Role of Global Institutions (Edexcel IGCSE Geography)

World Trade Organisation

• A global economy needs managers of power and influence 

• Some of these organisations include:

  • World Trade Organisation (WTO)

  • World Bank

  • International Monetary Fund (IMF)

  • United Nations (UN)

  • Non-Governmental Organisations (NGOs)

  • Transnational and Multi-National Corporations (TNC and MNC)

  • Countries such as Japan, the European Union (EU), and the USA 

• Two major inter-governmental organisations (IGOs) that lead the global economy in trade and foreign investment are the WTO and IMF

World Trade Organisation (WTO)

• It aims to reduce barriers and promote free trade between countries

• The WTO has been a driver of globalisation, with both positive and negative effects

• Powerful TNCs support the WTO for its positive impact on international economic growth

• Others see it as increasing the wealth gap and hurting local workers and communities

• Overall, the WTO has:

  • Lowered trade barriers

  • Increased trade among the member countries

  • Lowered trade tariffs

International Monetary Fund

• The International Monetary Fund (IMF) was created to bring financial stability to the world after World War II 

• It helps currencies be exchanged freely and easily between 190 global member countries

• The IMF is funded by quota subscriptions, depending on the size of a country's economy

• Quotas allow members to have enough foreign exchange to do business with the rest of the world

• The IMF provides advice and financial assistance to struggling members

• Criticism of the IMF has been for lending with imposed conditions

  • Telling how a country should run its economy

  • Making payback a priority on the loan

  • Forcing financial concerns ahead of social care

• Countries under IMF programmes are usually developing, emerging or countries that have faced financial crises

The World Bank

• The World Bank is sister to the IMF and were set up during the Bretton Woods Conference in 1945

• It is an international organisation that provides finance, advice, and research to developing nations to aid their economic advancement

• Funded from wealthy nations and interest from loans

• It acts to reduce poverty by increasing economic growth

• It deals mostly with internal investment (development assistance) projects

  • Building dams and infrastructure

  • Promoting health and education in developing and emerging countries 

• Usually works with other nations, organisations and institutions as a sponsor of the project

• The World Bank issues low-interest loans, grants, and/or zero-interest credits to support the development of their economies

• The World Bank funds projects that otherwise wouldn't happen because the cost is too high for developing countries or they cannot raise sufficient funds elsewhere because they are for social and not economic purposes 

Transnational Corporations (TNCs)

• Transnational Corporations (TNCs) operate in foreign countries individually and not through a centralised management system

• TNCs and countries are the two main elements of the global economy

• Governments and global institutions set the rules for the global economy but the main investment is through TNCs

• TNCs directly invest in one country and later expand to other nations (usually developing countries) to take advantage of lower labour costs and incentives 

• They may not be loyal to the operating country's values and will only look to the expansion of their business as they have no connection to the country they operate in

• This process of moving manufacturing around the globe has resulted in the development of emerging countries such as China, India and Brazil

Non-Governmental Organisations (NGOs)

• A non-governmental organisation (NGO) is a group that functions independently of any particular government

• Also known as civil society organisations, they are:

  • Non-profit

  • Operate on a community, national, or international level

• They play a major role in:

  • International development

  • Aid

  • Humanitarian causes

  • Protection of the environment

• Funding comes from private donations, government grants and membership fees

• They run budgets of millions or up to billions of pounds each year

• Some well-known NGOs include the Red Cross, the Salvation Army, Médecins Sans Frontières and Amnesty International

United Nations (UN)

• The UN is not an NGO but an Inter-Governmental Organisation (IGO) because it is a governing body

• It is a non-profit international organisation formed in 1945 to improve and increase economic and political cooperation between its member countries

• The UN affects globalisation through:

  • Maintaining international peace and security

  • Protecting human rights

  • Delivering humanitarian aid

  • Promoting sustainable development

  • Upholding international law