Lelis, Princess

AB Journalism 1-A
College of Arts and Letters

THE INTERNATIONAL FINANCIAL INSTITUTIONS

The twenty-first century requires procedures and measure that enhance the transformation of
global scenarios. Today the International financial institutions (IFIs) are increasingly engaging
countries that are economically poor into investing in resourceful developments that support
economic growth. (IFC Magazine, 2010) This paper is a discussion of the roles played by the
International financial institutions and their duty to help by cooperating with the private sector in
the quest of modifying methodologies to meet the needed market oriented. What role do
financial institutions play in ensuring that defined economic growth principles are adhered to?

International financial institutions have to play a role in reshaping market positions. Some of
these institutions – which is the two major International Financial Institutions, the International
Monetary Fund and the World Bank, have long sought to alleviate poverty in developing nations
by improving policies that encourage economic growth and environmental preservation.
Evidently, there has been an extraordinary renewal and strengthening of global integration since
then, aided by technological advancements and international economic policies stemming from
multilateral collaboration. These events combined to result in greatly reduced barriers to
international trade; increased global output growth; the spread of advanced industrialization-
related living standards to new parts of the world; reducing poverty and improved standards of
living in most other parts of the world; and the rise of new of a number of new key players in the
international economy. The International Monetary Fund was created to preside over a new fixed
rate system based on the United States. Countries with temporary balance of payments deficits
would be able to borrow from the IMF on concessionary terms. The IMF found itself taking on a
very different role after the collapse of fixed exchanged rates. After the 1980s, worldwide
financial crises became far more common, and the IMF was free to recast itself as a crisis-
fighting institution. The main purpose of this was to make sure exchange rates stayed stable to
encourage global trade. The IMF was also tasked with providing short-term loans to countries
that are struggling to pay their current debts. On the contrary, the World Bank’s main role is to
give financial assistance or relief to countries. It also provides funding and resources in projects
in some of the poorest countries in the world. The IMF is funded mainly by quotas from member
countries. The World Bank is financed mostly by issuing bonds to its global investors. The
institutions can ensure this growth by assisting the governments’ role of creating the conditions
necessary for market-orientation towards the achievements and by being participants in
investing. One thing the IMF and World Bank have in particular is that they both have detractors.
The World Bank and IMF, which are monopolized by developed countries, are frequently
reprimanded for failing to pay adequate attention to the needs of developing countries.
Furthermore, they are accused of interfering unnecessarily in the economic policies of the
borrowing developing countries. Nonetheless, the IMF and World Bank have been a boon to
many of the world's emerging economies.
 HISTORY OF GLOBAL MARKET INTEGRATION IN THE 20TH CENTURY
Using grain markets during the first phase of globalization as a test platform, the paper builds on
contemporary trade literature and 19th-century economic history to link levels of market
integration to cross-sectional and temporal variations in transport technology, geography,
monetary tyrannies, commercial networks or policy, and conflict. Over the centuries as
commerce grew, albeit slowly, the power of the vassals of the feudal system declined being
replaced by merchants and incipient capitalists. Innovations in sailing led to long distance
trading. The opportunities and challenges of sending a vessel abroad for years at a time brought
about the institutions which facilitated the growth of the modern capitalist system. At the same
time, booming industry and industrialization undermined the feudal economy, altering both
Europe's political and economic structures.
The question remains why in the “west”? Some of the factors contributing to these changes were
the Protestant Reformation – note that industrialization began in northern Europe. Protestant
work ethic - fostered hard work, frugality, sobriety and efficiency, virtues which facilitated
capitalism. Secondly, the rise of strong nation states - 16th through 19th century. The rise of
strong nation-states created conditions conducive to capitalism. It provided domestic markets
free of barriers to trade, a uniform monetary system, contract and property laws, police and
militia protection, as well as basic transportation and communications infrastructure. Initially
absolute monarchs wrested power from feudal lords and town authorities and consolidated
territory into nation states. Eventually, as the power of capitalists and the middle class or
bourgeoisie rose, the monarchs ceded power to a more representative structure. Lastly, the
enlightenment - during the 17th and 18th centuries, tremendous scientific and social
breakthroughs were made. Many discoveries, such as oxygen, electricity, and mathematics, led
to practical uses in agriculture and industry. The scientific basis for the industrial revolution was
built during this time period. Individual rights and duties were emphasized in the social thinking
of David Hume, Adam Smith, and Thomas Jefferson. This weakened the power of institutions
such as the church and state, which had patronizing relationships with the masses. This liberal
philosophy emphasizing freedom from arbitrary authority further led to the rise of the middle
class and the overthrow of the landed gentry. It eventually led to political revolutions in not only
in the United States, but also in England, Holland, and France. Simultaneously, integration of
world capital markets proceeded rapidly. By the early 20 th century, it is estimated that foreign-
owned assets were about equal in value to about 20 percent of world GDP. The United Kingdom
was, as is well known, the world's banker and at its peak, owned 80 percent of foreign assets
globally. Its capital outflows were as much as 10 percent of GDP in some years and averaged 4.5
percent of GDP per year between.
I shall contend economic policies have been extraordinarily effective to date, alter the structure
of the world economy in various ways, mostly for the better. At the same time, there are a
number of barriers that, if not addressed appropriately and in a timely manner, may impede
progress and undo much of the advantages achieved thus far.
REFERENCES
Bremmer, I. (2014). The new rules of globalization. Harvard Business Review, 92 (1/2), 103-
107. Brown, G. W. (2008). Globalization is what we make of it: Contemporary globalization
theory and the future construction of global interconnection. Political Studies Review, 6 (1), 42-
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