With the end of the Second World War in 1945 came the reconstruction and development of the global economy via such pillars of multilateralism as the General Agreement on Tariffs and Trade (GATT), the World Bank (WB) and the International Monetary Fund (IMF). At this point I must specify that the "international economy" comprises, in name, of the economies of the developed, or First World countries; communist, or Second World countries; and developing, or Third World countries; however, by "international economy ", in the post-war context, I refer mainly to the economies of the First and Third Worlds (and not the Second), due to the fact that the latter had a closed economy for political reasons.
The international economy, under the direction of the multi-national institutions, then met with criticisms from the Third World: for example, GATT did not foster trade in primary products, the basis of most Third World economies, as it did with other products; the voting power in the IMF was proportionate to the country's economic power, while that in the WB was proportionate to the member's contributions, both of which impeded the development and upward mobility of the Third World. In short, the complaint was that the existing international economic framework was not concerned with Third World interests, but was significantly biased in favor of the First World.
In my opinion, Third World criticisms of international economy between 1945 and 1991 were, to a large extent, valid; that is to say, they were legitimate complaints that had a sound basis. During the course of my discussion I will analyse these grievances in relation to the multi-national institutions (GATT, IMF and WB), since they did have a major influence over the state of the post-war international economy.
[...] Hence, although the ways in which the IMF and the WB functioned were understandable, it is undeniable that they did not aid substantially the Third World countries; indeed, harmed them more than they helped. Therefore, I agree to a large extent that the Third World criticisms of the international economy under the workings of the IMF and WB were valid. Some may argue that the Third World did not always lose out; that these countries did grow and advance economically, too. [...]
[...] For example, with regards to the IMF and WB loans, at times emphasis was not on appraising loan quality but on keeping the flow of capital running so that the deflationary potential inherent in the oil price rise would not choke off exports to the Third World from the industrial economies.”14 Thus, in conclusion, I think that the Third World criticisms of the international economy between 1945 and 1991 were, to a large extent, valid. After all, MNIs [multi-national institutions] have directed their efforts toward structuring the economies of the Third World to fit the evolving requirements of the industrial countries rather than meeting the fundamental needs of their populations.” Walters, Robert S., and David H. Blake, The Politics of Global Economic Relations. USA: Prentice Hall page Ibid, page Girling, Robert Henriques, Multinational Institutions and the Third World. New York: Praenger Publishers page Ibid, page 157. [...]
[...] In my opinion, there is some truth in these arguments, but, as can be seen, the validity of Third World criticisms of international economy in relation to GATT from 1945 to 1991 remains largely intact. Their complaints were legitimate, as it is largely true that they really had no hold over the matter. The IMF and WB are also crucial to our assessment of the validity of Third World criticism. One Third World criticism of the IMF was that voting power was proportionate to the country's economic power G10 held 51% of the votes, while the US itself had 20% hence the power to authorise loans, primarily to the Third World, lay decidedly in the hands of the First World. [...]
[...] In this regard, the criticisms still stand valid, as the Third World could practically do nothing but passively hope that loans would be sufficient. It was a similar situation with regards to the WB. Because the voting power is proportionate to the members' contributions, it is difficult for the Third World to rise in economic prosperity and hence contribute more since the system was a self-perpetuating cycle. This practically meant that a Third World nation could not obtain adequate loans unless there was an incentive for the First World to vote in favour of it. [...]
[...] This also means to say that in any conflict between the 1st and Third Worlds, the latter would get the lower end of the bargain. As Girling postulates, “GATT worked best by regulating trading relationships among equals. The most-favoured-nations provision, which is its centrepiece, is based on reciprocity and eliminates development-promoting preferential trading agreements.”4 Thus, in terms of GATT's attempts to make trade between 1st and Third World nations fair, Third World criticisms were valid, as loopholes still persisted equality was not assured in the international economy. Aside from these problems, the concerns of the Third World were neglected in the international economy. [...]
APA Style referenceFor your bibliography
Online readingwith our online reader
Content validatedby our reading committee