The Effect of International Economic Institutions on The Developing Countries

International economic institutions such as the International Monetary Fund, The World Trade Organization and The World Health Organization make developing countries economically better off. International Institutions as such rule in which globalization and Institutions that would enforce rules regarding International trade and identify violators. Such rules are then negotiated by states in which they typically formalize international agreements that are embodied in organizations. Developing countries would be more in favor to adapting to such economic changes by these institutions rather than ultimately fighting to survive without them.

The international Monetary Fund is represented through developing countries as a means of a form of Insurance for the governments against the possibility of an economic crisis. This means of Insurance such as will likely provide a means of a security blanket goal for the arrangement to be able to first stabilize a country in which they are facing a balance of payment crisis and to therefore promote growth and the ultimate goal of reduction in the form of poverty. Kenneth Rogoff describe the IMF as “Critics must understand that governments from developing countries don’t seek the IMF financial assistance when the sun is shining; they come when they have already run into deep financial difficulties”. This implies how when a developing country is to come across financial hardships it is due to the government not promoting a rather good approach in management. The IMF creates an opportunity for these developing countries to seek assistance as far as when economies are in destress the fund will be able to intervene where private funders won’t dare to pursue and will additionally make rates for these countries that are rather unheard off. For example, South Korea and Thailand were facing a prolonged free fall in the value of their currencies in 1997 which ended up thanks to the IMF becoming a less damaging result than what was predicted to be.

The International Monetary Fund is not just a means for developing countries to get assistance on how to cope with a financial crisis but also consider its continuous advice in attempting at refraining from having developing countries get into trouble Many believe that the IMF was fully responsible when it came to the advice on international capital movements. Critics believe that the IMF was responsible for the planting of the idea to Asia in regard to the capital flows that led to the financial crisis. “In the months leading up to Thailand’s currency collapse in 1997, IMF reports on the Thai economy portrayed in stark terms the risks of liberalizing capital flows while keeping the domestic currency at a fixed level against the U.S. dollar. The authorities didn’t listen, still hoping instead that Bangkok would become a financial center like Singapore”. The fund provides a key for exchanging of ideas and best practices for developing countries that will ensure that domestic production grows and thrives economically.

The World Trade Organization is “a principle body governing trade, serving as a forum for negotiations, an arbiter and a monitor of the implementation of trade agreements” as described by James McBride. The world trade organization has helped by as a means of reducing the overall barriers that are generally avoiding the production of goods and services that are created as a resolution system of conflict that some say reduce the threat of trade wars. This Institution helps developing countries economically by allowing for special provisions such like longer periods to implement agreements or commitments that would measure an increase in their trading opportunities. “The WTO seeks predictability in trade related regulations and promotes international standards to give citizens, companies and investors stability. Additionally, organization is committed in principle to giving less developed countries greater flexibility and accommodations to help them adjust to new rules”.

The world Trade organization has made its mission to allow for developing countries to get the center of attention when it comes to a new round of negotiations; This became known as the Doha Development Agenda. With this agenda in the air the status became a significant achievement for developing countries. For example, the Multilateral agreement since the creation of the WTO. Described by James McBride “This was the trade facilitation agreement (TFA) which aims to speed up customs procedures and make trade easier, faster, and cheaper. This would estimate in 2015 that could increase global trade by 1 trillion dollars”. This allows for developing countries to have more flexibility in promoting economic growth. The institution had implemented the “public stockholding” as a means of allowing for developed countries to stockpile the agricultural products to protect against their food shortages.

However, critics believe that international economic institutions make developing countries economically worse than they are with them due to them going off the basis that these institutions only benefit the richer countries who are able to financially grow as far as trade and economically so. Vreeland describes the International Monetary fund as “developed countries safety nets that are weak and nonexistent among the self-employed and in the rural sector”. This brings up for a discussion as to why the institution is portrayed that way in the first place. When politicians attempt to confront their population with a less profitable budget they use the IMF as a “whipping boy” as means of saving their reputations against their citizens. “The IMF forced us to do it! Is the familiar refrain when governments cut spending and subsidies. Never mind that the country’s’ government whose macroeconomic mismanagement often had more than a little to do with the crisis in the first place”. However, when it comes down to helping out the countries in terms of preventing an economic crisis, the IMF encourages such policies where feasible. For example, Germany was strongly advised by the IMF that their country should be flexible in regard to observing their budget constraints within the European stability and growth pact.

Overall, International economic institutions make developing world countries a chance at economic growth and overall stability. Such institution’s such as the International Monetary Fund and The World Trade Organization are here to provide ease when dealing with economic hardships as a society. There overall goals to perform and succeed within each country when they experience an economic crisis as a form of help and chance for growth.