8B.8 IGOs

Question 1

what three IGOs have been significant in managing the global economy?

Answer 1

IMF
WTO
World Bank
(the Bretton Woods institutions)

Question 2

how have IGOs managed the global economy?

Answer 2

they have maintained the global dominance of Western Capitalism

Question 3

what key principles were agreed after WW2 in the Bretton Woods institutions?

Answer 3

-establishment of fixed rate exchange system based on gold and US dollar
-use of IMF and WB to stabilise global systems of finance and trade
-establishment of the General Agreement on Tariffs and Trade (WTO)

Question 4

what do the Bretton Woods IGOs promote as an ideology?

Answer 4

neo-liberalism
to deliver economic growth and to protect the hegemony of the USA

Question 5

the World Bank’s role in world trade

Answer 5

to give advice, loans and grants for the reduction of poverty and the promotion of economic development. its main role is to offer long term assistance, not crisis support

Question 6

failings/ limitations of the World Bank

Answer 6

-major players are the developed Western countries, not equal
-too much focus on economies over living standards changing as a result
-reliance (core-periphery model assumes)
-some past lending has increased rather than reduced debt and poverty in developing countries
-development schemes they help to fund often neglect environmental concerns

Question 7

the IMFs role in world trade

Answer 7

to monitor the economic and financial development of countries and to lend money when they are facing economic difficulty
e.g. between 2010 and 2015 almost US$40 billion was lent to Greece

Question 8

failings/ limitations of the IMF

Answer 8

-too much focus on economics over social and political implications of loans
-borrowing can increase levels of poverty in receiving nations
-leaders appointed are usually from USA or leading EU nations- operating under ‘Western’ principles with little understanding of economic/ social/cultural frameworkes of developing countries

Question 9

the WTOs role in world trade

Answer 9

to formulate trade policy and agreements and to settle disputes
aims to promote free trade on a global scale

Question 10

what difficult problems does the WTO have to deal with?

Answer 10

-wealthy countries failing to agree on how far trade in agriculture should be liberalised
-the fast growth of emerging economies including China, making it hard to agree on fair policies for developing countries

Question 11

failings/ limitations of the WTO

Answer 11

-free trade benefits developed countries more than developing countries
-serves the interests of MNCs and undermines local development
-lack of environmental protection
-restricts how countries regulate their own economies e.g. subsidies, tariffs
-slow dispute resolution system

Question 12

what are SAPs?

Answer 12

structural adjustment programmes
-economic policies imposed by the IMF and World Bank on developing countries as a condition for receiving loans or debt relief

Question 13

short term SAPs

Answer 13

to halt further deterioration of a country’s economy e.g. wage freeze, reduced subsidies

Question 14

long term SAPs

Answer 14

aim to boost economic effectiveness
e.g. tax reductions, export promotion and economic globalisation

Question 15

what are the main components of SAP policies?

Answer 15

-fiscal austerity
-trade liberalisation
-privatisation
-deregulation
-currency devaluation

Question 16

benefits of SAPs

Answer 16

-trade liberalisation has helped restore economic growth e.g. Nigeria
-shrink government budget deficits and maintain debt payment schedules e.g. Bolivia and Uganda
-aim to attract FDI by reducing inflation and exchange rate volatility, increasing investor confidence
-strengthen governance, rule of law and anti-corruption measures
-achieve long term economic growth by restructuring the economy and reducing government intervention e.g. Ghana and Tanzania

Question 17

challenges of SAPs

Answer 17

-reduced public spending on health, education and social services, increasing poverty and inequality e.g. Zambia- higher child mortality rates
-increased vulnerability to external shocks such as fluctuations in exchange rates, interest rates and commodity prices
-loss of policy autonomy and sovereignty
-erosion of domestic industries and agriculture as cheaper imports flood the market and undermine local production e.g. Ghana- loss of jobs
-increased social unrest and political instability- protests e.g. Bolivia riots

Question 18

describe the SAP in Jamaica

Answer 18

accepted loans from the IMF and WB with SAP conditions (e.g. reduced government spending on public services like healthcare) after economic recessions and debt in 1970s and 80s
-in 1991, they agreed to more SAPs for more loans, focusing on deregulating their economy- low wages and encouraging FDI
-social and economic wellbeing declined
-government spending primarily on paying back foreign debts

Question 19

impact of the SAP in Jamaica on social and economic wellbeing

Answer 19

in 1990- 97% of children completed primary school
vs
in 2019- 85% of children completed primary school
(less gov spending on education)

Question 20

what are HIPCs?

Answer 20

Heavily Indebted Poor Countries

Question 21

how many HIPCs are there?

Answer 21

group of 39 low income countries that qualify for debt relief form the WB and the World Bank

Question 22

what do HIPC policies aim to do?

Answer 22

reduce the debt burden of these countries and free up resources for poverty reduction and social development

Question 23

benefits of HIPCs

Answer 23

-reduced debt service payments, increased public spending on health, education and infrastructure e.g. Uganda
-improved economic stability and growth, access to international markets
-stronger governance and higher participation rates in society
-implementation of poverty reduction strategies

Question 24

costs of HIPCs

Answer 24

-insufficient debt relief and unstainable debt levels
-conditions and policies may undermine national sovereignty and policy space e.g. water privatisation on Bolivia
-trade offs between debt relief and other forms of development assistance such as grants for trade

Question 25

how is Uganda being impacted by HIPC policies?

Answer 25

in 1992, Uganda was in US$1.9billion debt and unable to repay- in 2000 became HIPC impacts: -gov spending rose by 20%- education and health -free primary schooling, 5 million extra children attended school -school enrolment rate rose from 62% to 93% in 2015 -by 2015, the gender difference attending school was 2%

Question 26

what is the main pattern of countries that qualify for HIPC assistance?

Answer 26

majority of qualifying countries were in Africa (2023)

Question 27

how do SAPs and HIPCs initiatives dispute economic sovereignty?

Answer 27

IGOs pressure countries to introduce new policies, adopt trade liberalisation and deregulate etc (SAPs) HIPCs policies aim to free up resources to aid development, undermining national sovereignty and policy space, which may cause social disputes and political instability -conditions such as debt relief and financial assistance may bypass democratic processes and prioritise debt repayment over domestic social welfare

Question 28

what % of world trade did WTO members account for in 2023?

Answer 28

98%

Question 29

what % of global GDP did WTO members account for in 2023?

Answer 29

98%

Question 30

what are regional trade blocs?

Answer 30

intergovernmental groups that reduce the barriers to trade in their region -a degree of economic sovereignty is willingly surrendered/ transfer of power by all governments

Question 31

what centripetal forces draw member states together?

Answer 31

harmonisation of economic policies and common currencies

Question 32

what do trading blocs require?

Answer 32

trust and economic consistency -sharing laws, ideology and sometimes language takes time, and some members may not want union e.g. UKs vote to leave EU- voters worried about diluted UK sovereignty

Question 33

why has Trump become increasingly protectionist?

Answer 33

he argues that free-trade agreements are unfair and disadvantageous to some -argues that better policy is protection of US jobs by having bilateral, not multi-lateral trade agreements with individual countries- if any

Question 34

what is USMCA?

Answer 34

(not very integrated) a trade bloc that encourages free trade between the USA, Canada and Mexico by removing internal tariffs

Question 35

what is the EU?

Answer 35

(highly integrated) -moves beyond a common market with freedom of movement towards full economic union- introduced a common currency and shares some political legislation -currently 27 members

Question 36

advantages of trading blocs

Answer 36

-free trade -market access and trade creation -economies of scale -jobs -protection -reduced chance of conflict -greater political/ economic influence

Question 37

disadvantages of trading blocs

Answer 37

-loss of benefits of wider global trade (EOS) -distortion of trade -inefficiencies and trade diversion -trade wars -admin cost -loss of sovereignty