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Global Institutions

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Global Institutions

You need to know about three different global institutions:

World Trade Organisation (WTO)
World Bank
International Monetary Fund

World Trade Organisation (WTO)

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You might have heard of the World Trade Organisation (WTO) before. The WTO is an international institution established in 1995 to oversee global trade rules among nations. It replaced the General Agreement on Tariffs and Trade (GATT) of 1947. Since March 2021, the WTO has been led by Ngozi Okonjo-Iweala, the first woman and first American to hold the position of Director-General.

The WTO’s primary function is to facilitate international trade by providing a framework for negotiating trade agreements and resolving disputes between member countries.

Some key aspects of the WTO include:

As of February 2024, the WTO has 166 member countries, representing over 98% of international trade. It serves as a forum for governments to negotiate trade agreements and settle trade-related disputes.

The WTO has worked to lower trade barriers and increase trade among member countries, however, it also still maintains certain trade barriers when deemed necessary for the global economy.

The WTO provides a platform for mediating trade disputes between nations. It offers a neutral control resolution process.

WTO has been a significant force for globalisation. While it has contributed to international economic growth, critics argue that it may increase wealth inequality and negatively impact local workers and communities.

This video can help explain the organisation further:

Here are some things that the WTO has achieved:

The World Bank

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The World Bank is an international organisation established in 1944 with the primary aim of supporting economic development and reducing poverty in developing nations. Unlike a traditional bank, it functions more as a cooperative of 189 member countries, providing financial assistance, expert advice, and research to help developing economies advance. To put it more simply, The World Bank is like a giant piggy bank for countries!

One of the World Bank’s key roles is offering financial support through various mechanisms. These include low-interest loans, zero-interest credits, and grants. This funding helps countries improve critical areas like education, healthcare, public administration, and infrastructure.

In 2016, the World Bank approved a $377.42 million project in Pakistan to enhance vaccine distribution for young children between 0-23 months (The World Bank Group).

The Learning for the Future in the Kyrgyz Republic project focuses on establishing 500 community-based kindergarten programs to enroll 20,000 children, training 500 new teachers, and providing digital learning resources.

The World Bank Group actually consists of five distinct organisations, each with its own focus:

The International Bank for Reconstruction and Development (IBRD), which lends to middle-income countries
The International Development Association (IDA), providing interest-free loans to the poorest nations
The International Finance Corporation (FC), supporting private sector development in developing countries
The Multilateral Investment Guarantee Agency (MIGA), which promotes foreign direct investments
The International Centre for Settlement of Investment Disputes (ICSID), which handles arbitration of international investment conflicts

While the World Bank has made substantial contributions to global development, it’s important to note that it has faced criticism over the years. Some argue that its policies can sometimes lead to increased debt burdens for developing countries or that its conditions for assistance may not always align perfectly with local needs.

The World Bank explains the organisation on their Youtube channel 👇🏻

International Monetary Fund (IMF)

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The International Monetary Fund (IMF) is a global organisation established in 1944 at the Bretton Woods Conference and has 190 member countries. It’s primary mission is to promote global economic stability, growth, and international trade, while also working to reduce poverty.

The key roles of the IMF include:

Economic surveillance - The IMF monitors global economic and financial events, tracking country performance and potential risks. They publish reports like the “World Economic Outlook” to provide economic forecasts.
Advisory services - The IMF offers guidance to member countries on improving their economies
Financial assistance - As a “lender of last resort”, the IMF provides loans to countries facing economic difficulties. In 2018, Argentina received a record $57 billion loan

The IMF’s lending capacity is around $1 trillion, funded mainly by quota subscriptions from member countries.

wealthier nations contribute more, which influences their voting power in the organisation

Leadership of the IMF has traditionally been European, with Kristalina Georgieva, an economist from Bulgaria, serving as the current Managing Director since 2019.

The IMF’s relationship with the UK has been significant

the UK was a founding member in 1945
the UK received a substantial bailout loan in 1976 during a period of high inflation
more recently, the IMF has commented on UK economic policies, including criticism of the 2022 mini-budget and predications about inflation and interest rates

This is the IMF’s explanation of who they are: