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![Page 1: World System Theory: WST argument: AIC’s ideology and power of capital are continually being reinforced in the decisions of the IMF, WB and WTO in order.](https://reader030.fdocuments.in/reader030/viewer/2022032803/56649e365503460f94b26171/html5/thumbnails/1.jpg)
World System Theory:
WST argument:
AIC’s ideology and power of capital are continually being reinforced in the decisions of the IMF, WB and WTO in order to maintain their core status.http://www.youtube.com/watch?v=tiav0V_F0bkOn song dynamite
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Bretton Woods Institutions: 1944
Multilateral bodies:
• IMF
• World Bank (IBRD)
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What is IMF expected to establish globally?
Global:• monetary cooperation
• exchange rate stability
• trade expansion as lender of last resort
- Lends to correct balance of payment deficits
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From where does IMF get its money?
• Subscriptions from member countries ‘Quota’ (capital) that they pay when they join the IMF
What do Quotas determine?• Countries’ payments• Voting power• How much they can borrow
e.g.: U.S. has 16.76 %, Seychelles is 0.03 % of quotas (2011) http://www.imf.org/external/np/sec/memdir/members.aspx, oct 22, 2011
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Who are IMF’s members?
• 188 countries (2012) - 44 original members.
http://www.imf.org/external/about/members.htm
Why are Western countries more powerful in IMF?• Western powers control through their voting
majority in the Executive Board (EB).• EB members have larger monetary share. • EB votes affirming the will of the US or
Europeans.
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http://www.imf.org/external/about/members.htm accessed Oct 2011
8In 2012
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http://www.imf.org/external/np/sec/memdir/eds.aspx (Oct 22, 2011)Appointed IMF Executive Directors and Voting Power - Top 5 members in voting power :
DirectorAlternate
Casting Votes of Votes by Country
Total Votes1 Percentof FundTotal2
Appointed
Meg LundsagerDouglas A. Rediker
United States 421,965 421,965 16.76
Mitsuhiro FurusawaTomoyuki Shimoda
Japan 157,026 157,026 6.24
Hubert TemmeyerSteffen Meyer
Germany 146,396 146,396 5.81
Ambroise FayolleAlice Terracol
France 108,126 108,126 4.29
Alexander GibbsRobert James Elder
United Kingdom 108,126 108,126 4.29
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Criticisms of IMF & WB:
1. Washington Consensus and neoliberal policies imposed on DW by IMF & WB have been discredited (#7 Birdsall & Fukuyama).
2. To remedy the impact of 2008 global financial crash on developing countries, UN and development economists have offered policies that have been misdirected (DW #8 Easterly)
3. Although the West’s influence is diminishing (DW#6:Mahubani), the status quo is maintained in development policies due to the disproportionate power of Rich countries in WTO, IMF & WB.
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Some countries in IMF Executive Board & their voting power:
% SDR Quota % of Votes
USA 17.09 16.77Japan 6.57 6.24China 4.00 3.81Canada 2.68 2.56India 2.45 2.34Mexico 1.52 1.47
SDR: Special Drawing Rights"http://www.imf.org/external/np/sec/memdir/members.htm#3", IMF. Retrieved on 2011 -Oct 22
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http://www.imf.org/external/mmedia/view.asp?eventID=1153(accessed 16 Oct 2009)
% Gains in Quota for EMCs
http://www.imf.org/external/mmedia/view.aspx?vid=79161031001 accessed oct 22 2011 Video on voting structure
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Susan George: http://www.youtube.com/watch?v=NQ952ba75Yk&feature=related7min 2011
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Bretton Woods Institutions: 1944
Multilateral bodies:
• IMF
• World Bank (IBRD group)
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The World Bank: a Bretton Woods institution (1944)
Original aim: post-war reconstruction of Europe• First loan of $250 million was to France (1947)
What is its aim today?• Reconstruction is WB’s important focuso Natural disasters, o Humanitarian emergencieso Post-conflict rehabilitation needs.
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The World Bank• Owned by member countries• Voting power related to members’ capital
subscriptions • Quota is based on a country’s relative
economic strength• Raises most funds in financial markets• IBRD sells AAA rated bonds and other debt
securities• Charges interest that reflects its low-cost
borrowings in capital markets
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IBRD: 188 members (2012)• World Bank provides long-term development
loans to LDCs
IBRD’s Board : 24 Executive Directors.
5 Exec Directors: appointed by the 5 largest shareholders (the US, Japan, Germany, France and the UK).
19 Exec Directors : elected by the Bank's other members.
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The “World Bank Group”
1944 1960 1956 1988 1966
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International Development Association (IDA)• Established 1960 to provide concessional assistance to
countries unable to borrow at commercial rates
What does IDA do? (March 2011)o Gives grants and interest free loanso Borrowers pay 1% administration feeo 52 countries contribute to funding ($49.3bil)o $12.6 billion – grants and loans to Africa and South
Asia, in education, health, social services, water and sanitation.
http://www.worldbank.org/ida/ida-factsheet.pdf oct 22, 2011
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www.fieo.org/uploads/files/file/FIEOAug3020121.ppt
source for WB info:Check out this Link for WB & IDA
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Mission
Help developing countries and their
people reach the Millennium
Development Goals by working with our
partners to alleviate poverty.
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Millennium Development Goals MDGs)
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FY11 Top Ten IDA Borrowers($million, excludes regional projects)
Bangladesh 2,139
India 2,072
Pakistan 1,292
Vietnam 1,280Ethiopia 630Ghana 605Nigeria 535Kenya 490
Tanzania 420
Mozambique 413
New IDA Lending by Region:Sub-Saharan Africa...........43%South Asia...........................39%East Asia/Pacific..................10%Europe/Central Asia...............4%Latin America/Caribbean........3%Middle East/North Africa.........1%
http://www.worldbank.org/ida/ida-financing.html
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WTO: AICs commercial interests are embodied in the rules global trade, aid and loan imposed on the LDCs :
• WTO works on power-based bargaining• Neoliberal policies• Washington consensus• SAP• Conditionality• MFN
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Wto p1 6.36 min http://www.youtube.com/watch?v=aOE7Ve06tXA&feature=fvwrel http://www.youtube.com/watch?NR=1&v=HbwZhCfO2GQ&feature=fvwpwto p 2 6.45 min
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World Trade Organization (WTO) ( for expanding free trade)
It oversees and regulates:
• Global trade balance
• Monetary stability
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WTO works on power-based bargaining
What do poor countries face?• Agricultural Protectionism• High Tariffs on Labour intensive goods• Anti-dumping
What do Rich countries reject?• Opening AICs’ agri market• Access to cheaper medicines• Lowering industrial tariff
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WTO (cont’d)• From 1995-2010, declarations of WTO have
not advanced the trade related development in LDCs
• AICs rejected G-21 demand to cut their agri subsidies/ tariff barriers
• Widening disagreements between the rich and poor countries
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Subsidies per Head per Year (in U.S. $)2006
Country Cattle Chickens Pigs Sheep
Aid per poor person in
developing world
EU 15 $179.28 1¢ $9.24 $28.93 $16.11
Australia $17.12 39¢ $6.49 94¢ 54¢
Canada $68.59 15¢ $18.99 0¢ 95¢
Japan $163.23 21¢ $3.92 0¢ $2.38
New Zealand $2.66 13¢ $2.14 19¢ 8¢
Norway $965.72 $1.48 $39.98 $94.06 83¢
Switzerland $987.58 $7.63 $139.62 $16.11 61¢
United States $29.06 58¢ $9.03 $4.12 $7.67
All $92.59 38¢ $10.58 $12.85 $29.17
http://www.foreignpolicy.com/story/cms.php?story_id=3547&page=5
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Unequal trade relations:• Tariff barriers• Non Tariff barriers
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Burkina Faso Cotton Production: Shares of Farmers Unions, French Holding company & the State
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Burkina Faso cotton growers protest low prices, Apr 28, 2011
http://af.reuters.com/article/topNews/idAFJOE73R06L20110428
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Davos: • World Economic Forum (WEF) – founded in
1971 by K.M. Schwab, a Swiss prof. • Annual meetings in Davos, Switzerland• Membership: top leaders in business & politics:
Presidents, PMs, Trade Ministers - a business forum - the richest businesses negotiate deals and lobby powerful politicians
What would be their real objective? • profit-making?
or• solving economic problems such as poverty?
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WTO: AICs commercial interests are embodied in the rules global trade, aid and loan imposed on the LDCs :
• WTO works on power-based bargaining• Neoliberal policies• Washington consensus• SAP• Conditionality• MFN
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What are the Neoliberal policies? DOPE LD
Liberalize tradeDeregulate finance/currency Open up for foreign investment,Privatize economyDeregulate commercial activityEnsure property protection
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WTO: AICs commercial interests are embodied in the rules global trade, aid and loan imposed on the LDCs :
• WTO works on power-based bargaining• Neoliberal policies• Washington consensus• SAP• Conditionality• MFN
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WASHINGTON CONSENSUS
• Liberalization
• Austerity
• Privatization
• De-regulation
LAPDog
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WTO: AICs commercial interests are embodied in the rules global trade, aid and loan imposed on the LDCs :
• WTO works on power-based bargaining• Neoliberal policies• Washington consensus• SAP• Conditionality• MFN
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How does Structural Adjustment Program (SAP) affect the Developing countries?Impact:• Balancing the government budget• Weakening the Labour• Deregulating the economy• Reducing the State
BLeeDS
IMF’s imposition of SAP on Asian countries created a financial crisis of economic contraction and depression.
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WTO: AICs commercial interests are embodied in the rules global trade, aid and loan imposed on the LDCs :
• WTO works on power-based bargaining• Neoliberal policies• Washington consensus• SAP• Conditionality• MFN
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Conditionality:
• Conditions placed on loans to LDCs
Conditions imposed to make aid effective in a recipient country – in reality could hurt the country’s economy or the country’s political stability
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WTO: AICs commercial interests are embodied in the rules global trade, aid and loan imposed on the LDCs :
• WTO works on power-based bargaining• Neoliberal policies• Washington consensus• SAP• Conditionality• MFN
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Most favored nation status (MFN) • An agreement between two nations to levy
tariffs on each other at rates as low as those levied on any other country.
• If one of these nations reduces tariffs on a third country, all of that nation's MFN partners also receive that lower tariff rate.