The Leading International Financial Institutions of the World - Dissertation Example

Download file to see previous pages The leading international financial institutions in the world the IMF and the World Bank also have been subject to such criticism from everyone observing their activities going in sheer compliance with the US objectives and interests. United States is said to be exerting its political and monetary pressures on these institutions to direct its decision in the favour of the US policies both pro and against any country. History has witnessed such events, which led the United States to spoil the flourishing economies of the world. The question has also been put this way if the US does not dominate the international financial institutions, then had the objective behind the creation of IMF and World Bank be the mutilation of world economies, subjugation of poor countries, and deprivation of already starving nations?
These are not mere words in a rhetorical sense, but they reflect the questions that have led scholars to carry out research on the topic and find out the real cause behind the creation of the IMF and World Bank. This also serves to be the core objective of this work. This paper provides an insight into the questions concerning the core creation, objectives, exploitation, and dominance within these two important financial-turned-political institutions of the world. Finally, it concludes as to whether or not the United States enjoys dominance within the IMF and World Bank.

THE IMF AND THE WORLD BANK- AN OVERVIEW

IMF (International Monetary Fund) and World Bank are the most prominent international financial institutions that were formed after World War II to transfer capital funds from robust to starving countries in the world. Kapur (1999) says that the World Bank was established to serve the purpose of financing cooperatives with the patronage of economically strong countries of the world. The Bank was determined to raise funds from the international market at lower rates and disperse them to the economically weaker countries for which it was not easy to borrow from the international market at those rates as the Bank.

IMF and World Bank have strong economic and political ties. A country willing to become a member of the latter needs to be a member of the former institution. The management framework of both these financial institutions is similar with the striking difference in the share allocation system that ascertains the number of shares owned by each member country. Mistry (1995) illustrates that share allocation to the members of the World Bank follows no certain rules or obligations, however in the IMF, the share allocation is determined by the Quota system where every country owns a specific number of fixed shares. Again in both these institutions, the borrowing (developing) countries hold a smaller ratio of the total shares as opposed to the shares owned by the economically stronger countries that enjoy influence over the entire minority.

These institutions can exercise a great degree of influence both economically and politically over the countries that choose to borrow from IMF and World Bank. Cox (1993) illuminates that the power and influence of these international financial institutions are due to the reasons that their conditions most prominently enhance their power over the borrowing countries, they are formed by economic superpowers to maintain their power, and their key members mostly represent countries with high economic strength. ...Download file to see next pages Read More