Shar believers that debt serves as is an effective tool than can ensure that the others access other peoples’ resources and facilities at the lowest and cheapest possible conditions (Shar). In the world today, dozens of nations must contend for the ever shrinking export marketplaces and can only export just a fixed range of goods due to the existence of the Northern protectionism coupled with the countries lack of money to invest in the development of various diversification programs aimed at cushioning themselves. Due to the resulting market intensity and saturation, there is a reduction of exporter’s financial gain to minimum levels.
While this is happening to other countries, the North delights from vast savings due to the prevailing market conditions. As a result, organization such as IMF, World banks and WTO were established to promote globalization. The growth of globalization would ensure that there would be an increase in the consolidation of economies and societies across the world. These will imply that people will be in a position to travel more and with great ease across national borders, money and forms of capital will cross borders, and that free commerce would exists between nations (Martell 247). For instance, IMF is a global organization that aims in the supervision of the global financial system through the use of macroeconomic policies that exist in its member countries especially those which have influence on the rate of exchange and balance of international payments.
Influence of IMF, WTO, and World Bank
In order to understand the degree of influence that IMF, WTO and World Bank have on the nation in terms of policy development, it is crucial to note the roles played by these organizations in pursuit of globalization. Despite the fact that these organizations vary in the roles and function, they are all striving to ensure that the global economy is centralized and that unification and equality prevails around the world. The WTO objective is to create a world that has no trade barriers; the IMF is looking for a global system in which all currencies have stability and equality while World Bank desires to reduce the breach between countries that are most-developed and those that are least-developed (Klemens 3).
The World Bank, IMF and WTO have mutual goal of encouraging that there is balanced growth of trade in goods and services. These obligations for trade issues are split among the three organizations (Independent Evaluation Office 5). These organizations influence the development of both social and economic policies of countries through the use SAPs and capacity building loans. Tsikata states that SAPs designed by the International Monetary Fund and the World Bank have been used as the model for social and economic policy in many countries in the south since the start of 1980. He furthest notes about 34 countries in African have implemented (pa.1).
Through the use of SAP, the WB, IMF and WTO have influenced the manner in which social and economic policy is developed in the developing countries. SAPs represent conditions that are imposed by the three organizations in order for countries to receive loans form World Bank or IMF or for them to be given low interest rates for loan being serviced by these countries. As a result, developing countries are challenged to develop their policies both at the social and economic level to be in line with those of these Organizations (Makwana 8)
Sengupta states that the need of countries to adjust to globalization and introduction of free IMF meant that finance was needed to facilitate this. As a result, IMF was created to render balance of payments in order to support countries in the sustainment an open trading system having accounts that are convertible (p. 116). However, such funds are provided by these organizations through conditional lending. The World Bank for instance avail trade support through its loaning operations, advocacy, and capacity establish activities. In this case, the World Bank and IMF offer preconditions that must be met for them to engage in lending programs with the countries in need. In this way, developing countries bear challenges to align their economic and social policies for them to receive funds for their projects (Independent evaluation office 5).
Impact of Word Banks, IMF and WTO
The impact of the above named organizations has being felt by some as positive while other regards some as negative. To begin, structural adjustments have been instrumental in reducing the influence of authorities and incorporating developing countries into the existing global economy. SAPs has failed in some areas where some developing countries have failed to experience substantial economic growth despite the implementation of these programs (Shar pa.7).With the implementations of the SAP, developing countries have being forced to increment their exports of trade goods and raw materials. Such countries have incurred loss because:
I. The export commodities exported are usually yielding less revenue than the finished products.
II. Countries that participate in exports arrangements end up being locked out of opportunities such as industrial funding or transfer technology and
III. When these countries import finished goods, they incur huge expenses due to high cost of finished products.
Through the emphasis on exports, there has been the rise of social disruption, particularly in the rural areas of developing countries where poor peasant farmers often find that their economic activities are depicted as non-productive while at the same time going through land pressures from the expansion of timber companies, mines and agribusiness. This has in the past made such people become part of urban unemployed individual who later more onto lands that are fragile and previously not in use (IMF).
The WB.IMF and WTO have strengthened countries through capacity building and facilitated the plan and enforcement of sound economic policies aimed at improving the countries in question. These organizations have been helpful in provision of proposal and training on numerous issues that surrounds its mandate. This has led to the development of a number of countries that have benefited from the projects of the three institutions and in return improved their revenue and economic stability.
Role of the US in expansion of globalization
Globalization is a wave that motivated by three forces. One of these forces is technology, which has acutely cut down the price of communicating and transporting goods and materials, a bottleneck that antecedently divided the global markets. The dramatic rise in the supply of workforce hired in international trade has also facilitated globalization. On the other hand, presence of enabling government policies has promoted globalization due to the reduction of trade barriers and removals of challenges to investment (Ahearn 4).The U.S has greatly contributed to the growth of globalization and its expansion to the rest of the world through the establishment of the adjustment assistance to its workers and provision of an enabling environment for globalization. Through adjustment assistance, workers disadvantaged by trade competitions receive recompense from the government once the workers prove that the government’s increased import have led to job loss (Ahearn 11).
The outsourcing of services by various industries to foreign countries like India and Philippines has greatly expanded globalization as such countries not only benefit from the returns accrued from this prospect but also set frameworks to develop the industry. As a result number countries have developed infrastructure to meet the needs of services and goods due to the ongoing wave of globalization. With the government opening doors to investment in the U.S, a number of countries have entered the market and flourished from the market share realized. Such companies include BP and Sony Corporation among others.
With many technological companies being located in the U.S, there has been tremendous technological innovations coming from the U.S which has made globalization grow and become established among nations. These technologies that are both software and hardware based have accelerated the practice of globalization. In addition, the U.S government releases funds to institutions like the IMF and WTO who are mandated to promote globalization and equality in global arena.
The wave of globalization has resulted in economic, technical, social, cultural, and ecological interdependence of countries in the world. Globalization has resulted to key impact on the economic sphere of individual countries as well as that of the global economy. The WB, IMF and WTO have played a crucial part in the promotion of an enabling environment that has facilitated the growth and adoption of the globalization. In return, the International economic relations between countries have since derived predominant importance in regard to globalization. To the many countries that adopted globalization such as India and China, these countries have experienced rapid economic development as well as decline in poverty in counties. The role played by the U.S has been critical in the advancement of globalization to other regions through the provisions open trade policies, technological advancement as well as companies in the U.S outsourcing various services. Indeed, despite the challenges of globalization, many countries will benefit from its wave all around the world.