The International Monetary Fund
The IMF promotes itself as “an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” It was created in 1944, while World War II was still raging, as part of the Bretton Woods Agreement. The agreement sought to create a monetary and exchange rate management system that might prevent a repeat of the currency devaluations that contributed to the economic challenges of that period.
The organization’s “primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other.” The IMF’s broad, self-defined mandate encompasses “all macroeconomic and financial sectorissues that bear on global stability,” including trade promotion, economic growth and poverty reduction.
The IMF advances its mission in a variety of ways. Monitoring and reporting on economic developments is a large part of the effort, including making recommendations to member countries on future courses of action. For example, in 2015, the IMF reviewed the health of the U.S. economy and recommended that the U.S. Federal Reserve hold off on its plans to increase interest rates because it might harm the economy. Although the IMF's recommendations are not legally binding, they are made public. Economic policy makers are certainly aware of them and are undoubtedly influenced by them.
Lending money to poor countries is also a major initiative at the IMF. The organization provides financing to help troubled nations avoid or recover from economic challenges. The IMF has made significant loans to Portugal, Greece, Ireland, Ukraine, Mexico, Poland, Columbia and Morocco, among others. All of the IMF’s initiatives are self-funded by its members. The organization’s headquarters is in Washington, D.C. (For more information, read: An Introduction To The International Monetary Fund.)
The World Bank
The World Bank Group, like the IMF, was created at Bretton Woods in 1944. Its goal is to provide “financial and technical assistance to developing countries around the world” in an effort to “reduce poverty and support development.” It consists of five underlying institutions, the first two of which are collectively referred to as The World Bank.
Advancing the World Bank Mission
The World Bank pursues its objectives by delivering financial assistance to developing nations. It gives low- or no-interest loans and grants to finance “a wide array of investments in such areas as education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management.” For example, the World Bank loaned India $500 million in 2015 to support micro-, small- and mid-sized businesses. The 10-year loan was made on favorable terms that include a provision that repayment does not need to begin for five years.
The World Trade Organization (WTO) claims to be “the only global international organization dealing with the rules of trade between nations.” The WTO’s efforts center on developing trade agreements between nations to encourage cross-border commerce. This includes setting up the agreements, interpreting the agreements and facilitating dispute settlement.
Officially founded in 1995, the WTO traces its roots back to Bretton Woods where the General Agreement on Trade and Tariffs (GATT) was crafted in an effort to encourage and support trade between nations. Following up on GATT, the 1986-1994 Uruguay Roundtable trade negotiations resulted in the formal creation of the WTO. The WTO headquarters is located in Geneva, Switzerland. Like the IMF and the World Bank, the WTO is funded by its members.
Advancing the WTO Mission
The WTO seeks to facilitate cross-border trade. Negotiations are conducted in an all-or-nothing format, with every issue on the table discussed until resolved. Accordingly, there are no partial deals, so missed deadlines and protracted efforts that continue for many years are not uncommon. In addition to large-scale trade initiatives, the WTO also facilitates trade dispute negotiations, such as a disagreement between Mexico and the United States over tuna fishing. (For related reading, see: 3 Times the WTO Got It Right This Century.)
The Bottom Line
While all three organizations promote themselves as fostering positive developments, not everyone agrees with their self-assessments. The organizations do provide financial assistance to countries in need, but like just about every other known method of obtaining financial resources, the money comes with strings attached and the motives behind the initiatives are often in question.
For example, what these groups refer to as “promoting economic growth,” their detractors view as a blueprint for destroying the local economy and despoiling the environment with globalization efforts that benefit only the rich. Protests, including those in Davos, Switzerland, Washington, D.C., Cancun, Mexico, and other major cities are a regular feature at IMF, World Bank, and WTO events. Aside from the public protests, even some business leaders argue against the organizations. (See: The Dark Side of the WTO.)