THE EMERGENCE OF GLOBAL INSTITUTIONS

As markets globalize and an increasing proportion of business activity transcends na­tional borders, institutions need to help manage, regulate, and police the global marketplace, and to promote the establishment of multinational treaties to govern the global business system. During the past 60 years, a number of important global insti­tutions have been created to help perform these functions. These institutions include the General Agreement on Tariffs and Trade (GATT)[8] and its successor, the World Trade Organization (WTO); the International Monetary Fund (IMF) and its sis­ter institution, the World Bank; and the United Nations (UN). All these institutions were created by voluntary agreement between individual nation-states, and their functions are enshrined in international treaties.

The World Trade Organization (like the GATT before it) is primarily respon­sible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states. As of January 1, 2013, 159 nations were members of the WTO, including all significant trading nations, which gives the WTO enormous scope and influence. The WTO is also responsible for facil­itating the establishment of additional multinational agreements between WTO mem­ber states. Over its entire history, and that of the GATT before it, the WTO has promoted the lowering of barriers to cross-border trade and investment. In doing so, the WTO has been the instrument of its member states, which have sought to create a more open global business system unencumbered by barriers to trade and investment between countries. Without an institution such as the WTO, it is unlikely that global­ization would have proceeded as far as it has. However, critics charge that the WTO is usurping the national sovereignty of individual nation-states.

The International Monetary Fund and the World Bank were both created in 1944 by 44 nations that met at Bretton Woods, New Hampshire. The task of the IMF was to maintain order in the international monetary system, and that of the World Bank was to promote economic development. In the nearly 70 years since their creation, both institutions have emerged as significant players in the global economy. The World Bank is the less controversial of the two sister institutions. It has focused on making low interest rate loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments (such as building dams or road systems).

The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other nations. Repeat­edly during the last decade, for example, the IMF has lent money to the governments of troubled states including Argentina, Indonesia, Mexico, Russia, South Korea, Thai­land, Turkey, and Ukraine to name a few of the more high-profile cases. The IMF loans come with strings attached; in return for loans, the IMF requires nation-states to adopt spe­cific policies aimed at returning their troubled economies to stability and growth. These “strings” have generated the most debate; some critics charge that the IMF’s policy recommendations are often inappropriate, while others maintain that, like the WTO, by telling national governments what economic policies they must adopt, the IMF is usurping their sovereignty.

The United Nations was established October 24, 1945, by 51 countries com­mitted to preserving peace through international cooperation and collective security. Today nearly every nation in the world belongs to the United Nations; membership now totals 193 states (and 2 observer states). When states become members of the United Nations, they agree to accept the obligations of the UN Charter[9], an international treaty that sets out basic principles of international relations. According to the charter, the UN has four purposes: (1) to maintain international peace and security; (2) to develop friendly relations among nations; (3) to cooperate in solving international problems and in promoting re­spect for human rights, and (4) to be a center for harmonizing the actions of nations. Al­though the UN is perhaps best known for its peacekeeping role, one of the UN’s central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development – all issues that are cen­tral to the creation of a vibrant global economy. As much as 70 percent of the work of the UN system is devoted to accomplishing this mandate. To do so, the UN works closely with other international institutions such as the World Bank. Guiding the work is the belief that eradicating poverty and improving the well-being of people every­where are necessary steps in creating conditions for lasting world peace.

15.3. Language Practice:

15.3.1. Multiple Choice:

15.3.2. Key Terms – Matching:

15.3.3. Please explain the meaning of the following words and word combinations in English:

Globalization, globalization of markets, globalization of production, economic slowdown, annual revenue, legal regulations, financial assets, treasury bills, eurobonds, financial futures, retailing, interest rate, turmoil, legal entity, economic welfare.

15.3.4. Please complete the following text with the basic economic concepts using the following words and phrases. Use the term once. Translate the text into Ukrainian:

Date: 2014-12-21; view: 7926