Introduction: After the Second World War two beginning, the third world. Basically
, we know that this term “third world” is origin of conflict between two countries
such as the united states of America and the soviet union. Besides, Korean conflict
(1950-1953) and arguably going, a new geopolitical imagination began to emerge
as the conflict between the Soviet Union and the united states. The term “third
world” arose during the cold war to define countries that remained non- aligned
with NATO ( North Atlantic treaty organization) or the communist bloc. We know
that about many countries associated with first world war such as The United
states, Canada, Japan, Korea, Western European nations and their allies. Besides,
Soviet Union, China, Cuba and their allies represented the second war. This
terminology provided a way of broadly categorizing the nations of the earth into
three groups based on political and economic divisions. The fall of the Soviet Union
and the end of the cold war. The term third world has been used less and less.
When the United States and the Soviet Union has started of cold war and then at
this time both countries published own power. But at this time many country
people thought and said they do not associated both country but they thinking and
planning and established NAM ( Non- Align Movement). Basically, third world
country means we say that developing countries, least developed countries or the
global south. The third world was normally seen to include many countries with
colonial parts in Africa, Latin America, Oceania, and Asia. It was also sometimes
taken as synonymous with countries in the Noon- Aligned Movement. In the
dependency theory of thinkers like Raul prebisch, Wlwaltet Rodney, theptonio das
Santos, and Andre Gunder frank , the third world has also been connected to the
world systemic economic division as ” periphery” countries dominated by the
countries comprising the economic ” core” . We know, there is no clear or agreed
upon definition of the third world. Some countries in the Communist Bloc, such as
Cuba, were often regarded as ” third world”. Because many world countries were
economically poor and non- industrialized. The creation of the international and
world bank were two of its most enduring legacies. The world bank and IMF often
called the Bretton Woods institutions, are twin intergovernmental pillars
supporting the structure of the world economic and financial order.
Similiarities to IMF and World Bank:
the Bank and IMF exhibit many common characteristics. Both are in a sense owned
and directed by the governments of member nations, and virtually every country
on earth is a member of both institutions. Both institutions concern themselves
with economic issues and concentrate their efforts on broadening and
strengthening the economies of their member nations. Staff members of both the
Bank and IMF often appear at international conferences, speaking the same
recondite language of the economics and development professions, or are
reported in the media to be negotiating involved and somewhat mystifying
programs of economic adjustment with ministers of finance or other government
officials. The two institutions hold joint annual meetings, which the news media
cover extensively. Both have headquarters in Washington, D.C., where popular
confusion over what they do and how they differ is said to be as pronounced as
everywhere else. For many years both even occupied the same building, and share
a common library and other facilities, regularly exchange economic data,
sometimes present joint seminars, daily hold informal meetings, and occasionally
send out joint missions to member countries.
what the IMF does?
1) surveillance
2)lends
3)Technical Assistance
1)surveillance: Involves the monitoring of economics and financial development
and the provision of policy advice, aimed especially at crisis prevention.
2) Lends: The IMF also lends to countries with balance of payments difficulties, to
provide temporary financing and to support policies aimed at correcting the
underlying problems, loans to low- income countries are also aimed especially at
poverty reduction.
3) Technical Assistance: The IMF provides countries with technical assistance and
training in its areas expertise.
purposes of the International Monetary Fund are as follows:
1. To promote international monetary cooperation through a permanent
institution which provides the machinery for consultation and collaboration
on international monetary problems.
2. To facilitate the expansion and balanced growth of international trade, and
to contribute thereby to the promotion and maintenance of high levels of
employment and real income and to the development of the productive
resources of all members as primary objectives of economic policy.
3. To promote exchange stability, to maintain orderly exchange arrangements
among members, and to avoid competitive exchange depreciation.
4. To assist in the establishment of a multilateral system of payments in
respect of current transactions between members and in the elimination of
foreign exchange restrictions which hamper the growth of world trade.
5. To give confidence to members by making the general resources of the
Fund temporarily available to them under adequate safeguards, thus
providing them with opportunity to correct maladjustments in their balance
of payments without resorting to measures destructive of national or
international prosperity.
6. In accordance with the above, to shorten the duration and lessen the
degree of disequilibrium in the international balances of payments of
members.
In addition to financial assistance, the IMF also provides member countries with
technical assistance to create and implement effective policies, particularly
economic, monetary, and banking policy and regulations.
All member nations, both wealthy and poor, have the right to financial assistance
from the IMF. Maintaining an orderly and stable international monetary system
requires all participants in that system to fulfill their financial obligations to other
participants. Through the use of IMF resources, countries have been able to buy
time to rectify economic policies and to restore growth without having to resort
to actions damaging to other members’ economies. The IMF has gone through
two distinct phases in its 50-year history. During the first phase, ending in 1973,
the IMF oversaw the adoption of general convertibility among the major
currencies, supervised a system of fixed exchange rates tied to the value of gold,
and provided short-term financing to countries in need of a quick infusion of
foreign exchange to keep their currencies at par value or to adjust to changing
economic circumstances.
After five years of analysis and negotiation (1973-78), the IMF’s second phase
began with the amendment of its constitution in 1978, broadening its functions to
enable it to grapple with the challenges that have arisen since the collapse of the
par value system. These functions are three.
How can the IMF help third world countries?
1. when a country imports more then it experts, it has a trade deficit. It
cancause foreign exchange
2. Flexibility and speed. “In March 2009, the IMF created the Flexible Credit
Line (FCL), which is a fast-disbursing loan facility with low conditionality aimed at
reassuring investors by injecting liquidity…Traditionally, IMF loan programs
require the imposition of austerity measures such as raising interest rates that
can reduce foreign investment…In the case of the FCL, countries qualify for it not
on the basis of their promises, but on the basis of their history. Just as individual
borrowers with good credit histories are eligible for loans at lower interest rates
than their risky counterparts, similarly, countries with sound macroeconomic
fundamentals are eligible for drawings under the FCL. A similar program has been
proposed for low-income countries. Known as the Rapid Credit Facility, it is front-
loaded (allowing for a single, up-front payout as with the FCL) and is also intended
to have low conditionality.
3.Cheerleading. “The Fund is positioning itself to be less of an adversary and
more of a cheerleader to member countries. For some countries that need loans
more for reassurance than reform, these changes to the Fund toolkit are
welcome.” Foreign Policy in Focus, this enables more domestic political and
economic stability.
4.Adaptability. “Instead of providing the same medicine to all countries
regardless of their particular problems, the new loan facilities are intended to aid
reform-minded governments by providing short-term resources to reassure
investors. In this manner, they help politicians in developing countries manage
the downside costs of integration.”
5.Transparency. The IMF has made efforts to improve its own transparency and
continues to encourage its member countries to do so. Supporters note that this
creates a barrier to any one or more countries that have more geopolitical
influence in the organization. In reality, the major economies continue to exert
influence on policy and implementation.
To underscore the global expectations for the IMF’s role, China, Russia, and other
global economies have renewed calls for the G20 to replace the US dollar as the
international reserve currency with a new global system controlled by the IMF.
What is World Bank?
The World Bank Group was established in 1944 to rebuild post world war 2 Europe
under the development. The world Bank is an international financial institution that
provides loans to countries of the world for capital projects. It comprises two
institutions: The international Bank for Reconstruction and development(IBRD)
,and the international development Association(IDA)
How can the World Bank help the third World countries?
1. Give loans and offers advice and training in both the private ;public sectors.
2. Aims to eliminate poverty by helping people help themselves.
3.Fights poverty by offering Development Assistance to middle income ; low-
income countries. seeks to promote the economic development of the world’s
poorer countries
4.assists developing countries through long-term financing of development
projects and programs
5.provides to the poorest developing countries whose per capita GNP is less than
$865 a year special financial assistance through the International Development
Association (IDA)
6.encourages private enterprises in developing countries through its affiliate, the
International Finance Corporation (IFC)
7.acquires most of its financial resources by borrowing on the international bond
market
8.has an authorized capital of $184 billion, of which members pay in about 10
percent
9.has a staff of 7,000 drawn from 180 member countries
World Bank overcome the Food crisis in third world countries such as:
1.The food crisis: A man made problem High fuel costs have resulted in higher
agriculture costs. faling food stocks, and land shifted out of food production to
produce biofuels .The international community should help those in danger today
and ensure the poor do not suffer this tragedy again.
2.World Food programme: Fully fund the world programmes emergency needs
supports its drive to buy food aid locally ensure the unhampered movement of
humanitarian assistance.
3.Safety Nets: support safety nets, such as distributing food in schools or offering
food for work. To quickly help those in severe distress.
4.Seeds and Fertilizer: Get seeds fertilizer for coming planting season to farmers in
poor countries. The key is not just financing, but fast delivery system.
5.Agriculture research: Double spending on agricultural research and development
to $800 million over the next 5 years through the consultative group on
International agricultural research.
Conclution: The International Monetary Fund promotes monetary cooperation
internationally and offers advice and assistance to facilitate building and
maintaining a country’s economy. The IMF also provides loans and helps countries
develop policy programs that solve balance of payment problems if a country
cannot obtain financing sufficient to meet its international obligations. The loans
offered by the IMF, however, are loaded with conditions. Often, a loan provided by
the IMF as a form of “rescue” for countries in serious debt ultimately only stabilizes
international trade and eventually results in the country repaying the loan at rather
hefty interest rates. For this reason, the IMF has many critics worldwide.
The World Bank’s purpose is to aid long-term economic development and reduce
poverty in developing countries. It accomplishes this by making technical and
financial support available to countries. The bank initially focused on rebuilding
infrastructure in Western Europe following World War II, and then turned its
operational focus to developing countries. World Bank support helps countries
reform inefficient economic sectors and implement specific projects, such as
building health centers and schools or making clean water and electricity more
widely available. World Bank assistance is typically long term, funded by countries
that are members of the bank through the issuing of bonds. The World Bank also
has a pool of about $200 billion with which to offer aid to less-developed countries.
The bank’s loans, however, are not used as a type of bailout, as in IMF style, but as
a fund for projects that help develop an underdeveloped or emerging market
nation and make it more productive economically.
Reference:
1. https://www.quora.com/What-are-the-roles-of-the-International-Monetary-Fund-IMF-an…
2. https://2012books.lardbucket.org/…and…/s10-02-what-is-the-role-of-the-imf-an.html
