POONAM RAMJEET

YADAV

ROLL NO: 12
GROUP “A”

K.E.S BK SHROFF
COLLEGE OF ARTS AND
COMMERCE
 GLOBALISATION,
LIBERALISATION
AND
PRIVATISATION:
THE ROLE AND
FUNCTIONS OF
THE INTERNATIONAL
FINANCIAL
INSTITUTIONS
 INDEX
GLOBALISATION

LIBERLIASATION

PRIVATISATION

WORL BANK

ORGANISATIONAL STRUCTURE

BOARD OF DIRECTORS

THE ROLE OF THE BANK

INTERNATIONAL MONETARY FUND

ORGANISATIONAL STRUCTURE

POLICIES AND FUNCTIONS

IMF AND THE WORLD

WORLD HEALTH ORGANISATION

DOHA DEVELOPMENT AGENDA

STRUCTURE
GLOBALISATION

Globalization (or globalisation) describes the process by

which regional economies, societies, and cultures have
become integrated through a global network of
communication, transportation, and trade. The term is
sometimes used to refer specifically to economic
globalization: the integration of national economies into the
international economy through trade, foreign direct
investment, capital flows, migration, and the spread of
technology.[1] However, globalization is usually recognized as
being driven by a combination of economic, technological,
sociocultural, political, and biological factors.[2] The term can
also refer to the transnational circulation of ideas, languages,
or popular culture through acculturation. An aspect of the
world which has gone through the process can be said to be
globalized
According to the Oxford English Dictionary, the word
'globalization' was first employed in a publication entitled
Towards New Education in 1930, to denote a holistic view of
human experience in education.[3] An early description of
globalization was penned by the American entrepreneur-
turned-minister Charles Taze Russell who coined the term
'corporate giants' in 1897,[4] although it was not until the 1960s
that the term began to be widely used by economists and other
social scientists. The term has since then achieved widespread
use in the mainstream press by the later half of the 1980s.
Since its inception, the concept of globalization has inspired
numerous competing definitions and interpretations, with
antecedents dating back to the great movements of trade and
empire across Asia and the Indian Ocean from the 15th
century onwards.[5]
The United Nations ESCWA says globalization "is a widely-
used term that can be defined in a number of different ways.
When used in an economic context, it refers to the reduction
and removal of barriers between national borders in order to
facilitate the flow of goods, capital, services and labor...
although considerable barriers remain to the flow of labor...
Globalization is not a new phenomenon. It began towards the
end of the nineteenth century, but it slowed down during the
period from the start of the First World War until the third
quarter of the twentieth century. This slowdown can be
attributed to the inward-looking policies pursued by a number
of countries in order to protect their respective industries...
however, the pace of globalization picked up rapidly during
the fourth quarter of the twentieth century..."[6]
Tom J. Palmer of the Cato Institute defines globalization as
"the diminution or elimination of state-enforced restrictions
on exchanges across borders and the increasingly integrated
and complex global system of production and exchange that
has emerged as a result."[10]
Thomas L. Friedman has examined the impact of the
"flattening" of the world, and argues that globalized trade,
outsourcing, supply-chaining, and political forces have
changed the world permanently, for both better and worse. He
also argues that the pace of globalization is quickening and
will continue to have a growing impact on business
organization and practice.[11]
Herman E. Daly argues that sometimes the terms
internationalization and globalization are used
interchangeably but there is a significant formal difference.
The term "internationalization" (or internationalisation) refers
to the importance of international trade, relations, treaties etc.
owing to the (hypothetical) immobility of labor and capital
between or among nations.[citation needed]
Finally, Takis Fotopoulos argues that globalization is the
result of systemic trends manifesting the market economy's
grow-or-die dynamic, following the rapid expansion of
transnational corporations. Because these trends have not been
offset effectively by counter-tendencies that could have
emanated from trade-union action and other forms of political
activity, the outcome has been globalization. This is a multi-
faceted and irreversible phenomenon within the system of the
market economy and it is expressed as: economic
globalization, namely, the opening and deregulation of
commodity, capital and labour markets which led to the
present form of neoliberal globalization; political
globalization.

LIBERALISATION
In general, liberalization (or liberalisation) refers to a
relaxation of previous government restrictions, usually in
areas of social or economic policy. In some contexts this
process or concept is often, but not always, referred to as
deregulation.[1] Liberalization of autocratic regimes may
precede democratization (or not, as in the case of the Prague
Spring).
In the arena of social policy it may refer to a relaxation of
laws restricting for example divorce, abortion, homosexuality
or drugs.
Most often, the term is used to refer to economic
liberalization, especially trade liberalization or capital market
liberalization.
Although economic liberalization is often associated with
privatization, the two can be quite separate processes. For
example, the European Union has liberalized gas and
electricity markets, instituting a system of competition; but
some of the leading European energy companies (such as
EDF and Vattenfall) remain partially or completely in
government ownership.
Liberalized and privatized public services may be dominated
by just a few big companies particularly in sectors with high
capital costs, or high such as water, gas and electricity. In
some cases they may remain legal monopoly at least for some
part of the market (e.g. small consumers).
Liberalization is one of three focal points (the others being
privatization and stabilization) of the Washington Consensus's
trinity strategy for economies in transition. An example of
Liberalization is the "Washington Consensus" which was a set
of policies created and used by Argentina
There is also a concept of hybrid liberalisation as, for
instance, in Ghana where cocoa crop can be sold to a variety
of competing private companies, but there is a minimum price
for which it can be sold and all exports are controlled by the
state

PRIVATISATION

Privatization is the incidence or process of transferring

ownership of a business, enterprise, agency or public service
from the public sector (the state or government) to the private
sector (businesses that operate for a private profit) or to
private non-profit organizations. In a broader sense,
privatization refers to transfer of any government function to
the private sector - including governmental functions like
revenue collection and law enforcement.[1]
The term "privatization" also has been used to describe two
unrelated transactions. The first is a buyout, by the majority
owner, of all shares of a public corporation or holding
company's stock, privatizing a publicly traded stock, and often
described as private equity. The second is a demutualization
of a mutual organization or cooperative to form a joint stock
company.
A long history of privatization dates from Ancient Greece,
when governments contracted out almost everything to the
private sector[5]. In the Roman Republic private individuals
and companies performed the majority of services including
tax collection (tax farming), army supplies (military
contractors), religious sacrifices and construction. However,
the Roman Empire also created state-owned enterprises — for
example, much of the grain was eventually produced on
estates owned by the Emperor. Some scholars suggest that the
cost of bureaucracy was one of the reasons for the fall of the
Roman Empire.[5]
In Britain, the privatization of common lands is referred to as
enclosure (in Scotland as the Lowland Clearances and the
Highland Clearances). Significant privatizations of this nature
occurred from 1760 to 1820, coincident with the industrial
revolution in that country.
In more recent times, Winston Churchill's government
privatized the British steel industry in the 1950s, and West
Germany's government embarked on large-scale privatization,
including selling its majority stake in Volkswagen to small
investors in a public share offering in 1961[5]. In the 1970s
General Pinochet implemented a significant privatization
program in Chile. However, it was in the 1980s under the
leaderships of Margaret Thatcher in the UK and Ronald
Reagan in the USA, that privatization gained worldwide
momentum. In the UK this culminated in the 1993
privatization of British Rail under Thatcher's successor, John
Major; British Rail having been formed by prior
nationalization of private rail companies.
Significant privatization of state owned enterprises in Eastern
and Central Europe and the former Soviet Union was
undertaken in the 1990s with assistanced from the World
Bank, the U.S. Agency for International Development, the
German Treuhand , and other governmental and
nongovernmental organizations.
A major ongoing privatization, that of Japan Post, involves
the Japanese post service and the largest bank in the world.
This privatization, spearheaded by Junichiro Koizumi, started
in 2007 following generations of debate. The privatization
process is expected[by whom?] to last until 2017
WORLD BANK

INTRODUCTION

The World Bank is an international financial institution that

provides loans[2] to developing countries for capital programs.
The World Bank has a stated goal of reducing poverty. By
law, all of its decisions must be guided by a commitment to
promote foreign investment, international trade and facilitate
capital investment.[3]
The World Bank differs from the World Bank Group, in that
the World Bank comprises only two institutions: the
International Bank for Reconstruction and Development
(IBRD) and the International Development Association
(IDA), whereas the latter incorporates these two in addition to
three more:[4] International Finance Corporation (IFC),
Multilateral Investment Guarantee Agency (MIGA), and
International Centre for Settlement of Investment Disputes
ORGANISATIONAL STRUCTURE

BOARD OF GOVERNORS

A board of governors is usually the governing board of a

public entity or non-profit organizations. It is the public
equivalent of the private board of directors.
Many public institutions, such as public universities, are
government-owned corporations. The British Broadcasting
Corporation was managed by a board of governors, though
this role has now been taken by the BBC Trust. In other cases,
government services are provided by "independent
establishments," which provide an environment mixing a
corporation and a government agency (see public-private
partnership). These, such as the United States Postal Service,
are governed by a board of governors. A more well known
example is the Federal Reserve System, which is also partially
governed by a board of governors

BOARD OF DIRECTORS
A board of directors is a body of elected or appointed
members who jointly oversee the activities of a company or
organization. The body sometimes has a different name, such
as board of trustees, board of governors, board of managers,
or executive board. It is often simply referred to as "the
board."
A board's activities are determined by the powers, duties, and
responsibilities delegated to it or conferred on it by an
authority outside itself. These matters are typically detailed in
the organization's bylaws. The bylaws commonly also specify
the number of members of the board, how they are to be
chosen, and when they are to meet.
In an organization with voting members, e.g., a professional
society, the board acts on behalf of, and is subordinate to, the
organization's full assembly, which usually chooses the
members of the board. In a stock corporation, the board is
elected by the stockholders and is the highest authority in the
management of the corporation. In a non-stock corporation
with no general voting membership, e.g., a university, the
board is the supreme governing body of the institution.[1]

Typical duties of boards of directors include[2][3]

• governing the organization by establishing broad policies
and objectives;
• selecting, appointing, supporting and reviewing the
performance of the chief executive;
 • ensuring the availability of adequate financial resources;
• approving annual budgets;
• accounting to the stakeholders for the organization's
performance.
The legal responsibilities of boards and board members vary
with the nature of the organization, and with the jurisdiction
within which it operates. For public corporations, these
responsibilities are typically much more rigorous and complex
than for those of other types.
Typically the board chooses one of its members to be the
chairman, sometimes called a president of the board in the
United States

THE ROLE OF THE BANK

The effect of structural adjustment policies on poor countries

has been one of the most significant criticisms of the World
Bank. The 1979 energy crisis plunged many countries into
economic crises.[46] The World Bank responded with structural
adjustment loans which distributed aid to struggling countries
while enforcing policy changes in order to reduce inflation
and fiscal imbalance. Some of these policies included
encouraging production, investment and labour-intensive
manufacturing, changing real exchange rates and altering the
distribution of government resources.[47] Structural adjustment
policies were most effective in countries with an institutional
framework that allowed these policies to be implemented
easily.[47] For some countries, particularly in Sub-Saharan
Africa, economic growth regressed and inflation worsened.[47]
The alleviation of poverty was not a goal of structural
adjustment loans, and the circumstances of the poor often
worsened, due to a reduction in social spending and an
increase in the price of food, as subsidies were lifted.[47]
By the late 1980s, international organizations began to admit
that structural adjustment policies were worsening life for the
world's poor. The World Bank changed structural adjustment
loans, allowing for social spending to be maintained, and
encouraging a slower change to policies such as transfer of
subsidies and price rises.[48] In 1999, the World Bank and the
IMF introduced the Poverty Reduction Strategy Paper
approach to replace structural adjustment loans.[49] The
Poverty Reduction Strategy Paper approach has been
interpreted as an extension of structural adjustment policies as
it continues to reinforce and legitimize global inequities.[50]
Neither approach has addressed the inherent flaws within the
global economy that contribute to economic and social
inequities within developing countries.[51] By reinforcing the
relationship between lending and client states, many believe
that the World Bank has usurped indebted countries' power to
determine their own economic policy
INTERNATIONAL MONETARY FUND

INTRODUCTION

The International Monetary Fund (IMF) is an international

organization engaged in the management of the global
financial system. This aim is achieved by monitoring
exchange rates and balance of payments. IMF provides
technical assistance and financial support to member countries
in times of crisis situations. In addition, the Fund assists
developing nations in achieving economic stability and
reducing poverty levels. The IMF is headquartered in
Washington DC, USA and has the status of a specialized UN
organization.

The IMF was established in July, 1944 in the town of Bretton

Woods, New Hampshire, USA. Its task was to monitor and
regulate the postwar international monetary relations.
Delegates from 44 countries participated in the memorable
United Nations’ Monetary and Financial Conference. On
December 27, 1945, 29 member stated signed the Articles of
Agreement and established the Fund.

The original objectives of the organization aimed at the

preparation of a plan for economic cooperation which would
avoid a recurrence of the events preceding the 1930 Great
Depression. Over the past 64 years, the priorities and
operations of the IMF had changed, adjusting to the new
monetary relations and the evolving global economy. And yet
its statutory purposes remain unchanged. They aim at
facilitating the growth and development of the global
economy, thus providing financial stability. To achieve them,
the IMF aims to:

- promote international cooperation in the monetary and

financial fields;
- help facilitate the balanced growth of international trade and
thereby stimulate employment and reduce poverty;
- contribute to the stability of exchange rates;
- eliminate exchange restrictions that obstruct international
trade;
- provide temporary financial resources to member countries
and help in stabilizing their balance of payments.

The IMF also promotes the adoption of sound economic and

financial policies and monitors regional, national, and global
economic developments on a regular basis.

At present, 186 countries participate in the organization. This

number stands for a large portion of the world community.
New members are accepted after the submission of
application and by a majority vote of the active members. The
Fund is supported by contributions from each member
country. The amount of the contribution is determined by a
formula which reflects the proportion of the country's
international payments and its Gross Domestic Product. The
total amount of contributions and the share of each country
are reviewed periodically.

The highest authority in its organizational structure has the

Board of Governors, with all member countries being
represented. Each member country designates one governor
and one alternate governor. The latter has the right to vote in
case that the principal governor is not present. A common
practice for member countries is the appointment of their
Minister of Finance, the Central Bank’s president, or another
high-ranking official as its governor. Decisions are based on
the majority of votes cast, unless the rules mandate otherwise.
The Board of Governors is assembled once a year or in case
when that circumstances require.

The next structural unit is the Executive Board, comprising of

24 executive directors and 24 alternates, who are in charge of
the Imp’s general operations. They meet several times a week
and deal with a wide range of organizational and
administrative problems. Their sessions are held at the IMF’s
headquarters. 19 of the executive directors are elected by
regional groups, representing the member states. The
countries with largest quotas (United States, United Kingdom,
Germany, France, and Japan) have the right to appoint 5
executive directors.

The executive director appoints a managing director who

serves as a chairman of the Executive Board for a term of five
years. The IMF’s Managing Director deals with the everyday
tasks of the Fund.

At present, the acting Managing Director is Dominique

Strauss-Kahn, who is a former Finance and Economy Minister
of France and the 10th Managing Director of the IMF. About
2,650 persons work at the IMF’s headquarters. In addition, the
IMF has a regional office located in Tokyo, Japan.
ORGANISATIONAL STRUCTURE

POLICIES AND FUNCTIONS

IMF describes itself as "an organization of 184 countries,
working to foster global monetary cooperation, secure
financial stability, facilitate international trade, promote high
employment and sustainable economic growth, and reduce
poverty".
The primary mission of the IMF is to provide financial
assistance to countries that experience serious financial
difficulties. Member states with balance of payments
problems may request loans and/or organizational
management of their national economies. In return, the
countries are usually required to launch certain reforms, an
example of which is the "Washington Consensus". These
reforms are generally required because countries with fixed
exchange rate policies can engage in fiscal, monetary, and
political practices which may lead to the crisis itself. For
example, nations with severe budget deficits, rampant
inflation, strict price controls, or significantly over-valued or
under-valued currencies run the risk of facing balance of
payment crises in their future. Thus, the structural adjustment
programs are at least ostensibly intended to ensure that the
IMF is actually helping to prevent financial crises rather than
merely funding financial recklessness.
If the success of institutions were judged by the breadth and
passion of their critics, then both the International Monetary
Fund (IMF) and the International Bank for Reconstruction and
Development (World Bank) would count among the most
effective multilateral organizations in the world. Beginning in
the late 1990s it became an annual ritual for tens of thousands
of anti-globalization protesters to descend upon Washington,
D.C., in late September to disrupt their annual meetings. But
the left has had no monopoly on criticism of the IMF and
World Bank. Republican U.S. congressmen and free-market
economists have long derided both entities as misguided and
even corrupt. Furthermore, these protests were nothing new:
both the left and the right in the United States vehemently
objected to the Bretton Woods agreements that created the
IMF and World Bank near the end of World War II.
Do the arguments made against the Bretton Woods
institutions, both now and in the past, have any merit? And
why do these multilateral institutions, created for the noble
goals of preventing international monetary turmoil and
alleviating global poverty, incite such heated responses, both
in the United States and abroad? Finally, are the IMF and
World Bank simply tools of American foreign policy, as is
often claimed? At first glance these criticisms are puzzling,
especially since protesters have vastly overestimated the
power and effect these institutions have had on the world
economy. The second half of the twentieth century witnessed
tremendous changes in all parts of the domestic and global
economy, including in those areas that are the responsibility
of the two Bretton Woods institutions: international monetary
relations and economic development. But a strong case could
be made that other forces—the Cold War, macroeconomic
reform, technology, the massive increase in capital and trade
flows—were far more crucial to unleashing and sustaining
these changes than either the IMF or the World Bank

IMF AND THE WORLD

These are sisters organizations created at the Bretton Woods

Conference in 1944, began operations on 1 March 1947.It had
its inception on 1 July 1944, when delegates of forty-four
nations met at Bretton Woods, New Hampshire, and proposed
two associated financial institutions—the IMF, with $8 billion
capital, and the International Bank for Reconstruction and
Development. A recurrence of the restrictive trade policies,
exchange instability, and international lending abuses that had
characterized the interwar era was feared. After World War I,
nations had sought monetary stability by returning to the gold
standard, but in many instances the gold standard took the
form of a weak version of the gold exchange standard. Its
breakdown contributed to the 1929–1936 economic debacle.
The IMF's original purpose was to support world trade by
reestablishing a stable international system. To this end, it was
given the mandate to monitor the exchange rate policies of
member countries and provide short-term loans in case of
balance of payments problems.

WORLD HEALTH ORGANISATION

INTRODUCTION

The World Health Organization (WHO) was created in 1948

by member states of the United Nations (UN) as a specialized
agency with a broad mandate for health. The WHO is the
world's leading health organization. Its policies and programs
have a far-reaching impact on the status of international public
health.
Defined by its constitution as "the directing and coordinating
authority on international health work," WHO aims at "the
attainment by all peoples of the highest possible standard of
health." Its mission is to improve people's lives, to reduce the
burdens of disease and poverty, and to provide access to
responsive health care for all people.

GATT

Set of multilateral trade agreements aimed at the abolition of

quotas and the reduction of tariff duties among the signing
nations. Originally signed by 23 countries at Geneva in 1947,
GATT became the most effective instrument in the massive
expansion of world trade in the later 20th century. By 1995,
when GATT was replaced by the World Trade Organization
(WTO), 125 nations had signed its agreements, which
governed 90% of world trade. GATT's most important
principle was trade without discrimination, in which member
nations opened their markets equally to one another. Once a
country and its largest trading partners agreed to reduce a
tariff, that tariff cut was automatically extended to all GATT
members. GATT also established uniform customs
regulations and sought to eliminate import quotas. It
sponsored many treaties that reduced tariffs, the last of which,
signed in Uruguay in 1994, established the WTO.

THE DUNKEL DRAFT

Arthur Dunkel (August 26, 1932 - June 8, 2005) was a Swiss

(Portuguese-born) administrator. He served as director-
general of General Agreement on Tariffs and Trade between
1980 and 1993. Dunkel was educated at the Graduate Institute
of International Studies, in Geneva.
Arthur Dunkel took an active part in the Uruguay Round
Negotiations of the GATT. His contribution to the successful
completion of these negotiations was vital. When negotiations
had passed the deadline and no agreement had emerged he
took initiative in his own hands compiling the 'Dunkel Draft'
in December 1991. The draft put together the results of
negotiations and provided an arbitrated solution to issues on
which negotiators failed to agree. Even though the United
States and India continued to bargain for changes to the
Dunkel Draft, only minor amendments were made in the
sphere of agriculture. The Dunkel Draft was accepted and
became the foundation of the World Trade Organisation.

DOHA DEVELOPMENT AGENDA

The Doha Development Agenda (DDA) places

development at the heart of WTO negotiations. It was
adopted in 2001 at the WTO Ministerial Meeting held in
Doha (Qatar).

The DDA provides developing and transition countries

with the opportunity to shape new rules for international
trade within a context favourable to their own
development needs and interests. It commits developed
countries to providing programmes of trade-related
technical assistance (TRTA) and institutional capacity-
building to help developing and transition economies
defend their national interests during negotiations and
take advantage of new trade opportunities.

Within the DDA, ITC places emphasis on helping

government and business in developing and transition
economies work together to define jointly the negotiating
parameters and positions likely to extract the most
advantageous terms and conditions for their national
economies during the process of trade liberalisation.

DDA negotiations focus on:

Agriculture: substantially improve market access; reduce

all forms of export subsidies, with a view to phasing
them out; and substantially reduce trade-distorting
domestic support.

Services: further liberalize all categories of services and

modes of supply.

Industrial Goods (NAMA): further reduce tariffs,

including tariff peaks, high tariffs, and tariff escalation,
as well as non-tariff barriers, particularly on products of
export interest to developing countries.

Trade Remedies: Antidumping measures subsidies and

countervailing measures: clarify and improve
disciplines, while preserving the basic concepts,
principles, and effectiveness of these agreements and
their instruments and objectives.

Regional Trade Agreements: clarify and improve

disciplines and procedures under existing WTO rules
applying to regional trading agreements.
 TRIPS: establish a multilateral system of notification
and registration of geographical indications for wines
and spirits.

Dispute Settlement Mechanism: improve the

implementation of rulings and participation of
developing countries.

Environment: negotiations limited to the relationship

between existing WTO rules and specific trade
obligations set out in multilateral environmental
agreements and to the reduction or elimination of tariff
and non-tariff barriers to environmental goods and
services.

Trade Facilitation: negotiations launched in July 2004

(the July Package) with the view to further expediting
the movement, release and clearance of goods, including
goods in transit. The negotiations are an integral part of
the DDA.

STRUCTURE AND FUNCTIONS OF WTO

FUNCTION

 Administering WTO trade agreements

 Forum for trade negotiations
 Forum for trade dispute settlement
 Monitoring national trade policies
 Providing technical assistance and training for developing
countries
 Functional cooperation with other international
organisations

STRUCTURE

The WTO has a complex institutional structure. At the highest

level is the Ministerial Conference which sits only for a few
days every two years. A level down is the General Council
which exercises the powers of the Ministerial Conference
between the latter's sessions. Exercising particular functions
under discrete WTO agreements, the General Council also sits
as the Dispute Settlement Body and the Trade Policy Review
Body. There are also a number of specialised Councils,
committees and working parties at lower levels in the
structure.

The WTO Secretariat is headed by the WTO Director-General

(currently Pascal Lamy). The WTO is however said to be 'a
Member-driven' organization. This means that the Members -
and not the Director-General or the WTO Secretariat - set the
agenda, make proposals and take decisions.