A North-South Relations Global History 12 Presentation

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A North-South RelationsGlobal History 12
Presentation

• on the global economic powers -
• The World Bank and IMF

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• The increasing economic problems within states
  and escalating economic trading tensions between
  states was interrupted by the Second World War
  (1939-1945).
• By the wars end, world leaders , anxious not to
  repeat the disasters of the 1930s, turned their
  attention to the regulation of world trade.

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• In July 1944, representatives from 44 countries
  met at Bretton Woods, New Hampshire, to design a
  multilateral (involving more than two parties in
  the economic systems of the world) postwar system
  through which the trade and monetary relations of
  the non-communist world could be regulated in a
  stable manner.

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• An overriding concern for policymakers at Bretton
  Woods was the importance to avoid another Great
  Depression.
• The policymakers at Bretton Woods believed that
  the length and severity of the Great Depression
  was caused by a lack of commitment by individual
  states to the maintenance of a stable world
  economic regime and the absence of formal
  international rules to guide state actions.

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• The Bretton Woods conference was an attempt to
  construct an international agreement that would
  promote international political and economic
  cooperation.
• The United States, USSR and Britain were among
  the countries attending the conference.
• The architects (framers) of the Bretton Woods
  system believed that expanding international
  trade held the key to stable economic
  reconstruction and development.

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• Advanced economies in the postwar period were
  driven by manufacturing and mass consumption of
  the new technologies of the period (i.e. cars,
  home appliances and televisions).
• National governments the world over kept a
  watchful eye over the flow of money within the
  national economy in order to ease inflation or
  prevent recession.

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• People sometimes confuse the World Bank with the
  International Monetary Fund (IMF), which was also
  founded at the Bretton Woods conference in 1944.
• While the World Bank and IMF compliment the
  other, the World Bank provides assistance to
  developing countries, and the IMF serves to
  stabilize the international monetary system and
  acts as a monitor of the worlds currencies.

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The Bank of all Banks

• The initial role of the World Bank was that of a
  financial intermediary (go-between) providing
  finance for postwar reconstruction in such
  sectors as agriculture, transportation and energy.

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The Beginning the 1950s

• By the 1950s, it became clear that a growing
  number of developing countries were having
  problems meeting the requirements to borrow on
  the World Banks terms.

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• As a lender for large-scale development projects
  such as dams, bridges, and power plants, the
  contracts to build these projects were largely
  American or other Western enterprises. It was
  seldom for local or regional companies to be
  awarded tenders.

• When many colonies of European imperialism gained
  independence in Africa in the 1960s, the World
  Bank began to play a larger economic role.

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• By this time, the World Bank was starting to
  focus its attention on poverty.
• Aid given by the World Bank to fight against
  poverty was tightly linked to the recipient
  countrys economic and social reforms.

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• The World Bank became more aware of the
  importance of governmental techniques designed to
  influence broad aspects of the domestic economy.
• Examples include policies for economic growth,
  unemployment, inflation, money supply, balanced
  budgets, decreased government spending, and the
  transference of responsibilities from the public
  to the private sector.

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• Loans to improve a countrys infrastructure were
  ineffective without a healthy economy to sustain
  developmental progress.
• The World Bank also believed that sound economic
  management would mean the repayment of loans to
  international financial institutions.

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• Up to the time of the Third World debt crisis in
  the 1980s, the work of the Bank and its lending
  institutions as a source of development finance
  grew in scope.
• The perceived success of the Bank in its early
  years, led to the creation and development of
  multilateral banks, such as the Asian Development
  Bank and the African Development Bank, along with
  the Inter-American Development Bank.

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• The 1980s marked a dramatic turning point in the
  history of the World Bank.
• The Bank went from development aid to structural
  adjustments programs (SAPs) conditional aid
  which are loans tied to conditions. Conditions
  usually involve spending cuts to vital areas,
  rainforest and resource destruction or selling
  off and repayment plans.

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• This became quite the difference from its earlier
  days of infrastructure development. The World
  Bank began to support polices that led to
  privatization, stabilization and deregulation.
• All in all, the SAPs have gone hand-in-hand to
  erode already low levels of social spending, and
  to encourage the privatization of health and
  education, as well as the forced exports of food
  production.

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• Clearly such policies have led to increases in
  malnutrition and illiteracy, and to deteriorating
  levels of basic health standards for the general
  population.
• In the early 1990s, the World Bank admitted that
  SAPs have had a deleterious impact on the
  developing world and once again turned its
  attention to poverty.

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The World Banks Priorities Have Changed
Dramatically

• The World Banks work in more than one hundred
  countries is seen to be a challenge worth taking
  on.
• Over the past 20 years, the Bank's focus has
  changed and so has its approach to how it
  operates.

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• It is now addressing newer issues like gender,
  community-driven development and indigenous
  peoples, and it support for social services like
  heath, nutrition, education, and pensions.
• Monies for these issues and programs has grown
  from 5 percent in 1980 to 22 percent by 2003,
  just four years ago.

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The Millennium Development Goals

• Goal 1 -Eradicate extreme poverty and hunger.
• Goal 2 Achieve universal primary education.
• Goal 3 Promote gender equality and empower
  women.
• Goal 4 Reduce child mortality.

• Goal 5 Improve maternal health.
• Goal 6 Combat HIV/AIDS, malaria, and other
  diseases.
• Goal 7 Ensure environmental sustainability.
• Goal 8 Develop a global partnership.

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The IMF
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• The International Monetary Fundalso known as the
  IMF or the Fundwas conceived at a United
  Nations conference convened in Bretton Woods, New
  Hampshire, U.S. in July 1944.

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• The International Monetary Fund was created in
  1945 to help promote the health of the world
  economy.

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• It was established to promote international
  monetary cooperation, exchange stability, and
  orderly exchange arrangements to foster economic
  growth and high levels of employment and to
  provide temporary financial assistance to
  countries to help ease balance of payments
  adjustment.

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• The 45 governments represented at that conference
  sought to build a framework for economic
  cooperation that would avoid a repetition of the
  disastrous economic policies that had contributed
  to the Great Depression of the 1930s.

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• Drawing on the experiences of the 1930s, the IMF
  sought to alleviate trade deficits because of the
  fear that they might eventually threaten the
  entire world economic system.
• To avoid the possibility of disrupting economic
  stability, the IMF lent money to countries facing
  a balance of-payments problem.

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IMF's main responsibilities

• promoting international monetary cooperation
• facilitating the expansion and balanced growth of
  international trade
• promoting exchange stability

• assisting in the establishment of a multilateral
  system of payments and
• making its resources available (under adequate
  safeguards) to members experiencing balance of
  payments difficulties.

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• More generally, the IMF is responsible for
  ensuring the stability of the international
  monetary and financial systemthe system of
  international payments and exchange rates among
  national currencies that enables trade to take
  place between countries.
• The Fund seeks to promote economic stability and
  prevent crises to help resolve crises when they
  do occur and to promote growth and alleviate
  poverty. It employs three main functionssurveilla
  nce, technical assistance, and lendingto meet
  these objectives.

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• Since the IMF was established its purposes have
  remained unchanged but its operationswhich
  involve surveillance, financial assistance, and
  technical assistancehave developed to meet the
  changing needs of its member countries in an
  evolving world economy.

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• The IMF's resources are provided by its member
  countries, primarily through paym
• ent of quotas, which broadly reflect each
  country's economic size.
• The total amount of quotas is the most important
  factor determining the IMF's lending capacity.
• The annual expenses of running the Fund are met
  mainly by the difference between interest
  receipts (on outstanding loans) and interest
  payments (on quota deposits).