Bretton Woods Institutions

• The Bretton Woods Conference aimed to establish international economic rules, stabilize currencies, prevent another Great Depression, and support capitalism against Soviet communism.

Bretton Woods Institutions

• The conference established the International Monetary Fund (IMF), World Bank, and World Trade Organization (WTO).
• The IMF stabilized currencies by using the US dollar as a benchmark.
• The World Bank, initially the International Bank for Reconstruction and Development, provided investment for middle-income countries.
• The WTO (originally GATT) is a forum for trade deals and international trade rules.

Shifts in Focus

• There has been increased international coordination on poverty and development, particularly through the UN's Millennium Development Goals (MDGs) and Sustainable Development Goals (SDGs).
• Multilateral free-trade agreements, like the EU's Single Market, NAFTA, and the Trans-Pacific Partnership (TPP) have increased.
• There is economic debate over single currencies like the Euro, which is used by 20 of 27 EU states.
• The Bretton Woods institutions provide a forum for resolving international economic crises, as seen during the 2008 financial crash, through which IGO's could work together.

Actors in Economic Global Governance

• Key actors include IGOs like the World Bank, IMF, and UN.
• Informal intergovernmental forums include the G20 and G7.
• Multi-National Corporations(MNCs) also play a large part.
• Multilateral forums like the World Economic Forum bring together world leaders, IGOs, and business leaders.

IMF & Neoclassical Economic Theory

• This economic theory supports free-market reforms and free trade for national development.
• Reducing tariffs and state control encourages private enterprise and global prosperity.

IMF & World Systems Theory

• The theory argues that free trade and free markets allow powerful core states to exploit less developed peripheral states.
• Core states in the Global North benefit by making peripheral states dependent on cheap, manufactured goods and mass-produced food.

Pre-1971 IMF Role

• The IMF encouraged stability in world exchange rates by stabilizing devalued currencies.
• It oversaw fixed exchange rates linked to the US dollar, which was fixed to the price of gold, so states were aware of their economic worth.

Modern IMF Functions

• The fixed exchange rate system ended in 1971 when the US dollar was unlinked from gold.
• The IMF now provides financial support/loans to countries at risk of economic crisis focusing on the developing world, and has also assisted developed countries like the UK, Greece, Portugal, and Spain.
• The IMF monitors the global economy and advises member countries on economic management, especially developing states and forecasts potential threats.

IMF Structure & Controversy

• The IMF has 190 members, excluding small states like Monaco and North Korea.
• Kristalina Georgieva is the current leader.
• There has been controversy over the IMF leader's role and powers in state's internal politics.
• Christine Lagarde was criticised for suggesting Brexit would increase inflation, which some saw as undue influence on the 2016 referendum.

IMF Funding & Voting Power

• The payments reflect the country's relative positions and wealth within the world economy.
• The USA is the largest contributor (17%).
• The IMF has $165 billion in lending to 83 countries, including $16 billion to low-income countries.
• After the 2008 crash, the IMF increased available lending funds.
• Voting power is weighted by financial contribution, giving more power to wealthier states, which some consider legitimate.

Structural Adjustment Programs (SAPs)

• These are conditions attached to IMF loans to ensure economic reform.
• SAP conditions include cutting public spending, raising taxes, privatization, and reducing public sector wages or state pensions.
• For example, Argentina's 2019 loan required increased taxes on the wealthy and an independent body to review the government's budget.

Criticisms of SAPs

• SAPs make excessive demands that infringe on sovereignty, imposing a neoliberal economic model aligned with the Washington Consensus.
• SAP's ensure economic policy is dictated by the IMF, not the state, causing more privatization, and less equality in society.
• Opening markets can expose fragile economies to foreign economic crises

Greek Economic Instability Before IMF Intervention

• Greece had accumulated large debts due to high public spending and low GDP growth.
• Which meant Greece could not repay its debts when the economic crisis broke out.

IMF Assistance to Greece

• In 2010, the IMF provided the first package of €110 billion.
• They demanded austerity measures and negotiated a 50% reduction on Greece's debt to banks (Troika: IMF, European Commission, and the European Central Bank).
• The Greek economy worsened despite two bailouts, leading to the election of an anti-austerity party in 2014.

Consequences of IMF Involvement in Greece

• Attempts to renegotiate the conditions, as the IMF was impeding on state sovereignty after the election.
• Voters rejected a renegotiated package in a referendum (61% to 39%).
• Greece failed to make an IMF payment in 2015, leading to bank closures and fears of leaving the Eurozone.
• Cash withdrawals were limited to €60 a day, and a new bailout was agreed later that year.

IMF Successes

• IMF emergency loans are vital in restoring confidence in member states facing balance of payments crises.
• Loans to EU states like Greece, Ireland, and Portugal during the Eurozone crisis were especially vital.
• The IMF provided $325 billion in loans to restore confidence in the global economy from the start of the global financial crisis until 2019.
• Developing countries like India have reformed and benefited from globalization and in 2019, the economy grew by 7.3%.
• The Asian financial crisis (1997-98) was contained due to quick IMF assistance.

IMF Failures

• The IMF continually fails in its surveillance work, neglecting to warn member states about high deficits that made them vulnerable to global financial shocks and the 2008 crash.
• The IMF's one-size-fits-all economic liberalism approach doesn't account for diverse national needs.
• SAP-required public spending cuts and free-market reforms are controversial.
• Countries are seeking loans that don't have conditions, with Pakistan turning to Saudi Arabia in 2018.
• The fact that every IMF leader has been European undermines the IMF's legitimacy in the developing world

World Bank Founding Objectives

• The World Bank was supposed to act as a source of loans for reconstruction & development and help rebuild key infrastructure such as roads and electricity.
• Originally used SAPs but has moved towards grants for specific projects in the poorest countries.

World Bank Institutions

• The International Bank for Reconstruction & Development provides loans to help meet middle-income countries' development needs (e.g., a $700 million loan to the State Bank of India for solar energy projects).
• The International Development Association provides loans to the poorest countries, often with very low or no interest rates.

How the World Bank Provides Help

• Offers loans, technical, and financial assistance to support reconstruction & development deploying >$50 billion in various types of assistance, w/ 12,000 projects worldwide.
• Provides technical advice, particularly on human & social development and also funds specific medium to long-term development projects, performs analytical work, which is made freely available to states & NGOs working on development.

World Bank Projects

• The World Bank provided India with $3.4 billion to improve access to clean water & sanitation, a long-term project since 2000 that has helped around 36 million people, which is the Water & Sanitation Project.
• The World Bank has invested >$4.7 billion for development and reconstruction since 2002, which is the Reconstruction in Afghanistan.

World Bank Successes

• Recognized as a base for world's experts in development economics. They offer technical advice & assistance to ensure project are delivered effectively.
• Acted as a source of finance to many states as they started to develop. South Korea received neraly $15bn from WB, and is now a leading donor to poorer states.
• There are 189 World Bank member states, which asserts its scope of influence.

Criticisms of the World Bank

• Competing development banks like the Asian Infrastructure and Investment Bank (AIIB), established by China in 2016, and the New Development Bank, established-in 2015 by the BRICS, means the World Bank is therefore becoming less powerful.
• It is suggested that the World Bank's previous SAP's create 'shock therapy' economies, that have had a US economic model imposed on them and like the IMF, has received criticism.
• It is overwhelmingly dominated by the US, who carries 16% of the voting power (in accordance with the amount that they contribute) and every World Bank President has been a US citizen.

More Details on WB Successes

• The World Bank has been repsonsible for major infrastructure projects in the developing worls. During 2011-8, IDA finances the immunisation of 274m children, and provided better access to clean water for 86m.
• Projects focus on lending directly to local communities (CDCs), and from 2010-2015, the IDA completed 90 projects, responsible 164,000 local projects, reaching 176m people.
• The Gender equality strategy means it encourages female education & opportunities. In sub-Saharan Africa, girls attending primary school rose from 76.1% in 2000 to 95% in 2017.

More Details on WB Failures

• From 2004-2013, SAPs led to the 'involuntary resettlement' of 3.4m people.
• Developing countries adopt principles too soon, they tend to end up with a kind of neocolonial dependency.
• The World Bank encourages the export of 'cash crops' by developing countries set by transnational coorporations, and this leaves developing countries in a state of dependency.

General Agreement on Tariffs and Trade (GATT)

• Founded in 1947 after the Bretton Woods Conference by 23 founding nations.
• It Agreed to a set of international trade rules where tarrifs on goods would be reduced.
• By 1995, GATT had reduced tariffs on goods, amounting to $300 billion and had >100 states.

WTO Objective

• Remove barriers on trade in both goods & services, through reducing tariffs to an agreed level (ie 10% on imported care) & imposing quotas on the amount of imports of particular goods and sets out rules by which states trade.

WTO Scope

• States are at liberty to set up their own separate trade agreements, outside of the WTO, but if they do so, they are restricted by the WTO's rules.
• The UK & EU, for example, have their own trade agreement signed outside of the WTO, in 2020. However, they do not have a free trade agreement with, for example, Australia, and so operate within the framework of the WTO.

Additional WTO Functions

• The WTO Checks states are following trade agreements, resolves trade disputes between states, to avoid them engaging in unilateral trade wars, and produces research on global trade & economic policy.

WTO Membership

• Has 166 members, which accounts for 97% of world trade.
• The most recent member is Timor-Leste but the process through which countries join can take a long time- Algeria applied in 1987, and is still not a full member.
• The EU operates slightly differently, and is instead acts and entire, unified block of states, as all EU members are WTO members.

WTO Decision-Making & Principles

• The WTO meets every 2 years, and decisions are made binding consensus (this makes decisions very slow).
• The 6 key principles are: Non-discrimination, More Open, Predicatable and Transparent, More Competitive, More benefits for less developed countries, and Protection of the environment.

Examples of GATT/WTO Rounds of Agreement

• The Doha Round (2001-date) is still technically in process and the WTO has effectively become defunct, as a unanimous agreement cannot be made.
• The Kennedy Round expanded on the removal of tariff barriers, worth $40 billion & was also the first round in which they discussed something other than tariff (states dumping cheap products on developing states).

Positives of the WTO

• The Doha Round did agree improvements to customs procedures.
• Gatt, 1947, 45,000 tariffs were removed, impating $10bn worth of trade.
• The Uruguay round involved 123 countries, and formally created the WTO.
• In 1950, value of global trade was $296bn, and, by 2018, it had reached $19.5tr.
• In spite of 2008, WTO members didn't resort to protectionist tariffs and According to democratic peace thesis, greater free trade = less conflict (which has been somewhat accurate).

Negatives of the WTO

• The Doha Round aimed to improve developing countries' access to global markets (particularly agricultual). This included reductions in government agricultural subsidies (of up to 75%), This has led to massive division, & it has become gridlocked.
• Critics argue that powerful nations block developing nations & attempt to preserve the status quo and the Doha Round was effectively abandoned without agreement in 2015.
• The WTO cannot make decisions quickly, and Ministerial Conferences are not frequent enough to keep up.
• States are increasingly signing trade deals outside of the WTO, like the Agreement for Trans-Specific Partnership. It has also struggled to cope with the problems between China & US and During 2018-9, Trump imposed $550bn tariffs on goods, and China retalliated with $185bn.