Wednesday, 6 April 2022

What are the major international trade institutions and trade agreements?

 There is massive destruction of life and property faced the world wide after the first and Second World Wars. The world economies were adversely affected. There are several reasons for economic disruption like scarcity of resources, disruption in the currency of nations, badly affected international trade, and many more. For solving all the problems and restore peace, the entire economists joined together and create international trade institutions for monitoring all international trade activities among the nations. It includes the world trade organization, international monetary fund, international trade organization, and many more. Anyone considers these institutions as peelers of international trade. These institutions work to regulate, influence, and control elements of the international economic landscape. Lets take look at the leading organizations' major objectives for the world economy. 

World Bank 

The international bank for reconstruction and development (IBRD) is known as World Bank. The main objects of setting up this international organization were to aid the task of reconstruction activities for the war-affected nations and assist in the development of the undeveloped areas of the world. The World Bank's initial five-year work for Europe nations and after that it turned its attention to development for undeveloped nations. Later the World Bank realized that by investing more and more in developing and undeveloped sectors of nations, especially in health and education. It believes social development will transform the developing nation. Over time, there are several institutes have been set up under the World Bank like the international development association, international financial cooperation, and other financial supporting institutions. As of today, the World Bank is including five international organizations. These organizations are responsible for providing finance to different nations. 

Functions of the World Bank 

As mentioned above, the World Bank is initially war disrupted nations with the task of economic growth and widening the scope of international trade. There are several functions are perform by the World Bank which is listed below.

  • Initially, it helps for war- devasted nations by providing them loans for reconstruction.
  • The World Bank and its affiliates provide extensive experience and financial resources to the banks for help in developing the infrastructure, energy, and many more.
  • The World Bank also provides funds to various governments for improving irrigation facilities, agriculture, water supply, health, education, and many more. 
  • The World Bank also provides advice regarding economic, monetary, and technical to the member nations for any of their operation. 
  • It encourages the help development of industries in undeveloped nations by addressing the various trade reforms. 

International development association 

The international development association was founded in 1960 as an affiliate of the World Bank. The primary object of the international development association (IDA) was to provide loans to the undeveloped nation on a soft loan basis. The object of a soft loan is also known as the soft loan window of the IBRD.

Objectives of the IDA 

The major objectives of the international development association are as follows. 

  • Providing loans for the development of undeveloped nations under easy terms of loans.
  • To provide advice and expertise for poverty alleviation in the poorest nations. 
  • The international development association provides financial concessional interest rates to promote economic development, raise production, and improve the living standard in less developed nations. 
  • It helps in extending macroeconomic management services including health, education, human resources development, and population control. 

The multinational investment guarantee agency 

The multinational investment guarantee agency was set up in April 1988 as a subsidiary of the World Bank. It offers political risk insurance and credit enhancement guarantees. These guarantees assist investors safeguarding foreign direct investment against political risk. 

Objectives of the IMGA

There are various objectives of the multinational investment guarantee agency which are followings. 

  • It encourages the flow of direct foreign investment into the less developed member nations. 
  • The major object of the multinational investment guarantee agency provides insurance cover to investors against political risk and uncertainty.
  • It gives guarantees against non-commercial risks like currency fluctuation, war and civil disturbance, and many more. 
  • It ensures new investments; establishes credibility, expansion of existing investments, and many more.

International monetary fund 

This is the second-largest organization of the international institution. The international monetary fund comes into existence in 1945. The main object of is establishment of the international monetary fund is providing facilitate a system of international payments and adjustments in the exchange rates among the national currencies.  

The major objectives of the international monetary fund

There are several districts objects of the international monetary fund which are following.

  • It promotes international monetary cooperation by a permanent institution. 
  • It makes it easy to expand of balanced growth of international trade and contributes to the maintenance of high-level employment and income. 
  • One of the main objects is promoting exchange stability intending to maintain orderly exchange arrangements among the member nations. 
  • It promotes the establishment of a multilateral payment system in respect of current transactions between members.

International financial corporation

The international financial corporation was founded in July 1956. The purpose of the international financial corporation was to provide funds to private sector businesses of developing nations. IFC is also the part of World Bank, but it has its own legal identity. it helps developing nations achieve sustainable growth through financial investments, mobilizing capital in international markets, and advisory services to businesses and governments as well.          





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