By definition, globalization is the process through which organizations and other businesses acquire international influence or rather operate on an international scale or level. In essence, it is the interactive and integrative process between companies, governments, and people globally. It can also be defined as the integration of industries, economies, cultures, markets, as well as policy-making around the world. As a growing phenomenon, globalization has substantially been catalyzed by communication and transportation technology which have in a compounded manner resulted in international culture, ideas, and trade. As a global phenomenon, the International Monetary Fund in 2000 identified four basic concepts related to globalization; dissemination of knowledge, movement and migration of individuals, capital and investment movements, as well as trade and transactions. In this regard, this paper seeks to provide a meticulous discourse regarding the roles of World Bank (WB), International Monetary Fund (IMF), and World Trade Organization (WTO) in the acceleration of globalization.
The Role of World Bank in Accelerating Globalization
The World Bank is an international institution or organization that is dedicated to providing financial support, research, and advice to developing nations to assist in their economic development. The organization, established in 1944, traces its roots to the Bretton Woods agreement which stemmed from the plight of many European and Asian countries that were in need of financial support for reconstruction purposes and efforts. The agreement explains why the World Bank is at times referred to as a Bretton Woods Institution. The organization significantly concentrates its efforts on fighting poverty globally by providing developmental assistance to the middle as well as poor income countries. To this end, the objectives of the bank are to curb and alleviate extreme poverty through decreasing the number of individuals living below 1.90 dollars per day to no more than three percent (World Bank, 2018). In addition, in line with the organization’s 2030 goals, it seeks to promote shared prosperity by fostering the income growth of the lower 40 percent of every nation.
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Other than financial support, the organization majors in sharing or pooling of innovative knowledge in a bid to ensure that countries access the best global expertise through cutting-edge knowledge. In essence, the two precepts; financial assistance and sharing of innovative knowledge as articulated earlier are two of the four salient facets of globalization as announced by the IMF. One of the fundamental roles of the organization is to offer loans at zero credits thereby fulfilling the mandate of debt relief, especially to the low-income countries, an important aspect of globalization. To further fast-track globalization, the organization not only promotes debt relief but also liaises with the governments of these countries to ensure competent governance, a robust financial system, as well as an effective judicial system. These efforts would, in the long run, be pivotal in fighting and eradicating corruption thereby attracting foreign and domestic investment.
The organization’s concentration is substantial in the middle and low-income countries due to the fact that 80 percent of the worlds poor live in these countries, (Mapsofindia, 2011). Ultimately, by fighting poverty in these countries, the WB ushers in a new era of development with a better economy, trade, communication, and transportation, which are fundamental to globalization. Additionally, the western countries already are developed, and as such, to accelerate globalization, the World Bank focuses its efforts on the middle and low-income countries thereby spreading development and globalization concurrently from the West. In order to promote innovativeness and creativity essential for globalization, the World Bank supports educational programs globally to achieve global education parity, which is a crucial factor in the acceleration of globalization. Additional tenets employed by the organization to accelerate globalization include addressing weaknesses in the structural, sectoral, and social policies, creating an institutional framework and the right policy, and providing advisory services, especially to the least developed countries.
Role of the IMF in Accelerating Globalization
The IMF is an international organization with a membership of 189 countries that in a compounded manner strive to ensure the stability of the international monetary and financial system. Similar to World Bank, the IMF is also referred to as a Bretton Woods Institution due to the fact that it was established in 1944 as a result of the Bretton Woods agreement. In fact, both of the institutions were founded with the aim of restoring and sustaining the benefits of global integration through the promotion of the international economic cooperation. As part of its objectives, the IMF focuses on the functioning of the international monetary system as well as on promoting sound macroeconomic policies as a pre-condition for constant economic growth. Further mandates of the institution are the facilitation as well as expansion and balanced growth of international trade, the promotion of exchange stability, as well as provision of the opportunity for the orderly correction of nations’ balance of payments problems. All these responsibilities fall under the four precepts of globalization.
Perhaps the most outstanding evidence for the organization’s role in the acceleration of globalization is its unwavering belief that globalization harbors the great potential to the contribution of growth that is key in the achievement of a sustained reduction of global poverty (IMF Staff, 2002). One of the agendas of the organization that has greatly been part of its motto for the better part of the 21 st Century is building support for better globalization through maximizing the benefits while minimizing the risks. A fundamental way that IMF has achieved this is through the creation of common political understanding which has been the engine behind the steady increase in enrollment of member countries and acceleration of globalization. IMF also encourages true national ownership of reforms through streamlining the conditions appertained in the IMF-supported programs. Ultimately, IMF works hand-in-hand with the World Bank as well as the WTO in pooling ideas regarding the best mechanism for spreading globalization such as through eradication of poverty and providing financial support for sustainable development.
Role of the WTO in Accelerating Globalization
The World Trade Organization (WTO) is an international organization comprising 164 member states that duly deal with the rules of trade among nations. It is worth pointing out that WTO is the main liaison institution to the Bretton Woods Institutions because trade relations are the engine of globalization. WTO essentially encompasses all the trading communities and economies thereby enabling the smooth flow of international trade, a concept that fast-tracks globalization. WTO achieves the flawless flow of trade by making it predictable and free - aspects advanced by the constructive and fair outlet measures put in place for countries to sort out disputes relating to trade issues. Resolving disputes is equally important for the prosperity of globalization given that the phenomenon flourishes on mutual, fair, and equitable international trade relations.
WTO was conceived in 1995 following the General Agreement on Tariffs and Trade established in 1947 (IMF Factsheet, 2018). Since then, the organization has worked in a complementary manner with the IMF undertaking mandates such as providing financial assistance to least developed countries and subsequently providing technical assistance fundamental in making the LDCs more active players in the global trading system. The WTO further achieves this objective by giving aid to the LDCs thus tackling supply-side constraints to trade. While the IMF and the WB act as the muscle towards the acceleration of globalization, the WTO is the brains in terms of international trade technicalities and strategies, especially in the LCDs. In essence, while the LCDs get loans from the IMF and the WB that might be beyond their reach to pay, the WTO steps in and provides opportunities to its member states to purchase industries and natural resources from the LCDs thereby promoting globalization. This concept explains the proliferation of offshore corporations in countries such as Brazil, China, or India.
Conclusion
As it has been shown in this scholarship, no single organization whether IMF, WB, or WTO can accelerate globalization on its own. A joint effort from all the three organizations is crucial and is the major reason for the steady spread of globalization, especially in the LCDs. One way this can be achieved is by eradicating poverty through the provision of a sustained supply of loans. Subsequently, the WTO steps in to provide knowledge and strategic support to these nations relating to international trade relations thereby ensuring proper spending of the money, eradication of corruption, and development of the economy. This ultimately attracts domestic and international investors who promote globalization. Even though these organizations are aware of the benefits of globalization, they are also conscious of its drawbacks, and as such, they strive to promote common political understanding which is crucial in the maximization of globalization benefits and minimization of the risks. Indeed, WTO, IMF, and WB are the wheels that drive globalization, the embodiment of international economic integration and consolidation of democracy.
References
IMF Factsheet. (2018). IMF and the World Trade Organization. IMF. Retrieved from https://www.imf.org/en/About/Factsheets/The-IMF-and-the-World-Trade-Organization
IMF Staff. (2002). Globalization: A Framework for IMF Involvement. IMF. Retrieved from https://www.imf.org/external/np/exr/ib/2002/031502.htm
Mapsofindia. (2011). Globalization and the Role of World Bank. Retrieved from https://business.mapsofindia.com/globalization/role-world-bank.html
World Bank. (2018). What We Do. The World Bank Group. Retrieved from http://www.worldbank.org/en/about/what-we-do
