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International Seminar

On
“The Concept of Global Village”

Organized by
Aditya Institute of management
Narhe, Pune.

Research Paper

On

United Global Village or Partition into


developed/developing /under developed Countries

By: Prof.Ms. Ranpreet Kaur (Lecturer – Finance)

Bharati Vidyapeeth Deemed University

Institute of Management and Entrepreneurship


Development, Pune - 411038
TOPIC : United Global Village or Partition into
developed/developing /under developed Countries

Abstract

This paper attempts to determine in the era of Globalization, world is united


or it is divided among developed, developing and least developed countries
and also Partition in developing, LDC and Developed world is optimistic or
pessimistic. There are many international organization which are working
towards reducing gap between developed, developing and LDC by
enhancing support and co-operation among them as well as due to their
principles rules and policies distinction happened in treatment, in some
cases it support the developing and LDC to improve their economic
position ,GDP, trade, Growth rate, standard of living, barriers related to fund
and tariff as well as sometimes it restrict their growth by putting some
limitations by developed member countries.

However, it is found to be in adequate to give complete and


full information related to united global nation or partition in developed,
developing and LDC, yet with the help of two International Institution WTO
and IMF true picture of unity or partition for Global world is try to be find
out in this research paper. The purpose of this study is to identify the
differences that exist between developed and developing country and also to
investigate why and how such differences arise while operating. Depending
on the nature of the research , an in-depth study of two International
Institution, two of which are working to foster global monetary cooperation,
a negotiating forum, set of rules helps to settle disputes ,secure financial
stability, facilitate international trade, promote high employment and
sustainable economic growth, and reduce poverty and development each
category, has been carried out. In both the International Institutions study,
results show that there are substantial differences between developed and
developing country in relation to goals, degree of conflict, patterns and
mechanisms in exercising control, and finally in income level and GDP
growth. The study makes a worthwhile contribution to the promotion of co-
operation and integration of world economies.
.
Key words-
Developing countries, LDC (Least developed Countries), Developed
Countries, WTO (World Trade Organization), IMF (International Monetary
Fund), GDP (Gross Domestic Product)
Introduction-
The development of a country is measured with statistical indexes such as
income per capita (per person) (GDP), life expectancy, the rate of literacy,
The IMF uses a flexible classification system that considers "(1) per capita
income level, (2) export diversification—so oil exporters that have high
per capita GDP would not make the advanced classification because
around 70% of its exports are oil, and (3) degree of integration into the
global financial system."
The World Bank classifies countries into four income groups. These are set
each year on July 1. Economies were divided according to 2008 GNI per
capita using the following ranges of income:

 Low income countries had GNI per capita of US$975 or less.


 Lower middle income countries had GNI per capita between US$976
and US$3,855.
 Upper middle income countries had GNI per capita between
US$3,856 and US$11,905.
 High income countries had GNI above US$11,906.

The World Bank classifies all low- and middle-income countries as


developing and high Income Countries as developed Countries.
Least Developed Country (LDC) is the name given to a country which,
according to the United Nations, exhibits the lowest indicators
of socioeconomic development, with the lowest Human Development
Index ratings of all countries in the world. The concept of LDCs originated
in the late 1960s and the first group of LDCs was listed by the UN in its
resolution 2768 (XXVI) of 18 November 1971. A country is classified as a
Least Developed Country if it meets three criteria.

 low-income (three-year average GNI per capita of less than US $905,


which must exceed $1,086 to leave the list)
 human resource weakness (based on indicators
of nutrition, health, education and adult literacy) and
 economic vulnerability (based on instability of agricultural
production, instability of exports of goods and services, economic
importance of non-traditional activities, merchandise export
concentration, handicap of economic smallness, and the percentage of
population displaced by natural disasters)

LDC criteria are reviewed every three years by the Committee for
Development Policy (CDP) of the UN Economic and Social Council
(ECOSOC). Countries may "graduate" out of the LDC classification when
indicators exceed these criteria. The United Nations Office of the High
Representative for the Least Developed Countries, Landlocked Developing
Countries and Small Island Developing States (UN OHRLLS) coordinates
UN support and provides advocacy services for Least Developed Countries.
This leads to formulate the Objectives as -
• To study policies, rules and principles which ensure integration of
world economies.
• To study the democratic (or rather non-democratic and non-
participatory) process of International Institution’s policy-making, and
the appropriateness (or rather inappropriateness) of the International
policies for united global nations.
• To Find out basis for difference between developed, developing and
least developed economy.
• Participation of developing, developed and least developed countries
and at what extent for integration of world economies.
• To study impact of Globalization on world.
• To study support and co-operation given by developed countries to
developing and least developed countries for development.

Explanation-

Existence of various International Organizations like WTO, IMF, World


Bank and it’s affiliates ,EU,SAFTA,NAFTA, and SAARAC is evidence for
integration of world economies as a whole as these International Institutions
work for support co-operation, economic development and maintaining
peace among member countries. They ensure uniformity in the formation of
rules , policies and principles to ensure development of LDC and developing
Countries.
By principles of trade without discrimination, National treatment, free
trade, fair competition, maintenance of exchange rates and promotion of
multilateral payment WTO and IMF facilitates the concept of global united
nation.

On other side by giving Special differential rights and quota system,


these international Institutions promote distinction among developed,
developing and LDC. As due to Special differential rights given to
developing and least developed countries by WTO, developed countries
think institutions are biased towards them.

Decisions at the World Bank and IMF are made by vote of the Board of
Executive Directors, which represents member countries. Unlike the United
Nations, where each member nation has an equal vote, voting power at the
World Bank and IMF is determined by the level of a nation's financial
contribution.

Percent
Director Votes by Total
Casting Votes of of Fund
Alternate Country Votes1
Total2
Appointed
Meg Lundsager United States 371,743 371,743 16.74
Douglas A. Rediker
Mitsuhiro Furusawa Japan 133,378 133,378 6.01
Tomoyuki Shimoda
Hubert Temmeyer Germany 130,332 130,332 5.87
Stephan von
Stenglin
Ambroise Fayolle France 107,635 107,635 4.85
Aymeric Ducrocq
Alex Gibbs United Kingdom 107,635 107,635 4.85
Robert James Elder

As in above chart it is clear developed countries owned more percentage of


quota as compared to a developing country and they have more voting rights
.As in this US has 16.74% fund so the United States has roughly 17% of the
vote, with the seven largest industrialized countries (G-7) holding a total of
45%. Because of the scale of its contribution, the United States has always
had a dominant voice and has at all times exercised an effective veto. At the
same time, developing countries have relatively little power within the
institution, which, through the programs and policies they decide to finance,
have tremendous impact throughout local economies and societies. So it
give dominance to developed countries over developing countries as well as
developing and LDC are enforced to agree with decisions which are passed
in meeting by majority. Loop holes in Most favored nation treatment (MFN)
of WTO principles-

• Countries can set up a free trade agreement that applies only to goods
traded within the group — discriminating against goods from
outside.
• Developed countries can give developing countries special access to
their markets.
• A country can raise barriers against products that are considered to be
traded unfairly from specific countries.

And in national treatment principle of WTO charging customs duty


on an import is not a violation of national treatment even if locally-
produced products are not charged an equivalent tax, it creates way
for developed countries to go for discrimination with developing and
LDC

Developed world continues to insist on free trade and services and


bringing down the tariffs in order to ensure fair competition between
local and imported products. While, on the other hand, the developed
world itself continues to follow protectionist policies in the case of
agriculture to safeguard its costly products against cheaper foodstuff
from the developing.

So existence of international Institutions is like a coin with two faces


as which has optimistic view for integration of world economies as a
whole and other which show pessimistic view as partition between
developed, developing and least developed countries on the basis of
income, fund contribution and principles, rules and policies of
international institutions which are formulated and implemented by
board of governors.
Findings
• International Institutions represent the "constitution" of the new global
economy. But the policies of the WTO, the IMF, the World Bank,
and other global regulators, represent the dominance of the investor
class (developed countries) in the politics and decisions of the
emerging global economy.
• As globalization has progressed standard of living, trade, investment
and GDP of countries have improved but strongest gains have been
made by advance and developed countries as compare to developing
and LDC.
• low-income countries have not been able to integrate with the global
economy as quickly as others, partly because of chosen policies and
partly because of factors outside their control.
• Erosion of confidence in the International Institutions within the
establishment (policy making, rules) of major shareholder countries;
and also debate on International policy and strategy
• World is moving towards more integrated and developed economies
which in future give the fair picture of integrate world as a whole.

Suggestions
• Establishment and promotion of highly integrated International
Institutions.
• Implementation of sound policies, programmes and principles which
promote development and growth of world as a whole
• Quota review should be done to give preference to developing and
LDC in voting power so that uniform set of rules and principles can
be formulated.
• International Institutions should appreciates, educate and advises
countries on the functions and selective uses of capital and trade
controls at national level, and helps them establish the capacity to
introduce or maintain such controls;
• Rich and developed counties need to do more to reduce trade-
distorting subsidies and dismantle their existing barriers on
competitive exports from developing countries for promotion of trade
investment and growth.

Conclusion
Globalization is powerful force to move towards integrated world. In the
present scenario of the global trade, both developing and developed worlds
have their roles to play. However, the strongest gains have been made by the
advanced countries and only some of the developing countries. That the
income gap between high-income and low-income countries has grown
wider is a matter for concern. The WTO IMF, World Bank and other Global
institutions aand the developed world must make further concessions for the
developing countries, which are in majority and have a very small portion of
the total world trade, and are not in a position to compete with the advanced
industrialised nations.

On the other hand, the developing world has its own


responsibilities to share. They cannot continue to live on grant-in-aids and
consider others responsible for all their ills, while squandering their own
resources. They have to put in serious efforts for overall improvement in the
quality of life of their impoverished masses, through sustained economic
growth. This would help them achieve their due share in the global trade,
rather than see it marginalized further The international community should
endeavor—by strengthening the international financial system, through
trade, and through aid—to help the poorest countries integrate into the world
economy, grow more rapidly, and reduce poverty. That is the way to ensure
all people in all countries have access to the benefits of globalization.

References

1. World Trade Organization Website(www.wto.org)


2. International Monetary Fund website(http://www.imf.org/external/index.htm)
3. http://www.oocities.org/znuniverse/Economics_of_Planning/wto_and_the_develo
ping_countries.htm
4. http://en.wikipedia.org/wiki/Least_Developed_Country
5. http://www.asil.org/ajil/April2009selectedpiece.pdf
6. Jacob Katz Cogan,2009 "Representation and power in international Organization:
the operational constitution and its Critics”