Transcript The World Trade Organization

Social Institutions
How do the institutions in society
affect you?
Social Institutions
• Structures to provide stability to social life as
well as mechanisms to assert authority,
power, and control.
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Family
Education
Criminal Justice
Religion
Government
Economy
Origins of the World Bank,
IMF and WTO
• These institutions arose out of the plans by
the US to avoid financial crisis after WWII.
– World Bank was to give loans to reconstruct Europe, but
gave loans to poor countries instead.
– IMF gives loans and advice for dealing with short term
financial crisis.
– Global Agreement on Tariffs and Trade (GATT) became
World Trade Organization (WTO) in 1996.
Global Political and
Economic Institutions
• International Bank for Reconstruction and
Development (World Bank)
– Loans for “development” projects to encourage economic
growth.
» http://www.worldbank.org/
• International Monetary Fund (IMF)
– Deals with short-term economic crisis through loans and
restructuring a nation’s economy.
» http://www.imf.org/external/index.htm
• World Trade Organization (WTO)
– Oversees trade between nations to encourage the free flow
of goods and growth of economies
» http://www.wto.org/
Goals of WB, IMF, WTO and
Neoliberalism
• Encourage economic growth through the removal of barriers to trade.
– Reduce expenses on social and governmental expenditures
• Cut government employees
• Sell off (privatize) state property such as natural resources, electricity and water
to private companies
• Cut social services and education (in some cases)
• Cut health care expenditures and begin fees for care
• Eliminate subsidies for basic foods
– Reduce regulation and encourage competition with global companies to “get
prices right”
– Focus your economy on “comparative advantage”
• Produce one, or a few, products for export
– Reduce tariffs and price subsidies on goods
– Discourage unions
Results of IMF Policies
• Development: IMF, Bank Wrongly Take Credit
for Poverty Drop
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http://www.globalexchange.org/campaigns/wbimf/1805.html
• Relative Size of Argentina’s Economy (GDP)
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Compared to the rest of the nations in the world
1970 = 19th
1980 = 25th
1990 = 23rd
2001 = 17th
2006 = 31st
Nicaragua
• Debt incurred by the dictators of Nicaragua still had to be repaid.
• Country devastated by war with “contras” who were illegally
supported by US.
• Economic crisis arose from falling coffee prices and a bank
scandal like US S&L crisis.
• IMF imposed conditions that forced the country to focus on
repaying debt to the wealthy in Nicaragua and eliminated pay
increases for teachers and public employees.
Nicaragua
• Nicaragua is now the poorest country in Latin America with the
highest rate of debt per person.
• It spends 2 and a half times more on debt repayment than on
health and education combined.
– Over half of the population live below the poverty line
– Two fifths of poor children are malnourished
– Three quarters of the poor live in rural areas, and half of these are
extremely poor, unable to meet their daily food needs