International Relations and Global Economics - Assignment Example

International Relations and Global Economics Name: Instructor’s Name: Course: Date: SECTION A: Q2. Why did multilateralism become a hallmark of International Economic Relations after 1945? Multilateralism is several countries working in concert with a given issue. After the world war two which ended in 1945, multilateral organizations since their inception have been playing an important role in the expansion and development of the third world countries. As the largest multilateral development organization, the World Bank is providing financial assistance to its member state top alleviate poverty. This essay focuses on the role of multilateral organizations in controlling the policy and practical framework of development sector in developing countries. Multilateral organizations are formed between three or more countries which work on issues related to all the nations found in the organization. According to Yildiz and Saggi (2010), after the World War II that is in late 1940s, the goal development was to increase gross national product which was looked upon as a development indicator. During this era, the states were focusing on industrial developments such as creation of dams, roads increase of GNP by savings. It was penetrated through the world and academia were influenced, the economic development discipline and the decision makers in the multilateral organizations. (Ornelas 2005). States developments were formulating national development plans which were focusing on the growth of the GNP. The World Bank being influence by this, it funded the projects related to GNP. During this time, poverty was not a point concern. The concept of poverty alleviation was not new in the world history of the world but people discussed it in terms of effects in GNP growth. It wasn’t discussed in academic debates and never had influence on lending policies and multilateral organization practices (Yildiz & Saggi 2010). In 1960s and 1970spoverty was incorporated as a defining element of development by the World Bank. This theory was made by a new president by 1968,(World bank). This paradigm changed the spectrum of development. Everyone involved started writing and formulating policies focusing on poverty issues. Conferences and researches were planned and in this, poor population was targeted in the data collection. The plans of national development were reviewed according to the concept of poverty alleviation. New debate about “poverty as part of development” was started in the universities (Joy, 1976). Economists focused on poverty mitigation while assessing policies on growth. Poverty in countries like India and Pakistan were focused and it was argued by (Ornelas, 2008) that there was production of impressive growth by the practice of neoclassical theory of development. The World Bank revised its lending policy in late 1960s and doubled the lending amount for poverty mitigation. This was to help the third world countries or nations to improve the living standards of the people. Namara who was the president by that time said that development is more than the economic growth of a country. Development is more of education, agricultural expansion and people’s technical training (Ornelas 2008). The World Bank changed its loaning rate on agriculture from 12% to 24% and lowered the infrastructure from 55% to 30%. These were done between the years of 1961 and 1971. (Ornelas 2005). This shift in lending share influenced the borrowing nations to shift their focus of development from one project to the other. This helped so much in making the third world countries in growth. In conclusion, multilateral organization is formed between more than two countries on an agreed agenda and the World Bank is the largest multilateral development organization with, more than 180 members and more than 10000 employees. The bank helps the countries which are developing by lending them money. After the Second World War that is after 1945, since its inception, it has been influencing the theory of development and policies. Since it is the largest organization in the world, its shift in policies and practices has great impact in the member nations involved. (Yildiz & Saggi 2010) In 1950s, the World Bank was following the theory of development as the growth in GNP. During that period, many theories and practices supported that concept. When McNamara became the president of the World Bank by 1968, poverty was incorporated as part of the development. Theories were then formulated to deal with poverty mitigation throughout the globe. In 1980s and 90s, a consensus was preached by this multilaterals while after millennium that is in 2000, millennium development goals have been opted as a road map. The debate has a conclusion that whatever the multilateral organizations have opted as policies, theories, and practices, it has trivial impacts on the development theory and its policies and practices (Ornelas 2005). SECTION B: Q.7. Does the wealth of rich states require the poverty of poor states? There is a flow of wealth from periphery of poor states to rich states thus having enriching the latter in the former expense; this notion is referred to as dependency theory. There is a way in which the poor states are unified into world system by which they are impoverished and rich ones get wealth. The theory came up as a response to the modernization theory, which was an earlier development theory that said that all societies undergo similar stages of development. It said that the developed states were once in the state of the underdeveloped states at some point in the past and thus this path of helping the poor states is to accelerate them along the common development path by means such as investment, technology transfer and unifying into the world market. Dependency theory rejected that view saying that poor countries aren’t the primeval versions of the rich states but have their unique features of their own, and seemingly being the members who are weak in the world market (Sonntag 2001). The developing countries are generally acting as colonial dependencies which send their wealth to the rich or developed countries with minimal compensation. The rich nations keep the poor nations in subservient position majorly through economic force by sanctioning them. The degree of dependency increases with time, and wealthy or rich countries use their wealth to influence the poor or rather the underdeveloped countries to adopting policies that increase the wealth of the rich nations at their own expense. They also make their system more secure as a protection so as not to be turned by the developing countries. There is capital migration from the developing countries to the developed countries causing the underdeveloped nations to lack wealth which in turn makes them take loans from the rich states further indebting them. In the view of this theory, incorporation on the developing nations into the markets is a source of sidelining which spreads rather than eroding dualism (Nepal & Lacher 2010). Many under developing countries have a failure to make the investment in the physical and institutional infrastructure which is required in the expansion of the agricultural and the export of raw materials is a source of lag in the development (Nepal & Lacher 2010). There have been conflicting ideas on how the developing countries can advance the effects of world system; several of the following nationalist practices have been embraced by some countries at one point or another. 1. Promotion of manufactured goods and domestic industries: by protecting the domestic industries, poor countries can sell their own products rather than exporting raw materials. 2. Limitations in the imports: this is limiting goods which can be manufactured in the country; this can reduce the capital loss. 3. Nationalization: in order to keep profits within the country, some governments have forcibly taken over foreign companies on the state behalf. Dependency theory still is applied in some degree. Diminishing trade barriers does not necessarily mean that the developing countries are going to improve or there won’t be trade imbalance in the products which are being exchanged. The Value of products in the developed countries is often expensive compared to the raw materials in the developing countries thus unequal trade (Williams, Hoffer, Waller &Swanson 2012). Since labor is cheaper in poor countries, it doesn’t mean that local labor pool will respond to the global economy need. Developed countries forces the developing countries which majorly are agriculture based to lower their product prices or risk being unable to compete in the world market. This in turn makes the developing countries feel threatened hence lowering their prices thus enriching the already developed states (Sonntag 2001). In conclusion, the developing market majorly budget for what they don’t possess, hoping to get aid for further development. They are supposed to budget from their own resources and budget as opposed to that of the donor. As we have seen, these rich and developed countries’ wealth depend on the poor states wealth. In order for the underdeveloped states to develop, they should work hard and plan for the resources they do have despite the approach they are going to use to devise this. Some countries such as china, Taiwan, South Korea and Chile used some approaches to gain its developed status. Developing countries should adopt their approach in order to succeed. To save developing countries, strong institutions and independent anticorruption coupled with traditional industries which are developing (Williams, Hoffer, Waller &Swanson 2012). References Nepal, K.S., Lacher, G. R, (2010). Dependency and development in Northern Thailand. Annals of tourism research. Vol. 37. P. 947-960. Ornelas E,(2005). Trade creating free trade areas and the undermining of multilateralism. European Economic Review. Vol. 49, P. 1718-1730. Ornelas E, (2008). Feasible Multilateralism and effects of regionalism. Journal of International Economics. Vol.74, P.203-220. Sonntag, H.R. (2001). Dependency theory. International Encyclopedia of the social & Behavioral Sciences. P. 3501-3505. Williams, D.B., Hoffer,C., Jin,H., Waller A.M., Swanson, D.R, (2012). The impact of key retail account on supplier performance: a collaborative perspective of resource dependency theory. Journal of retailing. Vol. 88. P. 413-419. Yildiz, M.H., Saggi K, (2010). Multilateralism and the quest for global free trade. Journal of international economics, Vol. 81, P.26-36. Read More