Lecture 4 UN PDF

3. International Institutions Learning Objectives Understand the role and influence of international organisations: 1. Explain the key activities of the United Nations 2. Explain the three major parts of the World Bank 3. Explain the International Monetary Fund 4. Understand the Worl...

3. International Institutions Learning Objectives Understand the role and influence of international organisations: 1. Explain the key activities of the United Nations 2. Explain the three major parts of the World Bank 3. Explain the International Monetary Fund 4. Understand the World Trade Organisation 5. Know about the Organisation for Economic Cooperation and Development United Nations  United Nations The UN is possibly the best-known worldwide organisation UN Charter was signed in San Francisco, California in 1945 51 Original Members, Ireland joined in 1955 193 member states as of 2002 Established after WW2 with the aim of preventing future wars A place where the world’s nations can gather together, discuss common problems and find shared solutions. https://www.un.org/en/about-us  United Nations Works to maintain peace and security, protecting human rights, delivering humanitarian aid, promotes sustainable development and upholds international law. Six official languages of the UN: Arabic, Chinese, English, French, Russian, and Spanish Total income 62.B https://www.un.org/en/about-us United Nations UN work carried out through five main bodies: The General Assembly The Security Council The Economic and Social Council The International Court of Justice The Secretariat Number of specialist agencies including the World Health Organisation, World Food Programme, UNESCO & UNICEF General Assembly Provides forum for multilateral discussion of international issues including peace and security. All UN member-nations are members of the General Assembly Each nation has one vote regardless of its size, wealth, or power General assembly decisions have no legally binding force for governments or citizens Annual meeting (last one September, 2024) New York UN Security Council Maintains international peace and security 97,000 uniformed military personnel contributed by national armies from 120 countries Composed of 15 members, 5 permanent and 10 chosen members The 5 permanent members include the People’s Republic of China, France, Russia, the United Kingdom, and the United States. Semi-permanent members are elected for 2-year terms. UN Security Council Presidency held by each member in alphabetical order for one month’s duration Ireland has been a member 3 times: 1962, 1981-82, 2001 – 2002 (Presidency during Iraq crisis) Ireland was elected to sit on the Security Council from 2021 (last held the Presidency of the council in September 2021) Effectiveness of the council has been questioned UN Security Council Presidency held by each member in alphabetical order for one month’s duration Algeria (2025) Ecuador (2024) Ireland has been a member 3 times: 1962, Guyana 1981-82, 2001 – 2002 (Presidency during (2025) Japan Iraq crisis) (2024) Ireland was elected to sit on the Security Malta (2024) Council from 2021 (last held the Presidency Mozambique of the council (2024) in September 2021) Republic of Korea (2025) Effectiveness of the council has been Sierra Leone (2025) questioned Slovenia (2025) Switzerland (2024) UN Security Council Presidency held by each member in alphabetical order for one month’s duration Ireland has been a member 3 times: 1962, 1981-82, 2001 – 2002 (Presidency during Iraq crisis) Ireland was elected to sit on the Security Council from 2021 (last held the Presidency of the council in September 2021) UN Security Council Each permanent member has the power to veto any measure. Impact on the effectiveness of the Security Council?  UN Security Council Reform https://www.youtube.com/watch?v=2YgZCkRdudQ The Secretariat Carries out day-to-day administrative functions Headquartered in New York City Services the other principal UN organs Administers the UN’s programmes and policies Current/new Secretary General: Antonio Gutuerres, Portugal. (Since October 2016) Began second term January 2022 – until December 2026. The International Court of Justice Also called the “World Court” Only nations may be parties to litigation before the “World Court” The International Court of Justice has 15 judges who must come from 15 different countries Judges serve nine-year terms Only principal body not to be based in New York: located in the Hague The Economic & Social Council (ECOSOC) Concerned with economic problems These include trade, transport, industrialisation, economic development, and social issues ECOSOC has broad responsibility for 70% of the human and financial resources of the entire UN system, including 14 specialised agencies, 9 “functional” commissions, and five regional commissions Makes recommendations on how to improve education and health conditions Promotes respect for and observation of human rights and freedoms of people everywhere  The Economic & Social Council (ECOSOC) https://www.un.org/ecosoc/en/home United Nations Role in Global Climate Action  United Nations Framework Convention on Climate Change The UNFCCC is a “Rio Convention”, one of two opened for signature at the “Rio Earth Summit” in 1992 The UNFCCC entered into force on 21 March 1994. Today, it has near-universal membership. The 197 countries that have ratified the Convention are called Parties to the Convention. Preventing “dangerous” human interference with the climate system is the ultimate aim of the UNFCCC. https://unfccc.int/process-and-meetings/the-convention/what-is-the-united-nations- framework-convention-on-climate-change  Kyoto Protocol The Kyoto Protocol was adopted on 11 December 1997. Owing to a complex ratification process, it entered into force on 16 February 2005. 192 Parties to the Kyoto Protocol. Operationalized the United Nations Framework Convention on Climate Change by committing industrialized countries and economies in transition to limit and reduce greenhouse gases (GHG) emissions in accordance with agreed individual targets. Designed to see cost for major emitting economies should carbon dioxide emissions continue to rise. (economic incentive) EU Directive for Emissions Trading June 2001, George W. Bush announced the withdrawal of the United States from the Protocol, helping to spell the end of the agreement. Implementation never reached its intended scale and ambition. Why? https://unfccc.int/kyoto_protocol Putting the Genie Back: Solving the Climate & Energy Crisis  Paris Climate Agreement (2015) “The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016. https://www.youtube.com/watch?v=WiGD0OgK2ug Paris Climate Agreement (2015) 5- year cycle of increasingly ambitious climate action carried out by countries Every 5 years countries must submit their plans for climate action known as nationally determined contributions (NDCs) and should report progress on same.  Sustainable Development Goals (SDGs) 17 Sustainable Development Goals (SDGs) global development targets, agreed by the United Nations (193 member states) in 2015, to achieve a more sustainable future for all by 2030. The goals are interconnected and address environmental, economic, and social challenges. The SDGs represent the focus for UN’s work https://sdgs.un.org/goals Sustainable Development Goals (SDGs) Sustainable Development Goals (SDGs) SDGs 1 & 5 represent dignity SDGs 2,3 & 4 represent people SDGs 6 and 12-15 represent planet SDGs 7-11 represent prosperity, while SDG 16 represents justice SDG 17 represents partnership with other business  MNE’s Commitment to SDGs: Coca Cola “The company’s sustainability priorities map to all 17 SDGs, with an emphasis on SDGs that relate most closely to where it believes it can make the greatest impact. Coca‑Cola is strongly focused in the areas of gender equity (SDG 5), clean water and sanitation (SDG 6), decent work and economic growth (SDG 8), responsible consumption and production (SDG 12), life below water (SDG 14), and partnerships for the goals (SDG 17)”. (Coca Cola, 2022)  MNE’s Commitment to SDGs: Unilever “We have also been embedding the SDGs into our work and partnerships, such as with the UK’s Foreign, Commonwealth and Development Office on TRANSFORM which aims to help millions of people in sub-Saharan Africa and South Asia gain access to products and services – many of which directly link to the SDGs – that have been shown to improve health, livelihoods, the environment or wellbeing by 2025. We also work with UN Women to advance our efforts on gender equality (SDG5), and UNICEF in areas such as clean water and sanitation (SDG6). We bring this to life through our brands, for example, our UNICEF partnerships with Dove and Domestos.” (Unilever, 2022) World Bank Development of the Modern Exchange System After the Great Depression and World War II, the world economy and trading system were in a sorry state. At war’s end, seeking stability in the international monetary and financial systems, 44 countries signed the Bretton Woods agreement. Bretton Woods established a fixed exchange rate system in which the U.S. dollar was pegged to a set value for gold ($35 per ounce), and other major currencies were pegged to the dollar. For nearly 30 years, the system kept exchange rates of major currencies at a fixed level. Bretton Woods Agreement The Bretton Woods Agreement, which set the course for contemporary global financial relations, was conceived by 44 nations at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, in 1944. Breakdown and Legacy of Bretton Woods Agreement The Bretton Woods agreement dissolved in 1971 as the world economy was evolving and governments could no longer maintain fixed exchange rates on the gold standard. Bretton Woods established the concept of international monetary cooperation, especially aimed at minimising currency risk. International Monetary Fund (IMF): Agency that promotes exchange rate stability, monitors exchange systems, provides funding to developing economies. World Bank: Agency that provides loans and technical assistance to combat global poverty around the world.  World Bank Founded in 1944 as the International Bank for Reconstruction and Development (renamed World Bank) Originally, providing loans to help rebuild countries devastated by World War II. Focus has shifted from reconstruction to development, with a heavy emphasis on infrastructure Associated group of five development institutions. With the founding of the International Finance Corporation in 1956, the institution became able to lend to private companies and financial institutions in developing countries. The International Development Association in 1960 put greater emphasis on the poorest countries, part of a steady shift toward the eradication of poverty (WBG’s primary goal) Subsequent launch of the International Centre for Settlement of Investment Disputes and the Multilateral Investment Guarantee Agency https://www.worldbank.org/en/what-we-do World Bank The World Bank (IBRD) is the world’s largest source of development assistance Makes hard & soft loans Hard loans are at prevailing market interest rates with normal market maturities Hard loans are granted only to sound borrowers  World Bank https://www.worldbank.org/en/what-we-do International Finance Corporation (IFC) The IFC is World Bank Group’s investment banker Sphere of the IFC is exclusively private risk ventures in the developing countries The IFC’s purpose is to further economic development by encouraging growth of productive enterprise in member-countries International Development Association(IDA) The IDA is the soft loan section of the World Bank Soft loans have up to 40-year maturities Borrowers from the IDA are the poorest of the poor developing countries IDA capital sources Subscriptions donated by the developed and some developing countries Resources renewed periodically by “replenishment” The Multilateral Investment Guarantee Agency Created in 1988 to encourage foreign investment Provides capacity-building and advisory services to help countries attract foreign direct investment Provides guarantees to foreign investors against losses caused by non-commercial risks in developing countries MIGA helps investors and lenders deal with these risk​s by insuring eligible projects in developing member countries against losses relating to: Currency inconvertibility and transfer restriction Expropriation War, terrorism and civil disturbance. Breach of contract Non-honouring of financial obligations The International Centre for the Settlement of Investment Disputes The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the International Bank for Reconstruction and Development (the World Bank). It was opened for signature on March 18, 1965 and entered into force on October 14, 1966. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes. ICSID was created by the Convention as an impartial international forum providing facilities for the resolution of legal disputes between eligible parties, through conciliation or arbitration procedures. Recourse to the ICSID facilities is always subject to the parties' consent.  International Monetary Fund (IMF) The International Monetary Fund IMF Articles of Agreement were adopted at the Bretton Woods Conference in 1944 IMF deals solely with governments IMF objectives are to foster: Orderly foreign exchange arrangements Convertible currencies A shorter duration and lesser degree of balance-of-payments disequilibria (key concern)  The International Monetary Fund IMF is a multilateral organization promoting international monetary cooperation and providing temporary financial assistance to countries with balance of payments problems. It has three primary activities on behalf of its 188 member countries: 1) Monitoring the global economy (*Economic Outlook Report, 11th October) 2) Providing technical assistance to developing countries 3) Lending to countries in financial difficulties https://www.imf.org/en/Publications/WEO The International Monetary Fund IMF contributes to policy coordination among the major industrial countries Major industrial countries are also referred to as G7 (now also G20) Includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States Total IMF member-countries total 189 IMF funding is conditional and linked to the member’s progress in implementing policies Irish IMF Bailout (2010) Context: 2008 Global Financial Crisis In 2008, a major crisis emerged in the global financial and monetary systems. It initially arose in the U.S. when investors lost confidence in the value of securitised home mortgages. Banks, lenders, and insurance companies became volatile, and stock markets crashed worldwide. Many national economies sank into recession. The world experienced sharp declines in consumer wealth, economic activity, and international trade. Context: 2008 Global Financial Crisis Many bad mortgages were ‘securitised’ – bundled into investment assets and sold in global financial markets. Over time, investors realised that many loans were high-risk, which led to capital flight. Like a contagion, the crisis spread quickly to Europe and beyond. As the global economy slowed, demand for exports shrank, and export- dependent countries floundered (e.g., Japan, Mexico, countries in Eastern Europe). Context: 2008 Global Financial Crisis National governments, the IMF, and World Bank took corrective measures, such as injecting massive sums into national economies and launching aid packages. Some countries imposed trade and investment barriers. The crisis highlights the importance of strong regulation, transparency, and supervision of institutions in the global financial system. Irish IMF Bailout (2010) Happy Ending? Ireland: National Debt to GDP The International Monetary Fund IMF conditionality typically imposes conditions that require belt-tightening by pushing governments to embark on reforms that they probably would not have undertaken otherwise. The financial crisis of 2008 has led to renewed debates around the pros and cons of IMF conditionality. In particular in the IMF has no power over those countries that do not need its loans even when running major budget deficits or current account deficits – notably the USA and the EU. IMF Lending Zambia, Sri Lanka & Lebanon have defaulted in the pandemic Russia and Suriname are negotiating IMF bailouts – debt restructuring their Ghana, Egypt and Tunisia are in early talks for similar support. $1.1bn bailout approved for Pakistan at the end of August Argentina is set to receive $3.9bn in Oct 2022 as part of its $41bn programme. IMF Lending What might be the impact of the current rise in inflation rates globally on IMF lending and defaults? Evaluating the IMFs Policy Prescriptions Conditions of loans “One size fits all’ Increasing interest rates Structural adjustments: privatisation & deregulation Moral hazard (?): ◦ People behave recklessly when they know they will be saved if things go wrong. IMF has grown too powerful?  Bank of International Settlements (BIS) Bank of International Settlements (BIS) Founded in 1930, the BIS is the most discreet financial institution in the world Central bankers of major industrial countries meet at the BIS ten times a year to discuss the global financial system The BIS deals with governments and governmental agencies BIS provides secure, anonymous cover for shareholder countries Bank of International Settlements (BIS) The BIS has four main functions A forum for international monetary cooperation A centre for research A banker for central banks An agent or trustee with regard to various international financial arrangements Bank of International Settlements (BIS) World Trade Organisation General Agreement of Tariffs & Trade (GATT) Established in 1947, negotiations are conducted in “rounds” 1947 to 1986, eight “rounds” took place First seven rounds were concerned with reduction of tariffs among industrial countries from 40 percent to 5 percent 9 out of 10 disputes among trading nations brought to GATT were settled satisfactorily January 1, 1995, the WTO replaced GATT Uruguay Round 1994, most comprehensive trade agreement in history. Created the World Trade Organization. Impacted: Agriculture subsidies (stumbling block: US/EU) Applied GATT rules to services and intellectual property. Strengthened GATT monitoring and enforcement. World Trade Organisation A multinational organisation designed to deal with rules of trade between nations The WTO is headquartered in Geneva, Switzerland Goal is to help producers of goods and services, exporters, and importers conduct their business by reducing or eliminating trade barriers and restrictions worldwide. 164 members at end of July 2016 Represents over 90% of world trade Trade volume of manufactured goods has increased 20 times World Trade Organisation Administering WTO trade agreements Forum for trade negotiations Handling trade disputes Monitoring national trade policies Technical assistance and training for developing countries Cooperation with other international organisations WTO Director General Major Achievements Telecommunications (1997) 68 countries - 90% of world telecommunications revenues Pledged to open their market to fair competition Financial Services (1997) 95% of financial services market 102 countries opened their markets to varying degrees Doha A round of WTO negotiations started in Doha, Qatar, in 2001 – officially known as the ‘Doha Development Agenda’ to: Reduce agricultural subsidies in developed countries to facilitate exports from developing countries. Slash tariffs, especially in industries that developing countries might benefit (such as textiles). Free up trade in services. Strengthen intellectual property protection. The complexity of an agreement on ‘everything’ among 164 member countries (as of 2019) in the Doha Development Agenda has so far proven to be a challenge too far.  Organisation for Economic Cooperation and Development(OECD ) Organisation for Economic Cooperation and Development (OECD) Origins in the Marshall Plan of WW2 Members are the world’s most developed countries Headquartered in Paris There are 38 member countries Conducts research and provides information on economic and other activities within its member-countries and also gives member- governments a setting in which to discuss economic and social policy Organisation for Economic Cooperation and Development (OECD) www.oecd.org  Organisation for Economic Cooperation and Development (OECD) https://data.oecd.org/ireland.htm  References & Further Reading  References Peng & Meryer, International Business,3rd edition, Cengage (Chapter 9) Cavusgil, Knight & Riesenberger, 2017, International Business: the New Realities, 4th ed., Pearson. Institutional websites https://data.oecd.org/ireland.htm  Further Reading https://data.oecd.org/ireland.htm Next Week Next Week International Business Management Topic 1. Introduction to International Business Topic 2. Classical & Modern Trade Theories Topic 3. International Institutes Topic 4. International Cultural Forces Topic 5: Negotiating and Decision-making across Cultures Topic 6: Regional Integration Topic 7: Brexit & The EU Topic 8: Strategy and Organisation in International Firms Topic 9: International Business Ethics Questions?