- There existed a lot of disunity along with the disharmony among the various countries of the world.
- It was created so as to provide a system of support for International Payments.
- There was a time when the International payments used to be made against the gold standards as gold was considered as the standard of payment and every International trade was paid through the gold standard.
- In order to support International countries with a stronger along with the robust International payment systems, these Economic organisations were created.
- The Economic organisation ensured the smooth process of litigation.
- When International trade happens, there is bound to be some amount of litigation or legalities involved between the two countries.
- It was not happening smoothly in the absence of International Organizations.
- One of the main aims of forming these Economic International Organisations was to move away from the Gold Standard System.
- All the countries wanted to evolve the process so that they could make the payments easily.
- World War I in 1914, witnessed a need for self-developing International System.
- In other words, it can also be said that the turmoil was existing in the International Markets.
- World War I saw the need for developing an International Economic System.
- The war also witnessed stagflation which means, a situation when both unemployment along with the inflation increases.
- World War I was followed by the Great Depression of 1928-1930.
- It witnessed a lot of turmoil in the world’s economy.
- In 1944, an International Monetary System was developed by the US and UK.
- IMF could govern International trade, disputes and payments.
- It was also considered as an objective of finding IMF as there was a dire need of ensuring the smooth flow of trade between the various countries.
- The genesis of the International Economic Organization is to govern the International trade, disputes and payments.
- A system was evolved that ensured the equitable distribution of profits among the various nations.
- In 1944, United Nations Conference was held in Bretton Woods in New Hampshire, U.S.A.
- This conference witnessed the birth of two giant organizations named the IMF and the World Bank.
- Thus, the twins were born namely, IMF and World Bank including the International Currency US Dollar.
Bretton Woods Institution.
- The fact can be traced over here that the main cause associated with the outbreak of World War I was none other than the financial crisis.
- It is considered that the Great Depression led to hostilities and eventually, war.
- In order to prohibit another war, it was the need of an hour for the countries to adopt the long-lasting solution collectively, at the International level.
Two conditions in Bretton Woods Conference
- It includes the shared experiences of both World Wars in the sense that the main reason behind the outbreak of WWII was the failure to deal with the economic problems that prevailed after WWI.
- This included the concentration of power in the hands of a few countries. Thus, in order to prohibit the outbreak of another World War, it is necessary to distribute power among the various countries.
International Monetary Fund
- International Fund was created by pooling the resources so as to utilize them during the crises.
- IMF provides help during the currency crises along with the Balance of Payments crises.
- It fosters Monetary cooperation at the global level.
- It also secures financial stability and facilitates international trade.
- It promotes Sustainable economic growth along with the High Employment.
- Reduce poverty around the world.
- Grants Special Drawing Rights (SDR) to the member nations.
- It can be described as an International Reserve Asset.
- It was created in 1961.
- IMF facilitates the SDR as an exchange between the countries.
- The value of SDR can be evaluated on the basis of five International currencies.
- Established in 1944, the World Bank Group is headquartered in Washington, D.C.
- The World Bank is a vital source of financial and technical assistance to developing countries around the world.
- The World Bank Group comprises five institutions managed by their member countries.
- The International Bank of Reconstruction and Development (IBRD).
- The International Development Association (IDA).
- The International Finance Corporation (IFC).
- The Multilateral Investment Guarantee Agency (MIGA).
- The International Centre for Settlement of Investment Disputes (ICSID).
- The main purpose of the creation of the World Bank involves Development along with the Reconstruction.
- Initially, it was known by another name that is IDRB, International Bank for Reconstruction and Development.
- It was created for the reconstruction of Europe after the World Wars.
- The World Bank Group has set two goals for the world to achieve by 2030:
- End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%
- Promote shared prosperity by fostering the income growth of the bottom 40% for every country
Asian Development Bank
- Asian countries have constructed the Asian Development bank for the purpose of economic along with the social progress of the developing member countries lying in the Asian Pacific region.
- Established in 1966, it is owned by 66 members in which 49 are from this region.
- The lending of banks primarily deals with the sector involving energy, transport, communication, finance, industry and social infrastructure sectors.
- The Asian Development Bank (ADB) envisions a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty in the region.
- It is described as an international forum for the government along with the Governors of the Central Banks.
- The Group of Twenty, or the G20, is the premier forum for international economic cooperation. The G20 brings together the leaders of both developed and developing countries from every continent.
- Collectively, G20 members represent around 80% of the world’s economic output, two-thirds of the global population and three-quarters of international trade. Throughout the year, representatives from G20 countries gather to discuss financial and socioeconomic issues.
- Originated in 1999 at the level of Finance Ministers and Central Bank Governors, the G20 gathered for high-level discussions on macro-financial issues. In the wake of the 2008 global financial crisis, the G20 was elevated to include the leaders of member countries
- The main aim of G20 is to provide International Financial stability along with the inclusive growth and other interrelated themes.
- It stands for Association of South-East Asian Nations.
- Its headquarters are situated in Jakarta, Indonesia.
- There are mainly ten member states including Myanmar, Thailand, Cambodia, Singapore, Indonesia, Malaysia, Vietnam, Laos, Philippines and Brunei Darussalam.
- It was formed in 1967 to promote peace, security, economic growth, social progress along with the cultural development in the South-East Asian region.
- The fundamental principles of ASEAN involve Mutual respect for all nation-states, non-interference in the internal affairs of any other state, Settling of disputes peacefully, the prohibition of the use of force along with the effective cooperation among the member countries.
- It stands for Regional Comprehensive Economic Partnership.
- Its member states include ASEAN+3+3.
- In other words, it means, ten ASEAN countries along with China, India, Japan and South Korea, New Zealand, Australia.
- It was created mainly for the purpose of the Free Trade Agreement.
- Its objective is to achieve a beneficial economic partnership agreement.