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Chapter 4


United Nations (UN)
UN was established in 1945 after the
Second World War.
UN has four bodies:
1) General Assembly
2) Security Council
3) UN Specialized Agencies
4) UN Secretariat

UN General Assembly is the
essential body of the UN.

It is made up of all member states,
each with one vote, regardless of
size, wealth, or power.

UN Security Council is composed of five
permanent members with veto power and
10 chosen (five each year) for two years
Five permanent members of Security
Council are;
China, Russia, France, England (UK), and
United States of America (USA)

UN Specialized Agencies UNICEF WHO FAO UNIDO ILO UNESCO UNDP ICAO ITU UPU WMO IAEA IFAD UNCTAD IMF IDA IBRD IFC International Court of Justice UN Economic and Social Council .

UN Offices UNICEF – UN International Children’s Emergency Fund WHO – World Health Organization FAO – Food and Agricultural Organization UNIDO – UN Industrial Development Organization ILO – International Labor Organization UNESCO – UN Educational. Scientific and Cultural Organization UNDP – UN Development Program ICAO – International Civil Aviation Organization ITU – International Telecommunications Union .

UN Offices UPU – Universal Postal Union WMO – World Meteorological Organization IAEA – International Atomic Energy Agency IFAD – International Fund for Agricultural Development UNCTAD – UN Conference on Trade and Development IMF – International Monetary Fund IDA – International Development Association IBRD – International Bank for Reconstruction and Development (World Bank) IFC – International Finance Corporation .

.UN Secretarait Headed by by the secretary-general. the secretariat carries out day-to-day administrative functions of UN.

4) Important states like Brazil. 5) Security Council is composed of the victorious states of the Second World War. and India want to have a place in the Security Council.Criticism of UN: 1) There are no Muslim countries in the Security Council. 2) Africa and Latin America do not have representatives in the Security Council. Nigeria. . 3) Economically powerful states like Japan and Germany are not in the Security Council.

2. In the USA they didn't know what "the rest of the world" meant 8. In South America they didn't know what "please" meant 7. The only question asked was: "Would you please give your honest opinion about solutions to the food shortage in the rest of the world?" The survey was a HUGE failure because of the following: 1. In the Middle East they didn't know what "solution" meant 6. 3. In Africa they didn't know what "food" meant. In Australia they hung up as soon as they heard the Indian accent. .A UN joke Last month a world survey was conducted by the UN. 4. In Eastern Europe they didn't know what "honest" meant. In Western Europe they didn't know what "shortage" meant. In China they didn't know what "opinion" meant 5.

European Bank for Reconstruction and Development (EBRD) intends to aid East European transition economies. Asean Development Bank is trying to develop the most underdeveloped regions in Asia. . Inter-American Development Bank finances projects in Latin America and Caribbean. International Bank for Reconstruction and Development (IBRD) is the World Bank.Multilateral Banks African Development Bank is trying to support private enterprises in Africa.

. Its aim is to help the Central and Eastern European ex-Soviet countries to develop their private sectors in democratic environment. It provides project financing for banks. both new ventures and investments in existing companies. EBRD is owned by 60 countries and two intergovernmental institutions. It supports privatization and restructuring of state-owned firms and improvement of municipal services. and businesses.European Bank for Reconstruction and Development It was established in 1991 after the fall of Soviet Union in 1991. industries.

and Almaty Kazakhstan. The purpose of the bank is to foster economic growth and social progress of member countries and Muslim communities in general according to principles of Shariah .Islamic Development Bank It is established in 1395H/1975. Malaysia. Moracco. So it is a multilateral Bank. The head office is in Jeddah. IDB has regional offices in Kuala Lumpur. Saudi Arabia. Rabat.

IBP also promotes Islamic financial market. Islamic Development Bank invited leading Islamic financial institutions to participate in the establishment of Islamic Bank’s Portfolio (IBP). IBP provides short-term trade financing and medium-term asset-based finance to the firms in Muslim countries. .Islamic Bank’s Portfolio (IBP) In 1987.

Abu Dhabi. Qatar. and Venezuela. Ecuador. Membership is open to any country which is a substantial net exporter of oil and which shares the ideals of the organization. Libya.Organization for Petroleum Exporting Countries (OPEC) It is established in 1960 in Baghdad by Iran. Saudi Arabia. Indonesia. Iraq. Algeria. . and United Arab Emirates joined later. Kuwait.

. • • • • Supply 40% of the world’s oil output. Meets 90% of Japan’s oil needs.OPEC members collectively. Meets 84% of Europe’s oil needs. Posses more than 75% of the world’s total crude oil reserves.

South Korea. Ireland. Slovakia. UK. Denmark. Greece. Spain. Germany. Netherlands. social. Finland. Poland. France. Japan. and environmental challenges posed by globalization. Austria. NZ.Organization for Economic Cooperation and Development It is established in 1960 to promote economic cooperation and development. Portugal. Iceland. Luxembourg. and US. Italy. Norway. Switzerland. Belgium. It has 30 members: Australia. Canada. Mexico. Czech Republic. Sweden. It helps governments to respond to economic. Its base is in Paris. . Hungary. Turkey.

Vietnam. France. Russian Federation. Taiwan. Japan. Indonesia. Egypt.Imortant groupings • G7 – US. Russian Federation. • G8 – US. Turkey. Indonesia. Turkey. • EAGLES 10 – China. Italy. India. UK. Brazil. Germany. Turkey. Brazil. Canada. Italy. India. South Korea. Endonesia. India. China. . • T-BRIC – Turkey. Brazil. Japan. Canada. South Africa. India. Russian Federation. Mexico. France. Russian Federation. China. • E7 – China. UK. Mexico. • BRIC – Brazil. Russian Federation. Egypt. • CIVETS – Colombia. Germany.

It campaigns to. • Save the oceans. • Say “no” to genetic engineering. • Stop whaling. It focuses on the most crucial worldwide threats to our planet’s biodiversity and environment. • Encourage sustainable trade. • Eliminate toxic chemicals. • Stop climate change. • Stop the nuclear threat. . • Protect ancient forests.Greenpeace It is a non-profit organization with a presence in 40 countries.

and the last fish dead. we will discover that we can not eat money”. “when the last tree is cut.Rainbow Warriors They call themselves Rainbow Warriors and argue that. . the last river poisoned.

General Agreement on Tariffs and Trade (GATT) It was established in 1947. . Geneva. Switzerland. The purpose was to promote free trade by reducing tariff barriers.

the second country must likewise lower its tariffs. 3) Transparency – Members are expected to replace non-tariff barriers (whose effects are hard to measure and detect) with tariffs. Most-favored-nation rule must apply to all the members. 2) Nondiscrimination – Members must not grant one country preferential trade treatment over others. which are open to scrutiny and thus more easily reduced through further negotiations. .GATT Principles 1) Reciprocity – If one country reduces its tariffs against another.

......1950 Geneva Round.........................................................................1947 Annecy Round...................1964-67 Tokyo Round..........................................1960-61 Kennedy Round.........1949 Torquay Round............1986-92 ...........................GATT Negotiating Rounds Geneva Round...............1956 Dillion Round..............1973-79 Uruguay Round..........................................

. • An organization for liberalizing trade. • An organization operating a system of trade rules.World Trade Organization (WTO) It is. • A place for govenments to settle trade disputes. • A forum for govenments to negotiate.

Internationally traded services: Developed countries attempt to reduce the barriers on service imports like financial services. Foreign investment: Restrictions on FDI by multinationals are challenged. yearly. Textiles and clothing trade had been restricted by multi-fiber arrangement (MFA). insurance services. Removal of all trade restrictions on farm products will increase the world trade by $100 billion. Expected gains from liberalization is $50 billion. Exporters were mainly LDCs and importers were wealthy industrialized countries. . Intellectual property: Protection against infringement of patents. etc.Issues to be tackled by the WTO: 1) 2) 3) 4) 5) Agricultural trade has been excluded from previous negotiations. trademarks and other intelelctual property is discussed.


Topics on the agenda of WTO • • • • • • Restrictions on FDI Government protection of new technology to protect domestic industry Antidumping laws Environmentalists opposition to increase trade Trade disputes between countries Setting ground rules for international commerce .

It provides two types of loans: • • Hard loans Soft loans .World Bank (IBRD) is responsible for economic development of countries.

tourism. convertible currencies at market interest rates with normal market maturities. and paper and cotton fabric. IFC finances industries like fertilizers. It developed capital market in Brazil. . synthetic fibers.1) Hard loans are made and repayable in hard. They are secure loans not exceeding 25 years. International Finance Corporation is World Bank’s investment department.

nonconvertible currencies. Soft loans are given to countries with per capita income less than $750 a year. International Development Association (IDA) provides these loans. but they can not carry hard currency burden.2) Soft loans can be paid back in soft. are usually long-term up to 40 years and may have grace periods up to 10 years during which no payments are required. carry low or no interest obligations. It is to help the poorest LDCs which need loans to develop. .

. 3) Foster shorter duration and lesser degree Balance of Payments disequilibria.International Monetary Fund (IMF) It was established to promote international monetary cooperation in Bretton Woods in 1945. The Articles of Agreement: 1) Foster orderly foreign exchange arrangements. 2) Foster fixed currencies.

meaning that IMF can influence or even dictate fiscal and monetary policies of the member states. . the second clause was changes as follows: 2) Foster floating exchange rates And a fourth clause was added as follows: 4) IMF has surveillance powers over the member states.In 1971.

The world went through many economic and crises after 1971. Some solutions to debt crises: Debt default is when countries can not pay their debts. debts are turned into bad debts. . debts are rescheduled. Debt rescheduling is when countries cannot pay their debts on time.

. It is a banker for central banks. It was established in 1930.Bank for International Settlements (BIS) BIS is the most discrete financial institution in the world. It is a center for research. It is an agent for international financial arrangements. Major industrial countries meet 10 times a year to discuss the global financial system in Basel Switzerland. • • • • It is a forum for international monetary cooperation.

1961). At each succeeding state. . members surrender a greater measure of their national sovereignty.ECONOMIC INTEGRATION According to Bela Balassa (The Theory of Economic Integration. there are five degrees of economic integration.

. and entrepreneurship within the union. and all members are subject to the binding decisions of a supranational authority consisting of executive. and a common foreign economic policy. labor. and legislative branches. unified monetary and tax systems. Economic union: In addition to common market.Five levels of economic integration: Free trade area: Members agree to remove all barriers to trade within the group but may continue to pursue their own independent policies with nonmembers. Economic integration: Removal of all barriers to interbloc movement of goods and factors of production is complete. economies of member countries are integrated through a common central bank. Common market: In addition to customs union. Customs union: Free movement of goods among member countries but imposes common system of trade restrictions with outsiders. unification of social and economic policies achieved. judicial. there will be unrestricted movement of capital.

European Union (EU) After a devastating Second World War. European countries decided to work together to avoid another war in Europe and to keep coal and steel industries under control. Treaty of Rome was signed in 1957 creating European Economic Community (EEC) and European Atomic Energy Community (Euratom). .

and Sweden (1995). Romania and Bulgaria (2007). Lithuania. Slovenia.EU Enlargement Treaty of Rome was signed by six founding states: W. Finland. Estonia. Italy. France. Slovakia. Belgium. Malta. Ireland. Following enlargements: Greece (1981). United Kingdom. Netherlands. Austria. and Poland (2004). and Denmark joined. and Luxembourg (Benelux States). Hungary. Germany. In 1973. Latvia. Check Republic. . Cyprus Greek Republic. Spain and Portugal (1986).

Policemen Cooks Beer Brewers Lovers Organization English French German Italian Swiss Hell if.EU hell or heaven? Heaven if. Policemen Cooks Beer Brewers Lovers Organization German English French Swiss Italian .

EU has become 27 states. .The New Map of EU With the latest enlargement. It is the richest region in the world.

Altiero Spinelli. along with an army under its control. with no other military forces being permited”. a supranational govenment directly responsible to the people of Europe and not national governments. he argued for “a federal Europe with a written constitution. . In 1944. an Italian resistence fighter is the father of the idea of a united Europe.

European Parliament is the elected body of the EU. European Commission is the beurocracy of the EU.000 beurocrats and technocrats working in Brussels. Its authority supersedes the decisions of the courts in the member states. There are about 20. The members of the EP are elected by the citizens of the member countries. European Court of Justice is the legal organ of the EU. It is deciding on issues raised against Treaty of Rome (against Nice Agreement after it is passed from the parliaments of the member states). It is made up of prime ministers of the member states. The representation in the EP is according to the population sizes of the countries. They meet periodically at summits.EU organizational structure 1) 2) 3) 4) Council of Ministers is the policy setting body of the EU. .

Maastricht Treaty It was signed on 1991 by 12 EU member states. Its goals were monetary and economic union with European Central Bank and a single currency replacing national currencies. It was a committment to future United States of Europe. .

National currencies must not have been devalued and must have remained within the normal (15%) bands of the EMS for the previous two years. National budget deficits must be less than 3% of GDP. National debt must be less than 60% of GDP.5% above the average of the three EU countries with the lowest interest rates. Long-term interest rates should be no more than 2% above the average of the three EU countries with the lowest interest rates.Maastricht Treaty set out five convergence criteria which member states must satisfy before they can accede to European Monetary Union (EMU): 1) 2) 3) 4) 5) Inflation rates should be no more than 1. .

North American Free Trade Agreement (NAFTA) NAFTA was established in 1990 by the USA and Canada. USA alone is accounting for the 28% of world’s GDP. Mexico joined later and NAFTA became the largest economic area in the world. .

has become the largest regional emerging market in the world. Their GDPs enjoyed annual growth rates averaging over 7%. ASEAN is the fastest growing economic region in the world. Thailand. Indonesia.Association of South East Asian Nations (ASEAN) It is created in 1967 by Brunei. the Philippines. Cambodia. and Vietnam. ASEAN – China Free Trade Area launched on Jan. Myanmar. . 1. 2010. Laos. Singapore. Malaysia.

Guinea. Gambia. Liberia. Burkina Faso. Ghana. . Sierra Leone. Ivory Cost. cacao. Niger. Cape Verde. Mali. GuineaBissau. Nigeria.Economic Community of West African States (ECOWAS) It was established by Benin. palm oil) and minerals including oil. and Togo. Senegal. ECOWAS countries produce and export mainly agricultural products (coffee.

oil. Belarus. Turkmenistan. Tajikistan. The most important state in CIS is Russia which is the world’s largest country (6.5 million square miles). Kazakhstan. Uzbekistan.Commonwealth of Independent States (CIS) After the collapse of Soviet Union in 1991. minerals. Kyrgyzstan. Azerbaijan. and fertile farmland. Armenia. ex-Soviet Republics formed CIS as a free trade area. diamonds. . including gold. Ukraine. and Moldova are members of CIS. Russia. Georgia. natural gas. CIS is very rich in natural resources.