Role of International Finance Institutions

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The international financial institutions (IFIs) are global institutions that have been established to promote economic development and trade. Examples of IFIs include the World Bank, Asian Development Bank (ADB), the International Monetary Fund (IMF) and the World Trade Organisation (WTO).

The process of promoting international economic development and the increasing inter-relationships of economies has become known as "economic globalisation". This term reflects a perception that the world is increasingly being moulded into a shared space by both economic and technological forces. The result is that developments in one region of the world can have profound consequences on individuals or communities on the other side of the globe. These effects can be cultural, economic or political. The term economic globalisation reflects the increased relationships of economies. It is in this area that the international financial institutions have the greatest impact.

The World Bank and International Monetary Fund:

In 1944, the Bretton Woods conference on the global financial system resulted in the creation of the World Bank and International Monetary Fund (IMF). This was done to assist in financing the reconstruction of Europe following the devastation caused by World War II, and to provide a mechanism for promoting international trade.

Both these institutions are known as multilateral development agencies. This means that they pool funds from individual nations to make loans and fund development projects. The aims of both forms of agencies include the reduction of poverty through the promotion of economic development.

The General Agreement on Trades and Tariffs and the World Trade Organisation

The WTO includes both the GATT agreements that focus on trade in goods, and the new General Agreement on Trade in Services (GATS), which covers areas such as telecommunications, banking and transport. There are also agreements covering trade-related intellectual property rights (TRIMS) and trade related investment measures (TRIPS). These new treaties have far-reaching implications for environmental standards, ...