GLOBALIZATION 1

Globalization

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Institution

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Globalization

Introduction

Globalization is a historical process of world integration in the economic, political,

technological, social, and cultural spheres, which has turned the world into an increasingly

interconnected place. In this sense, this process is said to have made the world a global

village. The progressive dissolution of the economic and communicational borders has

generated a capitalist expansion. In turn, this has enabled global financial transactions and

investments geared towards distant or emerging markets, in terms that were formerly very

difficult, highly costly, or unviable. Besides, the globalization process has modified how

countries and subjects interact and have generated a significant impact on economic, political,

and, access to education, technology, among others. The purpose of this study is to explore

the role of the World Bank, the International Monetary Fund, and the World Trade

Organization in this process of globalization.

Role of The World Bank in Globalization

The purpose of the world bank in globalization is to assist countries to help

themselves catalyzing capital and policies through a mix of ideas and experiences, taking

advantage of the opportunities offered by the private market, and support for good

governance and the fight against corruption, all driven by its financial resources

(Kanbur, 2018). Also, the World Bank advances ideas about international projects and

agreements on trade, finance, health, poverty, education, and climate change, so that they can

benefit all, and especially the poor seeking new opportunities. Therefore, the ban also seeks

to broaden the frontiers of thinking regarding politics and markets, explore new possibilities,

and not just recycle what has already proven acceptable by giving it a small financial

advantage in its quest to enhance globalization.

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World bank is only the single institution that carries out its activities through

specialized affiliates, as in many large financial companies. Hence, the bank consolidates its

interaction and effectiveness as a major player in globalization. The bank is made up of

financing entities for the public sector called International Bank for Reconstruction and

Development (IBRD) (Kanbur, 2018). This entity provides loans at market prices, risk

management, and other financial services, combined with its extensive development

experience. Another affiliate of the bank is the International Development Association (IDA),

which gives free loans and grants to the poorest nations in addition to the debt relief.

Additionally, the bank works with private sector entities such as the International

Finance Corporation (IFC), which provides advisory services in developing countries in

addition to loans and guarantees and makes equity investments. The Multilateral Investment

Guarantee Agency (MIGA) grants guarantee against political risks (Kanbur, 2018). By

operating together with these institutions, the World Bank can take advantage of these tools

to ensure that the whole is greater than the sum of its parts. All of these components have in

common a wealth of experience and expertise in various development disciplines. Delivering,

expanding, and testing this knowledge, parallel with the provision of financing or separately,

is the most critical part of the Bank's work in its role in globalization.

Role of The International Monetary Fund in Globalization

The international monetary Fund (IMF) is one of the key players in globalization. The

IMF provides financial assistance and its conditionality as a means of enhancing

globalization. The organization provides financial services whose objective is to help states

with problems in their balance of payments. Besides, the IMF orders some recommendations

for economic adjustment policy within these economies (Reinhart & Trebesch, 2016). This is

provided by transferring resources from specific funds administered by the Fund. Finally, the

operations carried out with the Special Drawing Rights (SDR). The most important part of
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the Fund's financial assistance, except for that granted through the special funds

administered, is based on buying and repurchasing coins. Therefore, the IMF's financial

assistance lies in the sale of the member country's currencies from other countries while

buying the former's currency. Compliance with the operation is carried out within a

previously agreed term by repurchasing the currency of the respective country in exchange

for foreign currency.

Financial support from the IMF has a harmonious relationship with the

implementation of specific economic policies, the content of which has to do with the

regulatory role that the agency has carried out since its creation. The persistence of policies

related to trade and investment flow is firmly linked to the supply of funds that said

institution provides in the event of balance of payments problems. The governments'

commitments regarding economic policy are concluded when requesting the three upper

tranches of credits through the letters of intent (Gallego Herrero, L´Hotellerie-Fallois &

López Vicente, 2018). According to the fulfillment of the committed economic policy, the

mentioned credit is delivered gradually in amounts and intervals previously agreed. These

possible loan arrangements, better known as stand-by credits, imply concrete plans for the

establishment of corrective measures and provides for the execution of permanent

consultations between the Fund and the corresponding members regarding compliance and

reconsideration of said measures.

Conditionality does not apply only to money orders by credit tranches. The extended

service, the supplementary financing service, and the policy of greater access are also subject

to it. In these credits, in addition to the task of minimizing the transitory balance of payments

problems, long-term criteria for structural adjustments of the economies are added,

particularly on the productive level. Therefore, their terms are longer. Consequently, policy

conditionality can and does become more demanding. The very existence of this degree of
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demand makes the expanded service and the policy of more fabulous access work in an

articulated way.

Role of The World Trade Organization in Globalization

The WTO Agreements are the international regulatory basis for trade and the legal

framework that regulates the behavior of States concerning their trade relations. These

agreements, which were preceded by the General Agreement on Tariffs and Trade (GATT) of

1947 (today incorporated into the WTO), establish the playing field on which the Members of

the Organization deepen their economic relations and resolve commercial irritants

(Siddiqui, 2016). It should be remembered that under this regulatory framework, the

principles of non-discrimination and reciprocity prevail, guaranteeing greater economic

benefits derived from this regime, which is genuinely multilateral. If an international trade

constitution exists, this regulatory framework would be it and the WTO its guardian.

Also, the WTO offers a multilateral forum to negotiate international rules on issues

that affect trade. For example, the negotiations for the Trade Facilitation Agreement were

successfully concluded, which, if fully implemented, would reduce world trade costs by more

than 14% and increase international trade by nearly one trillion dollars (Siddiqui, 2016).

Similarly, agreements have been reached to reduce and eliminate agricultural subsidies, and

agreements are being negotiated to eliminate harmful subsidies to fisheries. Among other

issues, and for the moment in a plurilateral manner, negotiations are ongoing in the area of

electronic commerce, investment facilitation, domestic regulation, and participation of

MSMEs in international trade, which crucial for globalization.

Conclusion

Globalization is a palpable phenomenon, especially since the end of the 20th century

and the beginning of the 21st century. Globalization is the result of the consolidation of

capitalism and the need to expand the flow of world trade and the main technological
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advances, especially in communicational matters. It should also be noted that innovations in

telecommunications and computing, especially the Internet, have played a decisive role in

building a globalized world.

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References

Gallego Herrero, S., L´Hotellerie-Fallois, P., & López Vicente, F. (2018). The International

Monetary Fund and its role as a guarantor of global financial stability. SSRN

Electronic Journal. https://doi.org/10.2139/ssrn.3304551

Kanbur, R. (2018). The role of the World Bank in middle-income countries. India Studies in

Business and Economics, 167-180. https://doi.org/10.1007/978-981-10-7950-4_8

Reinhart, C. M., & Trebesch, C. (2016). The International Monetary Fund: 70 years of

reinvention. Journal of Economic Perspectives, 30(1), 3-28.

https://doi.org/10.1257/jep.30.1.3

Siddiqui, K. (2016). World trade organisation, international trade and prosperity.

International Journal of Social and Economic Research, 6(2), 1.

https://doi.org/10.5958/2249-6270.2016.00014.3