Other International Organizations: IMF,

World Bank, WTO

 IMF and World Bank part of establishment of an
international economic regime- same time as
U.N. created.
 IMF and World Bank (International Bank for
Reconstruction and Development) created with
purposes of leading economic recovery for
Europe post WWII
 World Bank invests in infrastructure and state
capacity building.
 IMF to establish balance of payments regime and as
lender of last resort to prevent depression style
crisis.
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Bretton Woods- 1944
 Intentional Interdependence
 Bretton Woods New Hampshire.
 U.S. and U.K. established funds and rules with U.S.
dollar to be the reserve currency.
 I.M.F.
 U.S. dollar fixed to gold at $35 to the ounce-
convertible.
• Severely limited U.S. Monetary policy options.
 Other currencies fixed at “equilibrium” rates relative
to trade partners and required to defend currency
within 2% of target.
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Bretton Woods Institutions
 Product of U.S. hegemony
 U.S. shouldered burden of fixed exchange rate and
initially financed European reconstruction through
both IBRD and Marshall Plan.
 Reaction to Soviet threat and alternative
economic models presented by Warsaw Pact
(although WP countries were prevented from
leaving Pact by invasion/ occupation.)

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Changing Institutions-IMF
 U.S. balance of payments grew unsustainable
due to growth of European and Japanese
economies, and U.S. military and aid
obligations abroad. Dollars went out without
other states buying U.S. goods.
 England and France asked for Gold- U.S.
defected and IMF changed to Special Drawing
Rights as reserve currency (SDRs had been
created in 1969 to cope with lack of gold and
dollars.)
 SDRs are basket (weighted average) of major “hard
exchangeable currencies.”
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IMF cont’d
 During de-colonializations IMF also served to stabilize
economies wracked by terms of trade shocks in
commodities crisis.
 IMF requires quotas of reserves from members states
according to economy size.
 Each state can withdraw quota w/o penalty or
conditions
 IMF has three lending mechanisms
 Non-concessional- lends short-term at market rates
w/o conditions
 Two concessional lending mechanisms
• Stand-by arrangements
• Medium term lending
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IMF Concessional lending
 Concessional lending
 .5-1% interest rates- but
 Contingent on stand-by agreements that explain
targets and structural adjustments
 Medium term lending, and long-term lending
under HIPC (highly indebted poor countries)
programs offer refinancing at very low rates
(rolls debt over to World Bank).
 Structural adjustment very controversial, IMF
and World Bank both attempt to respect
sovereignty, however scandals led to tighter
requirements. 199
IMF
 IMF conditionality: A challenge to state sovereignty.
 Stand-by agreements include requirements on inflation
targets.
 Often recommend financial liberalization and
privatization as way of reducing government debt
exposure.
 Very controversial as 80s-90s driven by strange combo
of market fundamentalism and fixed exchange rates the
goal was to increase trade and investment.
 IMF is the credit counseling agency of IR. If states must
go- they aren’t happy.
 Domestic Politicians often blame IMF for own failures or
to scapegoat pain of reforms.
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IMF
 Mixed results in economic recovery.
 Argentina collapse, recovery has not been IMF.
 Turkey 1999 program collapsed, 2001 program
has been good so far 5-8% growth rate.
 Malaysia refused IMF conditionality, tightened
capital controls and recovered faster than
others hit in Asian finance crisis.

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IBRD (World Bank)
 Focus shifted from Europe to Post-colonial
states with independence movements. As well
as Eastern Europe in 1989.
 IBRD is a Keynsian institution compared to
Monetarist IMF. They have a sort of structural
rivalry.
 IBRD goals are Reconstruction and
Development, and self-sustainable capacity.
 Works with both state and non-state actors-
depending on needs.
 Keeps staff in country longer, works more
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closely than IMF
World Bank Formation
 The International Bank for Reconstruction and Development
 15-20 year loans low rates. Middle income states
 The International Development Association
 Technical assistance and Grants &0% loans to poorest
countries
 The International Finance Corporation
 Helps create regulatory capacity and public-private
partnerships
 The Multilateral Investment Guarantee Agency
 Provides investment insurance to international investors

 The International Centre for the Settlement of Investment

Disputes
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World Bank
 Driven to increase government capacity.
 Lending for infrastructure
• Hydro
• Industry
• Agriculture
 Human development
• Education
• Health Care
• Communication
 Works in cooperation with national and local
governments.

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World Bank
 Lends for structural adjustment
 Facilitates foreign investment
 Scandals of embezzlement by state leaders and
diversion of funds has led to tighter monitoring
and conditionality of loans
 Loans dispersed on a per-project basis.
 Often respects sovereignty of state- means that
some projects face criticism when state and
international priorities collide.

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