money to developing countries in order to help them seems like a great idea, especially for the countries who are recipients of these loans (video 3), these loans can prove to be overwhelming in the long run for developing nations who are unable to pay them back in full, even with "low or no interest rates" (video 1). For example, in Mexico, the IMF would only allow a loan to Mexico if the country's government allowed Mexican wages to be frozen for 10 years. In this sense, these international financial organizations can perpetuate inequality in the name of "international trade and development," and display an imbalance of power in that it's pretty much more developed nations that take on leadership roles in international organizations. It is slightly problematic and hypocritical that these organizations exist to address poverty and international development when it is essentially the same system of hegemony present during colonial periods, which, ironically is when many of these developed nations accumulated their wealth, and where many of the now-developing countries were thrown into periods of instability.
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Poli 3 - DeAnza
Winter 2016 |