LEMEI B PHOM
As a result of the World War II, most of the economies of Europe
were badly shattered. The major economists of the 1940s, particularly
John Maynard Keynes, were greatly affected by the economic crisis
that engulfed the world and sought to reconstruct the world economy
after the end of World War II. Thus, under the intellectual leadership
Keynes, 44 nations of the world gathered in 1944 at Bretton Woods,
New Hampshire, Where it was agreed to organize the world economy
around three corner stonesInternational Monetary Fund (IMF)
International bank For Reconstruction and Development (IBRD)
International Trade Organization (ITO)
Established on December 27, 1945 with 29 countries.
Began financial operations on March 1, 1947.
Headquarters in Washington D.C.
The IMF has a membership of 185 countries.
All members of the United Nations Organization, except
the former USSR, are members of the IMF.
The IMF provides financial assistance to
members to help them to correct balance of
payments problems in a manner that promotes
Promote international monetary cooperation.
Shorten the duration and lessen the degree of disequilibrium in
the international balances of payments of members.
Facilitate the expansion and balanced growth of international
Promote Exchange stability and maintain orderly exchange
arrangements among members.
Assist in establishing a multilateral system of payments.
MANAGEMENT OF IMF
BOARD OF GOVERNORS
STAFF OF INTERNATIONAL CIVIL SERVANTS
1. International monetary And Financial Committee of the Board of Governors.
2. The Development committee.
RESOURCES OF IMF
1. QUOTAS AND SUBSCRIPTION BY MEMBERS: A members total
subscription is equal to its quota. The quota of each member is
payable in the following manner:
(I) 15% of the quota or 10 % of its gold and Dollar holdings payable in
gold or Dollars.
(II) The rest in members own currency.
2. BORROWINGS: The IMF is authorized under its articles of agreement
to supplement its ordinary resources by borrowing.
The fund may seek the amount it needs in any currency and from any
source. Two sources of supplementary financing now exist:
(I) General Arrangements to Borrow (GAB)
(II) New Arrangements to Borrow (NAB)
FUNCTIONS OF IMF
It serves as a short term credit institution.
The fund provides a mechanism for improving short term balance
of payments position.
The fund provides machinery for international consultations.
It provides a reservoir of the currencies of the members countries
and enables members to borrow one another’s currency.
It promotes orderly adjustment of exchange rates to promote
EFFECT OF IMF ON INDIA
India is the founder member of IMF and has played an important
role in the formulation of fund policies .India has stood for
liberalization of fund’s lending and has criticized fund’s scale of
charge in respect of drawing.
Drawls from IMF
(million) July-Sept. 1990
BENEFITS TO INDIA
of the World bank
of India in international field
advice and training
IBRD or World Bank was established in July 1944.
With an authorized capital of $10 billion, divided into 100,000 shares of
183 member Countries
Every member of the IMF is also a member of the world bank.
It is concerned with assisting its member
countries to achieve sustained economic
growth. It functions as an intermediary for
the transfer of financial resources from the
more developed to the less developed countries.
To assist in the reconstruction and development of the territories of the
members by facilitating the investment of capital for productive purposes.
To promote private foreign investment by means of guarantees or participations
in loans and other investments made by private investors and to supplement
private investment when private capital is not available on reasonable terms.
To promote the long range balanced growth of international trade and
maintenance of equilibrium in the balance of payments.
To encourage loans made or guaranteed so that the more useful and urgent
projects will be dealt with first.
To conduct its operations so as to bring about a smooth transference from a
war-time to peace-time economy.
FUNCTIONS OF WORLD BANK
It grants long term and medium term loans.
The bank gives loans to member governments.
The bank gives technical advice to the borrowers and for this purpose engages
Economic and social research.
The bank promotes foreign investments by guaranteeing loans made by other
Setting up a number of subsidiary organizations for further finance e.g.., IDA,
The World Bank is managed in the same way as the IMF, except the Head
Officer of the Bank is called the President. The Governors and the Executive
Directors of the two organization are frequently the same men and women.
Each member of the world bank has capital subscription that is similar to its
quota in the Fund.
The member countries subscribed to it in accordance with there economic
position and the size of the quota in the IMF.
A member’s total subscription in the capital of the Bank was originally divided
into three parts:
(i) 2% of the subscription to be paid in gold or US dollars
(ii) 18 % of the subscription to be paid in member’s own currency and the
remaining 80% subject to call as and when required to meet the Bank’s
ASSISTANCE TO INDIA
Largest beneficiary of the IBRD-IDA assistance.
Although the World Bank assistance to India is very large in absolute terms, the
per capita assistance has been low.
WTO, the first and the most powerful world trade regulating
Before the WTO came into existence international trade in
merchandise was guided by the rules and provisions of the
The GATT rules, however, could not absorb the complexities of
world trade, which has been growing steadily since the Bretton
Woods days, both in terms of commodity coverage and the
nature of regulators applied by the regional trade blocs.
GATT was biased in the favor of developed countries and was
appropriately called the “rich men’s club”.
In the Uruguay round of negotiations, WTO was proposed and
the proposal became a reality on Jan 1st, 1995.
WORLD TRADE ORGANISATION
Formation – 1 January 1995
Headquarters - Geneva, Switzerland
Membership - 151 member states
Official languages- English, French ,Spanish
Director general- Pascal Lamy
Budget 175 million Swiss francs
The WTO is the umbrella organization responsible
for overseeing the implementation of all agreements that
have been negotiated just before it came into existence. It
is responsible for the settlement of disputes among its
STRUCTURE OF WTO
COMMITTEE ON TRADE AND
COUNCIL FOR TRADE
COUNCIL FOR TRADE
COUNCIL FOR TRADE-RELATED
ASPECTS OF INTELLECTUAL
Raising standard of living and incomes, promoting full employment, expanding production
and trade, and optimum utilization of world’s resources.
Introduce sustainable development- A concept which envisages that development and
environment can go together.
Taking positive steps to ensure that developing countries, specially the least developed
ones, secure a better share of growth in world trade.
The WTO shall facilitate the implementation, administration and operation and
further the objectives of the Multilateral trade agreements.
The WTO shall provide the forum for negotiations among its members
concerning them multilateral trade relations in matters dealt with under the
The WTO shall administer the ‘ Understanding on Rules and Procedures
governing the settlement of disputes’ .
The WTO shall administer the ‘ Trade Review Mechanism’.
Technical assistance and Training For developing countries.
INDIA AND WTO
INDIA”S COMMITMENT TO WTO:Tariff lines
Quantitative Restrictions (QR)
Trade Related Intellectual Property Rights
Trade Related Investment Measures
General agreement On Trade in Services.
Customs Valuation Rules.
INDIA AND WTO
BENEFITS TO INDIA:Benefits from reduction of tariffs on the products of exports of interest to India.
Improved prospects for agricultural exports as a result of likely increase in th
world prices of agricultural products due to reduction in domestic subsidies and
barriers to trade .
Increase in the export of textiles and clothing due to the phasing out of the
MFA (Multi Fiber Arrangement) since 2005.
Advantages from greater security and predictability of the international trading
system due to the revamped dispute settlement procedures and the
agreements on safeguard, subsidies and anti-dumping measures.
Compulsion imposed on us to be competitive in the world market.
INDIA AND WTO
DISADVANTAGES TO INDIA:-
It is to be noted that TRIPs Agreement goes against the Patent Act Of India, 1970 in
almost all important areas.
Increased outflow of foreign exchange due to commitments undertaken in the field of
TRIMs and Services.
Tariff reductions on goods of exports of interest to India are very small.
Meagre prospects of increase in agricultural exports due to the very limited extent of
India will be the under the tremendous pressure to liberalize her services industries.
Established in 1964 as the permanent organ of the UN General assembly.
The Conference, which is a plenary body of large number of countries, meets normally at
intervals of 4 years.
The UNCTAD was designed to serve as a
forum in which trade related development
issues could be discussed and analyzed to lead
to the negotiations of international
understanding on issues that were in disputes .
Every country has the sovereign rights freely to dispose of natural resources i
the interest of the economic development and well-being of its own people and
freely to trade with other countries.
Economic relations between countries including trade relations shall be based
on respect for the principles of sovereign of states, self-determination of people,
and non-interference in the internal affairs of other countries.
There shall be no discrimination on the basis of differences in socio-economic
systems and the adoption of trading methods and the policies.
To promote international trade with a view to accelerate the economic development.
To formulate principles of and policies on international trade and related problems of
To negotiate multinational trade agreements.
To make proposals for putting its principles and policies into effect.
The major activities of UNCTAD includes research
and support of negotiations for commodity agreements
technical elaboration of new trade activities designed to
assist developing countries in the areas of trade and
During its eleven rounds so far, the UNCTAD has made vital
recommendations. Prominent among them are stabilization of exports
earnings, specially of primary goods exporting countries, improvement
in the market access for the goods of the developing countries,
increase in the flow of development finance, preferential treatment for
least developed countries, and framing of code of conduct for
Established in 1956, affiliated to World Bank.
Membership in World Bank is prerequisite for membership in IFC.
The corporation has its own operating and legal staff, but draws upon the bank
for administrative and other services.
The mission of IFC is to contribute to the world
Bank group’s overall purpose of reducing poverty and
improving living standard by playing a leading role in the
development of a sustainable private sector.
To assist in the economic development of less developed country by
promoting growth in private sector.
To stimulate the flow of private capital into productive private, mixed
private/ public private enterprise.
To act as catalyst bringing together entrepreneurship, investment
capital and production.
To provide the provision for essential infrastructural development to
attract investment flows.
To encourage the growth of productive private investment and saving.
The IFC makes its investments in partnership with private investors
from the capital exporting country or from the country in which the
enterprise is located.
It is envisaged that the Corporation’s investments will never be more
than half of the capital requirements of the enterprise.
The minimum investment IFC will make in an enterprise is fixed at US
$ 1,00,000 or its equivalent, but no upper limit is fixed.
The enterprises eligible for loans from the Corporation should be
predominantly industrial and contribute to the economic development
of the country.
Rate of interest in each case would be matter of negotiation depending
on the risks and other investments.
IFC AND INDIA
The IFC has assisted a number of projects in India.
The Corporation has identified five priority areas in India where it plans
to beef up its activities.
Capital markets Development
Direct foreign investment
Access to foreign markets
Equity Investments in new and expanding companies
Finance capital investments and infrastructure.