Презентация - Lecture 3 global and regional international organizations supporting development part 1

Lecture 3 Global and Regional International Organizations supporting Development Part 1
March 25, 2022 Dr. Tatyana Leonova tleonova1203@gmail.com

International Organizations

Lecture Plan
Part 1: Global IOs supporting development: International Financial Institutions: IMF, BIS, World Bank Group; Other: WTO Part 2: Regional IOs: Globalization, Regionalization and Regionalism Examples of Regional Organizations Regional Development Banks

Part 1
Global International organizations supporting development

International Financial Institutions
Bretton Woods agreements (1944) formed the basis for the emergence of the global financial system in the second half of XX century. Objective - to maintain stable exchange rates of currencies in economically developed countries, and to assist in the post-war recovery of Europe and Japan. The following measures were taken: Major world currencies were linked to the US dollar through a “pegged rate” currency regime (exchange rates of major currencies were regularly revised), and the USA, in turn, informally committed to link the dollar to gold (gold standard); A system of international financial institutions was established: the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD) intended to assist long-term economic development, in particular, through financing infrastructure projects such as road construction and improvement of water supply systems; Simultaneously with the foundation of the IMF and IBRD, creation of an agency to assist liberalization of the world trade was considered; however, the World Trade Organization was established only in 1995. Prior to that, trade issues were addressed in the framework of the General Agreement on Tariffs and Trade (GATT).

“Money is the Lifeblood of the Economy”

International Financial Institutions: mandate and status
International financial institutions (IFIs) have a common goal: promote cooperation and ensure integrity and stability of the complex and controversial global economy IFIs operate on the basis of intergovernmental agreements and are intended to regulate international (trade, financial) relations (!) IFIs serve to support key UN goals – i.e. promoting security, prosperity and understanding

International Monetary Fund (IMF) Initial Functions:
Assist countries in maintaining the fixed exchange rate through providing short-term capital (emergency package credit money) to support balance of payments (BoP); Monitor macroeconomic distortions threatening the stability of external economic situation in a given country, and provide credits for macroeconomic stabilization and economic restructuring; The IMF was also intended to act as a central bank following Keynesian model, authorized to issue accounting units — the so called Special Drawing Rights (SDR)

Council for Mutual Economic Assistance (CMEA), byname “Comecon” Совет Экономической Взаимопомощи (СЭВ)
International intergovernmental organization established in January 1949 to facilitate and coordinate the economic development of the Eastern European countries belonging to the Soviet bloc. Headquarters were established in Moscow. Original members - the Soviet Union, Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. Albania joined in 1949, ceased taking an active part in 1961. The German Democratic Republic joined in 1950, Mongolia in 1962. Yugoslavia – in 1964, Cuba in 1972, and Vietnam in 1978. Affiliated agencies - the International Bank for Economic Cooperation - managed the “transferable ruble” system, the International Investment Bank was in charge of financing joint projects. After the start of transition to market economy in eastern Europe in 1989, and with the dismantling of the Soviet Union, the organization largely lost its purpose and faced disintegration in 1990–92.
Logo: By Лобачев Владимир - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=73626826

Present-Day IMF
The IMF current membership is 187 countries (except Cuba, North Korea, Andorra, Monaco, Nauru and Lichtenstein) Staff: 2500 employees from 160 countries IMF mandate: FOSTER GLOBAL ECONOMIC AND FINANCIAL STABILITY PROVIDE SHORT-TERM SUPPORT OF BALANCE OF PAYMENTS FACILITATE GROWTH OF INTERNATIONAL TRADE, INCREASED EMPLOYMENT AND POVERTY REDUCTION Works in collaboration with the UN, WB, WTO and ILO Major functions: global fire-fighter (lending); trainer/adviser (technical assistance and support, analysis, statistics)

Bank for International Settlements (BIS)
The Bank for International Settlements (BIS) is based in Basel, Switzerland The BIS is an organization of national central banks BIS functions: Facilitate collaboration among central banks, Foster favorable environment for international financial operations, Provide advice on banking supervision and monitoring of financial operations; Act as an agent or trustee in connection with international financial operations of its customers; The BIS is not entitled to accept deposits from or provide loans to governments

World Bank Group

World Bank Group’s Agencies
Country can only be a member of the WB if it is a member of the IMF. Membership in IBRD is conditional on IMF membership; and membership in IFC, IDA, MIGA - conditional on IBRD membership. Russia joined the WBG in 1992 (IDA, IBRD, MIGA) and 1993 (IFC). It is not a member of ICSID.
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How did it begin…
International Bank for Reconstruction and Development established July 1944, Bretton Woods Operations started in 1946 Mission - to rebuild Europe and Japan after World War II.
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Early Borrowers
France first to borrow $250 million to finance post-war reconstruction in 1947, and later was the first one to graduate from the borrower’s status and became the WB donor. Many current donor nations such as Austria, Australia, Denmark, Japan, Italy, Korea and Greece were borrowers.
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Evolving Development Paradigm
1950s (Europe Reconstruction) Physical 1960s (Rural) Natural 1970s (Human Development) Human 1980s (Economic Reform) Financial 1990s (Poverty Reduction) Social 2000s (Governance) Institutional 2010 (Climate Change) Environmental Now – Combat extreme poverty and boost shared prosperity
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Current Mandate: Two Ambitious Twin Goals
The overall framework for these goals are the sustainable development goals (SDGs), which come from the millennium development goals (MDGs)

Who owns the World Bank Group?
World Bank Group is owned by the governments of member nations All member countries are shareholders of the WB. The size of the share is based on the size of a country’s economy.
Shareholders
Voting power in IBRD
Member Countries [IBRD: 189, IFC: 184, IDA: 173, MIGA: 181]
U.S. 16.44%
Japan 7.09%
Board of Governors
Rest of the World 60%
China 4.58%
(Russia 2.87%)
Board of Directors [25]
Germany 4.15%
IBRD: EU Combined 26.96%
President
France 3.89%
IFC: EU Combined 28.57%
UK 3.89%
Management and Staff

World Bank Staff
130 offices 16,000 staff 15,000 Consultants 130 offices 174 nationalities Who they are - economists, anthropologists, educators, engineers, environmental specialists, social scientists, financial analysts, healthcare experts, etc.
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How is the World Bank organized?

Global Practices and Cross Cutting Solution Areas

WBG GLOBAL COMMITMENTS in fiscal 2020

IBRD – What do We Support Today
IBRD Global Lending by Sector (GP) and Region FY16 - $29.7B
*Indicates amounts less than 0.5%

Where does the money come from?
IBRD: Raises funds on capital markets at rates lower than commercial banks IDA: Donor contributions + IBRD profits and credit repayments. (No interest rate /38 year repayment) - $1,135 GNI per capita/79 countries
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WORLD BANK
Donors, Markets IBRD and IFC Repayments
Sells bonds AAA credit
MIDDLE
POOR
LIBOR + Bank spread Up to 35 years 5 year grace
0% Up to 38 years 6 year grace

WB Classification of Countries
Each year on July 1, the World Bank updates its classification of world economies based on estimated gross national income (GNI) per capita for the preceding year calculated using the World Bank Atlas method. Based on updated estimates of GNI per capita, the Bank compiles its operational classification of countries defining their eligibility for lending. I Low and lower middle income countries are sometimes called developing countries The term is used for convenience and does not imply that all countries referred to this category are developing in the same way, nor that other countries have achieved the preferable or final development stage. Russia in 2019 had 11,260 per capita GDP => upper-middle income country
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Financing instruments
Investment Project Financing provides IBRD loan, IDA credit/grant and guarantee financing to governments for activities that create the physical/social infrastructure necessary to reduce poverty and create sustainable development. Development Policy Financing provides IBRD loan, IDA credit/grant and guarantee budget support to governments or a political subdivision for a program of policy and institutional actions to help achieve sustainable, shared growth and poverty reduction. Program-for-Results links disbursement of funds directly to the delivery of defined results, helping countries improve the design and implementation of their own development programs and achieve lasting results by strengthening institutions and building capacity.  Trust funds and grants allow scaling up of activities, notably in fragile and crisis-affected situations; enable the Bank Group to provide support when our ability to lend is limited; provide immediate assistance in response to natural disasters and other emergencies; and pilot innovations that are later mainstreamed into our operations.

Top Borrowers in Fiscal Year 2015 (mln. $)

IBRD and IDA top country borrowers FY20

Advisory Services and Analytics (ASA)
Economic and Sector Work: diagnostic and analytical work aiming to influence policy choices and programs Technical Assistance: transfer of skills and data for the purposes of country institutional development and capacity-building– draft laws, sector reforms, conferences, workshops, etc. Impact Evaluations establishing the causal link between the change in outcomes and specific policy actions. By measuring cause-effect relationships

Country Assistance Strategy – Country Partnership Strategy – Country Partnership Framework
A 4-6 year framework document – guidelines for cooperation with the client country A detailed description of the World Bank Group assistance strategy for a country within a specified period The primary purposes are: to inform the Board and others of the objectives of the WBG engagement to help coordinate the engagement across the different WBG institutions CPF also establishes a basis for accountability in the WBG’s country engagement. Defines the levels and areas of lending, analytical work and technical assistance from the Bank in accordance with the Strategy, and depending on the implementation progress of the country project portfolio.

Content of the CPF

World Bank as Knowledge Bank
WB Analytical and Research Work

https://openknowledge.worldbank.org/
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http://data.worldbank.org/
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Documents and Reports, and Operations
Operations: country aggregate reports, strategies, policies and procedures, procurement, list of debarred firms, etc. Projects: data on World Bank lending projects from 1947 to present. Documents and Reports: over 14,000 World Bank full-text documents
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Major WB Publications
WB Annual Report World Development Report (WDR) World Development Indicators Global Economic Prospects

Joining the World Bank Group
Young Professionals Program Junior Professional Associate Analyst (GE-level) Extended Term Consultant/Temporary Short Term Consultant/Temporary IFC: Investment Analyst Program Internship Programs

Books to Read
“The Bottom Billion: Why the poorest countries are failing and what can be done about it” by Paul Collier “The Trouble with Africa: Why foreign aid isn’t working” by Robert Calderisi “The End of Poverty: Economic possibilities for our time” by Jeffrey Sachs “The White Man’s Burden: Why the West's efforts to aid the rest have done so much Ill and so little good” by William Easterley “The World Bank: From reconstruction to development to equity” by Katherine Marshall “The World’s Banker” by Sebastian Mallaby Forgotten Foundations of Bretton Woods: International Development and the Making of the Postwar Order, 2014, by Eric Helleiner

World Trade Organization (WTO)
The WTO was established in 1995, replacing the General Agreement on Tariffs and Trade (GATT) as the only international organization dealing with the global rules of trade between nations WTO Headquarters is in Geneva, Switzerland. The governing body of the WTO —the Ministerial Conference— meets every two years; the General Council conducts everyday business; as of March 2013, the WTO consisted of 159 member-countries. The WTO is not a specialized institution of the UN System, but there are mechanisms and procedures for collaboration with the UN Functions of the WTO: Assisting in greater coherence of trade in the framework of a system based on specific rules; Unbiased settling of trade disputes between the governments; Facilitating trade negotiations. The WTO oversees 60 agreements containing major legal rules of international commerce and trade policies Principles underpinning these agreements include non-discrimination, liberalization of international trade, encouraging competition, and additional provisions for less developed countries. One of the main WTO objectives is to combat protectionism.