Question

Explain how international institutions such as World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT), World Bank and IMF provide public goods. Discuss the contributions of these international institutions to the world economy as well as the criticisms against their services and policies.

Answer 1

These international  institutions work in complementary manner with each other to safe guard global public goods .The global organizations like IMF, World,Bank,GATT and  WTO play a major role in international economic relations.

IMFcame into existence in Dec 1945 with 29 countries signing the articles of agreement.It aims to prevent crisis by adopting sound economic policies and also provides temporary financial assistance to member countries to solve Balance of payment problem. However the criticism against IMF is that IMF makes loans conditional while giving loans to countries, by implementing certain economic policies.

World Bank was founded at Bretton Woods conference with184 members.Aims to make long term economic development including  financing of infrastructure projects like road building , constructing bridges etc.It also aims in poverty reduction.Critics argue that the free market reform policies which the bank advocates are harmful to economic development if the policies are implemented wrongly.

GATT wsa formed in 1960 to deal with trade issues with 23 nations on principles of nondiscrimination ie to treat all members equally and national treatment ie imports should be given similar treatment in the domestic market as goods which are produced domestically.It works to reduce barriers of trade.Criticism is that there are legal problems in areas of agriculture and textile.

The main task of WTO is to administer trade agreements ,handle trade dispute,monitor national trade policies.WTO is a forum for trade negotiations.The two principles of WTO are Liberalization ie reduce protection and move towards globalization and Non discrimination ie .WTO treats all members equally.WTO is criticised for being undemocratic.It is also criticised for establishing  multinational companies that results in reducing cultural diversity and thus wash out local industries.