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IMF (International Monetary Fund) from 2007 to present using international business perspective - Research Paper Example

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The world is experiencing is huge shift in the form of breakdown of national economic barriers to form an integrated system of world economy where one national is dependent on another. …
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IMF (International Monetary Fund) from 2007 to present using international business perspective
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Download file to see previous pages Globalization has huge implications for companies as it can reduce the cost structure of the companies and bring in improvement in terms of quality of products. Globalization has helped in improving international trade and investment volume as more and more companies have entered in to global market and take the shape of multinational organizations. Earlier US companies used dominate in the field of international exports and FDI. But, with changing world scenario, various European countries, Japan as well as emerging economies like India, China, Korea, etc. have reduced the dominance of USA as they are following the same footprint (Hill, 2010). For example, share of FDI of the companies of developing world have increased from less than 1 percent in 1980 to as high as 15 percent in 2008, while the share of USA based companies have declined from near 40 percent in 1980 to 18 percent in 2008(approximately) (Hill, 2010). The political scenario has also changed in this changed economic situation. The political dominance of US is no under great threat in this increasing market economy. Many European countries that were Communist earlier and Some Asian countries have undertaken democratic politics and stressed on building free market economies. Hence, international businesses are getting more and more opportunities to enter these economies that have in turn strengthen these economies. (Hill, 2010) In this globalized world, importance of global institutions has increased significantly in maintaining order in various economical and political fields. IMF is one of such institutes which hold an important position in this changing economic and political environment. In fact, it is helping this process of change by its policies. IMF is responsible for maintaining order and stability in the international monetary system. The performance of international businesses to a large extent depends on the operation of international monetary system. If this system operates properly, then, the risks associated with international business operation reduce significantly. This paper will place its focus on some important issues relating to IMF policies and its scandals since 2007 as IMF activities is closely related to the performance of international businesses. (Hill, 2010) Issues and Problems with IMF since 2007: Since 2007, a number of issues relating to IMF activities is worth mentioning as this period corresponds to the recent global financial crisis that has essentially affected internal business. Some of these issues will be looked at in this section. Failure of IMF in the early detection of US sub-prime crisis in 2007: IMF is responsible for maintaining stability in the world monetary system and any kind of crisis that my take place in future so that international businesses become aware of that event and take required steps. But IMF is being blamed for its failure to predict the materialization and severity of the financial crisis that was creates in US (Bennet, 2008). The crisis first emerged in the sub-prime market of US. There was a bubble in the market in 2006 and 2007. The movements in this market were some early sign of the upcoming event of global financial crisis. But, the IMF failed to capture those signals in sub-prime market. It is now being said that lack of technical and analytical capacity of the IMF along with US’s unwillingness to implement surveillance of financial sector by IMF were responsible for IMF’s inability to detect the early signs of the crisis and predict its emergence and severity. (Bennet, 2008; Bossone, 2008b) Changing macroeconomic Policy under global financial crisis: Although IMF failed to predict the recent global ...Download file to see next pagesRead More
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