Globalization means an association of people, cultures, economies by the way of cross border trade throughout the world. In simple words, Globalization brings the whole world together. It is with globalization, we see various influences of other countries on technology, clothing, cuisines, entertainment, and the list goes on. However, with a promising future, globalization also brings risks. To monitor such obstacles institutions like the IMF and World Bank have a great role to play.
Globalization means the increase in flows and interchange(of living persons, material, and amenities, funds, machinery, or cultural behaviours) all over the globe. One of the results of globalization is that it advances and leads to enlargement in interactivity between various divisions and people around the globe.
Two sides of Globalization
Globalization is a window of opportunities and risks, which should be tackled at the national magnitude by a secured, civilized, and by a commercial system. Universally, there is a requirement to create a secured global financial framework and to get clear of the questions thrown open, in other words, be accountable. This is where globalization and the role of the IMF and World Bank cannot be ignored.
IMF And World bank
The International Monetary Fund (IMF) is an international corporation of 189 member nations that functions to certify the steadiness of the Global economic and financial structure. The IMF’s directives include regulating the extension and stabilized development of international business and encouraging interchanging balance. The IMF was established in 1945.
The World Bank is an international corporation invested in facilitating business, advice, and analysis in developing countries to succour their financial development. The bank principally takes measures as a corporation that strives to confront poverty by contributing expansion support to middle- and low-earning nations. Progressively, the World Bank has two affirmed objectives that it aims to be accomplished by 2030. The first is to get rid of maximal poverty by reducing the number of persons surviving on barely more than $1.90 per day to below 3% of the global population. The second is to escalate general affluence by expanding earnings growth in the bottom 40% of every nation in the world.
Low-Income Nations – Debt aid would be given to the low-earning nations and the system should get going strenuously. It is here that the World Bank has an indispensable part to do, functioning with powers that be and make sure impactful administration, constructive legal structure, and a powerful financial structure. All these would oblige in curbing falsification and corruption. If these dynamisms are not pursued, alluring international and national funding would be tough and thus globalization shall backfire.
Middle-Income Nations –Strictly, 80% of the globe’s poverty-stricken reside in middle-income nations. These are the nations which need utmost aid for a vigorous financial solidity. For that, the systems and social betterment should be in setting for the following level of expansion. The aim of fighting world poverty to gain universal expansion/ development.
World Bank is concentration on –
- Certain everlasting capitalization
- Rendering consultative services
- Generating the just blueprint and systematic structure
- Settling defects in the community, organizational, and section strategies
Objectives of IMF And World Bank
The International Monetary Fund and the World Bank were both generated at an international meeting held in Bretton Woods, New Hampshire, United States (July 1944). The aim of the meeting was to create a structure for financial collaboration and growth that would link to a further balanced and thriving world economy. While this agenda stands primary to both organizations, their task is normally advancing in reaction to brand new financial growths and difficulties.
The IMF’s Directives
The IMF encourages global financial collaboration and facilitates policy consultation and volume growth assistance to aid nations, construct and to uphold powerful economies. The IMF also facilitates medium-term loans and aids nations, drawing strategy or plans to resolve trade balance issues when adequate funding cannot be acquired to link up net international settlements. IMF credit is short and medium-term and financed primarily by the supply of share offering that its collaborators facilitate. IMF employees are mainly financial experts with extensive knowledge of macroeconomic and economic policies.
The International Monetary Fund (IMF) pointed out four analytical parts of globalization that efficaciously explain this notion from a commerce perspective:
- Trade and undertakings (imports and exports)
- Capital and investment trends (i.e. Foreign Direct Investment (FDI), etc.)
- Migration and movements/ action of people
- Circulation of knowledge
The World Bank’s Directives.
The World Bank encourages long-term financial growth and poverty elimination by facilitating technological and economical assistance to aid nations to amend particular sectors or execute certain projects—such as building health centres and schools, supplying electricity and water, curbing disease, and safeguarding the habitat. World Bank’s reinforcements are by and large long term and are financed both by member nation grants. World Bank employees are often experts on techniques, issues, or sections.
Following are the points on the objectives of the International Monetary Funds:
- To encourage international financial cooperation through ceaseless organization which furnishes the apparatus for educating and on global financial issues
- To dispense the growth and balanced expansion of international commerce, and to put up thereby upgrade and continuation of high magnitude businesses and real gain and to the expansion of the high yielding assets of all contributors as main agendas of financial policy.
- To advance interchange rationality, to continue, in order exchange transactions among members, and to steer clear of cutthroat interchange depletion.
- To aid in the creation of multiple structures of remittance in respect of contemporary undertakings between members and in the depletion of foreign exchange impediments which compromise the development of global trade.
- To render assurance to members by creating the widespread resources of the Fund briefly accessible to them under appropriate provisions, thus facilitating them with advantage to rectify incorrect adjustments in their balance of payments without utilizing means, disadvantageous of domestic or global betterment.
- In line with the above, to condense the span and minimize the standards of disparity in the global balances of payments of members.
Objectives of World Bank:
- To dispense long term capital to contributors/ members nations for financial rebuilding and expansion.
- To involve long term capital investment for guaranteeing BOP parity and equal growth of global business.
- To encourage capital investment in member nations by following routes:
- To furnish assurance on capital investment or private loans.
- If capital is not provided even after rendering assurance, then IBRD facilitates loans for high yielding projects on solicitous circumstances.
- To assure the execution of growth tasks to render an even conveyance from a conflict time to a non-aggressive economy.
Seemingly, the World Bank and IMF reflect various common features. Both are in an awareness, occupied and instructed by the incumbencies of member countries. The People’s Republic of China, by a mile the most densely populated state in the world, is a member, as is the globe’s largest commercial power (the United States). In point of fact, effectively every nation in the globe is a member of both organizations. Both organizations consider financial difficulties and channelize their endeavours on expanding and building strong economies of their member countries. Employees and members of both the World Bank and IMF more than often, are present at international conventions or conferences, Expressing the same profound dialect of the finance and growth occupations, or are outlined in the media to reach to an agreement intended and more or less puzzling plans of financial arrangements with ministers of economics or other administration officials. The two organizations conduct collective yearly conferences, which the press of the world focuses on widely. Both have main offices in Washington, D.C., where there is an eminent perplexity over what they work and how they distinct is about as expressed as everywhere else. For as long as one remembers both acquired the same structure and even currently, though situated facing on different sides of the avenue in proximity with the White House, they have a library and other amenities, frequently interchanging of financial facts, occasionally conduct collective seminars, the regular holding of informal conferences, and sometimes deliver out collective agendas to member nations.
In spite of these and other resemblance, however, the Bank and the IMF remain different. The principle distinction is this: The Bank is mainly an expansion organization; the IMF is a collaborative organization that takes efforts to find and maintain a disciplined structure of transactions and proof of purchase between countries. Each has a distinct aim, a different system, attaining its financing from various causes, aids distinct sections of members, and strives to attain different aims through ways distinguished to itself.
However, there are aspects where the IMF and the World Bank garnered backlash as well. Both institutions are criticized in the aspects of organizational inadequate representation of the countries underlying Global South. One of the leading criticisms of the World Bank and IMF links to the governmental/political power disequilibrium in their administrative fabric, where, as an effect of common shares formed primarily on the dimensions and ‘openness’ of nations’, financially poor nations – more often those obtaining credit from the BWIs – are organizationally inadequately represented in settlement-making processes. Further, both are criticized for being prejudiced and at odds with decision-making. The Bank and Fund have also been widely criticized for the part taken by the political convenience of crucial shareholders in its settlement-making and possibility of interference, inclusive of its aid to dictatorships. The IMF’s resolution to crack its own guidelines and assist the exceedingly contentious Greek loan program, assigned in 2010, encouraged Brazil’s Executive Director to the IMF to disagree that, “… the program … may be seen not as a rescue of Greece, which will have to undergo a wrenching adjustment, but as a bail-out of Greece’s private debt holders, mainly European financial institutions.” The part played by IMF and The World Bank cannot be excluded from the conglomerate of international business, ventures, and laws. The IMF and The World Bank monitors and sets a bar or standards, helping in diminishing the gap between a developed country and a developing country.
1. “Articles of Agreement: Article I—Purposes,” International Monetary Fund.
2. Derber, Charles (2002). People Before Profit. New York: Picador
3. Stiglitz, Joseph E. (2007). Making Globalization Work. New York, NY: W. W. Norton & Company. ISBN 978-0-393-33028-1.
Student, Chanakya National Law University Patna
Nitisha Bhardwaj is a writer, speaker, and researcher. She has an affinity for International Aviation and Corporate Law. She is a creative thinker and seeks for balance. For any Clarifications, feedback, and suggestion, you can reach her at Nitishabhardwaj1@gmail.com