Bus 40 International Business
Internet Assignment #2 (Chapter 5)
[Instructor comments appear in bold, italic font within brackets below.]
The World Trade Organization (WTO), the International Money Fund (IMF), and the World Bank
1. What is the WTO’s goal and what are the functions of this organization?
The WTO or World Trade Organization is a global international organization that
deals with the rules of trade between nations. “The goal of the WTO is
to help the trade process to be free, smooth, predictable and as fair as possible.
It does this by the following functions:
• Administering trade agreements
• Acting as a forum for trade negotiations
• Setting trade disputes
• Reviewing national trade policies
• Assisting developing countries in trade policy issues, through technical
assistance and training programmers
• Cooperating with other international organizations
The WTO is the successor to GATT (General Agreements on Tariffs and Trades).
Much like its successor the WTO’s decision-making process is based on
consensus from its 130 members. These members represent over 90% of world trade”
(www.wto.org). The WTO negotiates agreement between different countries to administer
trade agreements. The WTO’s agreement acts as rules, these rules help
to ensure the organizations ability to reach its goals of keeping trade smooth
flowing, predictable, and fair.
2. What is the IMF and its functions?
The IMF or International Money Fund is an “international organization
that was established to promote international monetary cooperation, exchange
stability and orderly exchange arrangements” (www.imf.org). Its hope is
to establish and promote economic growth. The IMF provides temporary financial
assistance to countries that need help. The primary functions of the IMF are
to provide Surveillance, Financial, and Technical Assistance. The surveillance
of the IMF is a process that is done through monitoring and consultation. This
is done as a protection for countries from economical policies of different
countries, which could affect their own country. The IMF provides surveillance
by monitoring these changes. “Another function of the IMF is providing
Financial Assistance to countries that are having problems with the Balance-of-payments.
By providing financial assistance the IMF is helping to restore conditions of
sustainable economic growth as well as giving these countries the ability to
rebuild their international reserves, stabilize currencies and pay for imports
without having to impost trade restrictions. Another function of the IMF is
providing Technical Assistance by helping countries to strengthen their human
and institutional capacity. The IMF contributes to the development of the productive
resources of member countries and by enhancing the effectiveness of economic
and financial policies” (www.imf.org).
3. To whom does the IMF make loans and what is the mechanism by which these loans are made?
The IMF gives loans to countries that are experiencing Balance-of-Payment problems.
By giving these loans, the IMF is providing these countries with the opportunity
of not having to impose trade restrictions or capital controls. “The IMF
loans also make it possible for these countries to rebuild their international
reserves, restore the conditions that are necessary for economic growth and
stabilize their currencies” (www.imf.org). The countries that are applying
for these loans must meet specific conditions to be applicable for the loans
that are specified under the “arrangement” in which they are given.
The loan must be approved by the IMF Executive Board in a “letter of intent.”
Once the loan has been approved, they are released in installments that are
phased as the program is carried out. “The IMF’s loan volume has
shown to shift irregularly over time and there have been periods of drastic
increase in lending” (www.imf.org).
4. What is the World Bank and what does it do?
The World Bank is an international organization that has the goal of fighting
poverty. The World Bank has set up a strategy that includes poverty-focused
lending in order to reach these goals. The loans that are issued from the World
Bank are used in more than 100 developing economies. The hope of the World Bank
is to be able to improve living standards and do away with the most unfortunate
forms of poverty. The World Bank has an extensive membership of over 180 member
countries. These countries come together to make decisions on behalf of the
World Bank. “The World Bank is one of the world’s largest sources
of development assistance. It has established effective poverty reduction strategies
and poverty-focused lending that are central to achieving the banks objectives.
Through its loans, along with its policy advice and technical assistance, the
World Bank supports an expansive range of programs. These programs are all geared
to the World Bank’s goal of reducing poverty and improving living standards
in developing worlds” (www.worldbank.org).
Sources:
The World Trade Organization website, www.wto.org
The International Money Fund website, www.imf.org
The World Bank website, www.worldbank.org
[Instructor end comment: Outstanding report!]
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