TMJC 2025 J1H2 C1 Lecture 5 Multilateral institutions

1 WHAT ARE MULTILATERAL INSTITUTIONS/SUPRANATIONAL ORGANISATION Multilateral institutions/Supranational bodies refer to agencies that have powers above that of the state. These agencies get their power from the agreements between its member states. Such supranational bodies can be divided into two main categories: (A) INTERNATIONAL REGULATORS International Regulators are international institutions that seek to regulate activity worldwide. In this syllabus, we will examine Global Financial Institutes (GFIs) such as International Monetary Fund (IMF) and World Bank, as well as, World Trade Organisation (WTO). Their aims are to remove trade barriers, promote global trade and stabilise economies. World Bank The World Bank is made up of 189 member states that provides loans to developing countries for capital programs. It consists of two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA). They aim to reduce poverty through an inclusive and sustainable globalisation through promotion of foreign investment and international trade and facilitation of capital investment. They do so by: i. Providing low-interest loans, zero to low interest credits and grants to developing countries. ii. Supporting social development programs such as education, health, public administration. Infrastructure, financial and private sector development, agriculture and environmental and nature resource management. iii. Facilitating financing through trust fund partnerships and bilateral and multilateral donors Providing advice on innovative knowledge sharing through policy advice, research and analysis and technical assistance The World Trade Organisation (WTO) The World Trade Organisation (WTO) began on 1 January 1995, replacing what was previously known as General Agreement on Tari ffs and Trade (GATT) . Its key aim is to promote competition & liberalisation of both goods and services. The major issues covered by the new WTO are outlined as follows: i. Reduction of tariffs and opening up of markets : For example, the European agricultural market will be opened up with a 30% cut in farm subsidies; protective barriers against imports of textiles will be reduced. ii. General agreement on trade of services : With rise of internet, it allows for transnational services hence this aim open up world markets and promote international financial and insurance services. Higher 2 (9173) Cluster 1: Development, Economy and Environment TMJC Cluster 1 Lecture 5 Multilateral Institutions 2025

2 iii. Trade-Related Intellectual Property Rights (TRIPS ): TRIPS protects patents by individuals or companies, giving legal protection against piracy or theft. However, although over 150 members are members of the WTO, effectively most decisions are made by the only more influential powerful 8 – the so-called G8- comprising Canada, USA, UK, Italy, France, Germany, Japan and Russia – which with the exception of Russia, also form the inner circle of the OECD (Organisation for Economic Co-operation and Development). In contrast, the many LDCs, with their limited wealth, products and technology have the least say and find it difficult to obtain a fair share of the world’s trade. E.g. most of the tariffs that had been removed in 1995 was generally on industrial products that benefitted the NICs. In contrast, there was little reform on agricultural products due to strong farming lobbies in the USA and the EU, much to the disadvantage of the LDCs. (i) Economic Impact of International Regulators The economic impact of International Regulators can be studied on a variety of scales: (a) Impact on national economies On a national scale, international regulators reduce the sovereign powers of the nation state in controlling its economy . By promoting globalisation and the establishment of Export Processing Zones, the actions of the WTO and IMF have led to an increase in regional disparities, as regions surrounding EPZs grow, while other areas in the country do not. The case of the Mexico-US border area is a prime example. (b) Impact on regional economies On a regional scale, international regulators, by liberalising markets, have promoted globalisation via market liberalisation. This in turn has accelerated the growth of economies that have sought export-oriented strategies for growth. The rapid growth of small, resource-poor East Asian states such as Singapore, Hong Kong and Taiwan have been attributed to the favourable trade climate brought about by the WTO. At the same time, the actions of international regulators such as the IMF have also been blamed for the stagnation of many Latin American economies such as Mexico. (c) Impact on global economies On a global scale, the impact of International Regulators has been to strengthen the position of Developed Countries, thereby leading to greater disparities between the DCs and LDCs. This is due to actions taken by DCs to make international export by LDCs difficult by implementing restriction policies. Such as implementation of Voluntary Export Restraint (VER). Moreover, the new WTO scheme gives DCs control over many of the economic policies of LDCs. For example, while TRIPS covers agricultural products, medicines and other primary products, it is still the DCs which control much of their development and production. TNCs who manufacture pharmaceutical products, genetically engineered agricultural seeds and artificial fertilisers will thus enjoy new patent rights, giving them greater control over the

3 goods. WTO regulations make competition by local industries illegal, thereby hampering the growth of LDC industry. As a result of WTO, the developing nations which export much of their agricultural produce are now forced to open up their markets. This is in contrast with the DCs, especially the USA and members of the European Union, who refuse to remove trade barriers against imports from the LDCs. Many development experts believe that WTO, is biased towards the richer nations. WTO considers the corporate business interests of the developed nations while paying little attention to the needs of, and the growing poverty, in many developing nations. (ii) Social Impact of International Regulators Increased social-economic polarisation within the state: As aid generally favours the elites and marginalises the middle and lower class, it has resulted in polarised and uneven development within the state. Gendered impacts: With reduction in government spending on healthcare infrastructure due to reduction of state spending specified by SAPs , this has resulted in the worsening fate of women and children under five years and the declining level in human development. This gendered impact of economic reforms can be understood in terms of commonly accepted gendered roles where women are perceived to be the main family caregiver, responsible for the household reproductive tasks. Thus, women are perceived to be intensive users of health services (like the young children), and with the economic reform, there will be a decline in the government spending in health under adjustment programme, leading to women having to be disadvantaged in the social support provided. In Tanzania, for example, reduction in public health services has resulted in an increase in the mortality of young children under five years of age from 193 per thousand in 1980 to 309 per thousand in 1987. Women also had to travel further and incur high er costs and had to supplement those public services such as medical and maternity care through their own labour. (iii) Environmental impacts of International Regulators Often, economic adjustments may be achieved at the cost of environmental sustainability. Ghana, for example, was widely recognised by the World Bank as being successful in terms of achieving pr