Economic Institutions GapFill

Global governance is organised through a network of prominent international institutions. It is important to understand the aims of these organisations and to be familiar with debates surrounding their effectiveness on the international stage.

In terms of economic governance, the twin organisations of the International Monetary Fund (IMF) and the World Bank play a central role on the international stage. Both were founded at the Bretton Woods Conference in 1944, with the intention of providing loans to indebted nation states, and supporting trade and employment, as well as helping to manage economic crises. The IMF and World Bank currently have 189 member states, all of whom pay into the fund and are entitled to claim loans for debt relief. The role of these twin institutions has changed over the decades alongside changes in the global economic system, though their primary function of offering loans to indebted nation states remains the same.

The IMF and World Bank have attracted controversy and criticism in recent decades for conditionalities they have attached to loans in the form of what are known as  Structural Adjustment ProgramsFiscal Contraction PoliciesGlobal Loan ExpectationsReorganisation Demands. These require nation states to implement certain economic polices, such as the removal of trade barriers, privatisation of publicly owned services and resources, and reduced public spending. This set of policy expectations is known as the Washington Consensus. Some argue that these conditions undermine national sovereignty and can be damaging to the economy in the long term by opening up developing economies to exploitation from wealthier nations and  multinational corporationsmilitary forcescharitiesnon-governmental organisations.

Another key international institution in global economic governance is the World Trade Organization (WTO). The WTO was founded in 1995 as a replacement for the semi-institutionalised General Agreement on Tariffs and Trade (GATT), which was established during the Bretton Woods Conference in 1944. It is responsible for enforcing global trade regulations and providing a forum in which trade negotiations can take place and trade disputes can be resolved. In practice, the WTO is similarly criticised for enforcing uneven trade regulations to the benefit of  rich peopledeveloped nationsnational governmentsconsumers, with decisions made at the WTO accused of lacking legitimacy and transparency.

Two other international institutions involved in global economic governance are the G7 and G20. The G7 is a forum of  multinational corporationseconomistsdeveloping countrieswealthy Western nations formed in the 1970s in response the oil crisis of that decade. Comprised of Canada, France, Germany, Italy, Japan, the UK and the USA, it has since met annually to discuss global economic strategy and respond to economic shocks. Although it still meets, in recent years it has been overtaken in prominence by the G20, a similar grouping regarded to have more legitimacy as it includes developing major powers such as China, India and Brazil. In recent years these meetings have been the focus of protests for those critical of, or opposed to,   national sovereigntyhuman rightsdeveloping nationsglobalisation.

While  anarchistsliberalsrealistsfeminists tend to see these forms of global economic governance as a positive phenomenon which boosts economic growth and global prosperity, others are more critical, saying the system of institutions creates relations of dependency between the Global North and Global South and constitutes an economic form of  colonialisminvasionsovereigntycharity.