33 Criticism of international institutions (continued)2. Ideology – Critics argue that advice and technical assistance to developing countries often reflects the prejudices and wishes of developed countries. 3. Implementation and adaptation costs – When agreements are concluded combining developed and developing countries, there are often asymmetries in the ability to absorb the associated costs that apply to industrialized countries in favour of industrialized countries. Copyright © 2011 Pearson Addison-Wesley. All rights reserved. 10 The IMF and the World Bank (continued) The IMF has its own currency, called the SDR or Special Drawing Right. 26 For and against EPAs The central economic question: Do ISAs support a gradual and long-term increase in world trade (building blocks) or do they tend to create obstacles to further easing of trade barriers (stumbling blocks)? 28 The role of international economic institutionsThe main difference between international institutions and national governments is that the former have only limited occupation of international institutions, but help restore order and reduce insecurity – order and security are public – of the different intangible values of most goods and services © Pearson Addison-Wesley 2011. All rights reserved. Twenty-five regional trade agreements and the WTO Since 1948, more than 500 agreements have been listed in the WTO; to the majority of notifications since 1990, 338 of these agreements are still active (2012) The WTO and GATT allow SAAs, provided they create more new trade than they destroy – trade creation > trade diversion 32 Criticism of international institutions International institutions receive three types of criticism 1. Sovereignty and transparency International institutions can violate national sovereignty by imposing undesirable national economic policies – Transparency concerns are based on questions about the mechanism by which decisions are made within an international institution Copyright © Pearson Addison-Wesley 2011. All rights reserved.
8 The International Monetary Fund (IMF) (continued) Missions of the IMF: -Prevents a financial system by promoting sound macroeconomic policies by promoting sound macroeconomic policies, including -Balanced expansion of trade – Stable exchange rates – Avoiding competitive devaluations -Orderly corrections of balance of payments problems Copyright © 2011 Pearson Addison-Wesley. All rights reserved. 28 For and against the RTAs (continued) opponents question many of these assumptions: their greatest criticism is that saas undermine progress towards multilateral (global) agreements. Pro-trade opponents of ATRs do not believe they encourage WTO agreements Opponents point out that THEAS often discriminate against poor and less developed countries 20 Five types of regional trade agreements (continued)Economic Union: A Common Market with Macroeconomic Policy Coordination (including the Common Currency, Harmonization of Standards and Rules) United States Canada Members of the European Union, who participate in the euro area Copyright © 2011 Pearson Addiso n-Wesley. All rights reserved. 18 Regional trade agreements Regional trade agreements (SAAs) between two or more (bilateral) (plurilateral) countries are another important institution in the global economy, called a multilateral agreement, as it potentially covers all countries in the world. 29 For and against RTAs (continued) Supporters have several arguments on their side. It is easier for a small number of countries to reach an agreement than for all WTO countries. The impact of reducing trade barriers at home is less dramatic. RTA member states can experiment with new agreements. SAAs can be used as a political and economic threat to promote agreements within the WTO.
27 For and against IAS (continued) Supporters of IAS consider themselves to be constitutive elements of a freer, Opponents of more open world trade see atRAs a undermining of progress towards multilateral (global) agreement 7 The International Monetary Fund (IMF) Founded by 29 nations (1945) at the Bretton Woods meetings between the Allies in July 1944 The IMF, 184 members (2006), is the central monetary institution of the current international economy The IMF is the central monetary institution of the current international economy s IMF is made from its membership fee, or the rate (the price of membership) depends on the size of the member and the status determines the voting weight of the member Copyright © 2011 Pearson Addison-Wesley. . . .