International

Organisations

International
World Trade
Monetary Fund, World Bank, 1945
Organisation, 1995
1947

International Multilateral International Centre

International
Development Investment for Settlement of
Finance Corporation
Association (IDA), Guarantee Investment Disputes
(IFC), 1956
1960 Agency(MIGA), 1988 (ICSID), 1966
• Formed on January 1, 1995
• Headquarters: Geneva, Switzerland
• Membership: 164 countries (since July 2016)
• Unlike GATT, WTO is a legal body.
• Unlike IMF and World Bank, it is not an agent of United
Nations.
• Unlike IMF and World Bank, WTO gives equal powers
and voting rights to its members.
• WTO is a permanent organization and hence the
agreements are binding on the member countries.
• The dispute settlement system is quicker and binding
on members.
• Unlike GATT, WTO’s approach is rule based and time
bound.
• Unlike GATT, WTO has wider coverage. It covers trade
in goods as well as in services.
• WTO is a huge organizational body with a large
secretariat.
• GATS provided access to technology, information networks, etc.
• The developing countries can follow the ‘positive list’ approach for
negotiations. Under this approach, the members can list the services
as well as the nature of concessions they propose to grant.
• GATS also provided an opportunity not only to avail services from
other member countries but also to increase the quality of its own
services due to completion.
• Product Patent System by 2005

• Exclusive Marketing Rights (EMR)

• Amendment in Patent Act, 1970 by April 19, 1999

• Patent (Amendment) Act, 1999

• Patent (Amendment) Act, 2005

• Copyright Act 1957

• Protection to layout designs -1999

• Trade and Merchandise Marks Act, 1958 was amended in 1999

International Monetary Fund
(IMF)_
 Formation of IMF
• Created on July 22, 1944 at Bretton Woods, New
Hampshire, United States
• Came into existence on December 27, 1945 when
29 countries signed the Articles of Agreement
• It originally had 45 members
• Membership – 188 Nations (April 2012)
• Headquarters – Washington, D.C.
• India became the founder member by signing the
agreement on December 27, 1945
 Objectives of IMF
• To maintain exchange rate stability
• To promote international monetary co-operation
• Top establish multilateral system of payments
• To provide short term assistance
• To facilitate expansion and growth of international
trade
• To reduce disequilibrium in balance of payments
 Functions of IMF
• Regulatory function
• Financial function
• Consultative function
• Other functions
a) Eliminates exchange rate restrictions applied by
member countries
b) Rationing of scarce currencies
c) Decides par value
d) Decides quota
e) Acts as bank of central banks
 Quota System
The IMF’s quota system was created to raise funds
for loans. Each IMF member country is assigned a
quota, or contribution, that reflects the country’s
relative size in the global economy. Each member’s
quota also determines its relative voting power. Thus,
financial contributions from member governments
are linked to voting power in the organization.
India's current quota in the IMF is SDR 4,158.20
million in the total quota of SDR 213 billion, giving it a
share holding of 1.91 %.
 Previously quotas were fixed on the following
basis:
a) 2% of national income
b) 5% of gold and dollar reserves
c) 10% of average annual imports
d) 10% of maximum variation in annual exports
e) The sum of a, b, c and d increased by the
percentage ratios of average annual exports of
national income
The current quota formula is a weighted average of
GDP (weight of 50 percent), openness (30 percent),
economic variability (15 percent), and international
reserves (5 percent).
 Till a few years back, the member countries used to
contribute gold equal to 25% of its quota, or 10% of
its gold stock and the U.S. dollar holdings, whichever
was less.
A member's quota subscription determines the
maximum amount of financial resources the member
is obliged to provide to the IMF. A member must pay
its subscription in full upon joining the Fund: up to
25 percent must be paid in SDRs or widely accepted
currencies (such as the U.S. dollar, the euro, the yen,
or the pound sterling), while the rest is paid in the
member's own currency.
Operations of IMF
Financial Assistance
Exchange Rate Stability
Removal of Exchange Controls
Bank of Central Banks
Special Drawing Rights (Paper
Gold)
 Features of SDRs
• Special drawing rights (SDRs) are
supplementary foreign exchange reserve assets
defined and maintained by the International
Monetary Fund (IMF).
• Created in 1969 to supplement a shortfall of
preferred foreign exchange reserve assets, namely
gold and the US dollar.
• Not a currency, SDRs instead represent a claim to
currency held by IMF member countries.
• SDRs are denoted with ‘XDR’.
 Features of SDRs
• SDR's value is defined by a weighted currency
basket of four major currencies: the Euro, the US
dollar, the British pound, and the Japanese yen
 Features of SDRs
• The value of SDR was initially defined as equivalent
to 0.88671 grams of fine gold
• At this time, 1 SDR = $1
• The basket of currencies is reviewed after five years
• The present value of SDR (Sep 2019) is 1 SDR =
Rs.97.77 and 1 SDR = $1.37
• Interest is paid by an IMF member country if it
holds less SDRs than it was allocated, and interest
is paid to a member country if it holds more SDRs
than the amount it was allocated
 Features of SDRs
• India has approximately 1043 million SDRs (August
2019).
• The IMF's Board of Governors on 28 April 2008
endorsed the reforms in quota and voting structure
of IMF. This endorsement marks an important
milestone in realigning the quota and voting
structure of the IMF to reflect the relative
economic weights of economies in the world.
 Features of SDRs
General allocations have to be based on a long-
term global need to supplement existing reserve
assets.
• The first allocation was for a total amount of SDR
9.3 billion, distributed in 1970-72 in yearly
installments.
• The second allocation, for SDR 12.1 billion, was
distributed in 1979-81 in yearly installments.
• The third general allocation was approved on
August 7, 2009 for an amount of SDR 161.2 billion
and took place on August 28, 2009.
 Features of SDRs
Separately, the Fourth Amendment of the Articles
of Agreement, a special allocation of SDR 21.5 billion
was made to enable all members of the IMF to
participate in the SDR system on an equitable basis
and correct for the fact that countries that joined the
Fund after 1981-more than one-fifth of the current
IMF membership-had never received an SDR
allocation. This has entered into force on 10 August
2010.
Shortcomings of IMF
• Does not support long term aid
• Par value decided in terms of gold or US dollar
• Destructive policies
• Failed to prevent dollar shortage
• Failed to solve the problems of developing
countries
• Safeguards U.S. interests
• Failed to evolve a stable international monetary
system
World Bank
 The World Bank was established in 1944 to help
rebuild Europe and Japan after World War II, and its
official name was the International Bank for
Reconstruction and Development (IBRD). When it first
began operations in 1946, it had 38 members. Now
its has 188 countries.
The World Bank is an international financial
institution that provides loans to developing
countries for capital programs.
The World Bank's official goal is the reduction of
poverty.
 As it has grown, the World Bank has created
new organizations within itself that specialize in
different activities. All these organizations together
are called the World Bank Group.
• IDA - International Development Association (Low
Income Countries)
• IFC - International Finance Corporation (Private
Sector)
• MIGA - Multilateral Investment Guarantee Agency
(Foreign Investment)
• ICSID - International Centre for Settlement of
Investment Disputes (Settling of disputes between
foreign countries and private investors)
 The World Bank Group consists of:
• International Bank for Reconstruction and
Development (Low & Middle Income Countries),
1944
• International Finance Corporation (Private Sector),
1956
• International Development Association (Low
Income Countries), 1960
• Multilateral Investment Guarantee Agency (Foreign
Investment), 1988
• International Centre for Settlement of Investment
Disputes (Settling of disputes between foreign
countries and private investors), 1966