This has resulted in the formation of numerous international organizations that aim at promoting policy coordination amongst countries and attempt to provide rules and investment transactions and a forum for discussion of trade related issues. Such international organizations are, the World Trade Organization (WTO), International Monetary Fund (IMF), The World Bank, Organization for economic cooperation and development (OECD), Organization of Petroleum Exporting Countries (OPEC), and the Group Seven (G7).
The WTO is the main multilateral trading agreement, which provides a forum for countries to promote free trade and resolve trade disputes. Its various roles include enforcing the existing WTO agreement, resolving disputes, and liberalizing world trade by implementing global trade agreements. These agreements lay ground rules that promote cooperation between countries.
The WTO also exists in order to provide non-discrimination between member countries, liberalization of trade which involves the removal of all tariff and non-tariff barriers, stability of trading relations where WTO mechanisms are set up to discuss and solve trade disputes between countries, and transparency of trade agreements, where trade preferences between countries are scrutinized and discussed in the WTO forum thereby reducing corruption.
Without the WTO, globalization would be a struggling process, as countries would have difficulty organizing trade policies, often resulting in many countries at a disadvantage. In essence the WTO serves as a forum to ensure that all its member countries benefit from globalization.
The IMF is an international organization established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth, a stable economic environment, high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment. This assistance is given to countries if economic policy is met, known as “structural adjustment policies”.
These policies are aimed to decrease the size of the government, privatizing government business enterprises and deregulating markets. Without the IMF, poorer countries will find themselves without assistance, and at a point where they cannot achieve economic growth, poorer areas within the country will be stagnate, and contrasting to the growing richer economies and richer areas, it will result in greater geographical disparities both within and between countries due to the poverty cycle.
The IMF exists in order to ensure that all countries benefit from globalization, and to make sure that countries that are disadvantages from lack of economic development, achieve economic growth that will in turn benefit the global community.
The World Bank's key role is to improve living standards and assist developing nations through making credit and other forms of assistance available to achieve a sustainable development. It provides investment for infrastructure in order to reduce poverty, loans with little or no interest, HIV/AIDS programs as well as educational funds.
Similar to the IMF it exists in order to ensure that all countries benefit from globalization, and to make sure that countries that are disadvantages from lack of economic development, achieve economic growth that will in turn benefit the global community.
The OECD's role is to promote the highest levels of economic growth and employment, and rising living standards in member countries, whilst maintaining financial stability and contributing to world economic development. It does this through the research, consultation, cooperation and coordination of economic trade and development issues.
OPEC's role is to set oil production quotas for members which can lead to higher world oil prices and cause production costs to rise in oil importing nations. This plays an important role in controlling the world economic growth.
For example if oil prices were increased, the cost of production for many goods will rise, which will in turn lead to a decrease in demand as suppliers raise their prices to compensate. This rise in price and decrease in demand will be experienced worldwide, and would then leave to a contraction in aggregate demand and therefore growth.
This could be seen in 1973, when OPEC used its control to artificially raise the oil prices in its member countries, and led to the “energy crisis” of the 1970s and caused widespread inflation and unemployment in the world economy. So in order to smooth out the international business cycle, and thus reduce the duration and damage of recessions, OPEC could temper oil prices and control booming or slumping economic growth.
G7 consists of the USA, Japan, Germany, France and the UK, Italy and Canada, and together they account for almost half of the world's GDP, trade and financial flows. Its role includes the discussion of international economic and trade issues and coordinates strategies and macroeconomic policies to overcome specific international economic problems.
Since G7 plays such an important part in the global economy, because is accounts for so much of the world's financial flows, its coordination of trade issues play an important part in exporting and importing between member countries. This can lead to the formation of other barriers between member countries and non-member countries, but are ultimately beneficial to its members. Its members benefit from liberalized trade gaining access to a larger demand market, new technologies, managerial techniques, raises in living standards, and employment opportunities.
International organizations have the power to impact world trade, investment and financial flows. They exist as a result of globalization. Such organizations include the World Trade Organization (WTO), International Monetary Fund (IMF), The World Bank, Organization for economic cooperation and development (OECD), Organization of Petroleum Exporting Countries (OPEC), and the Group Seven (G7). They're role is to promote policy coordination amongst countries and attempt to provide rules for trade and investment transactions and a forum for discussion of trade related issues.
Although aimed to breach the gap between developing nations, the IMF and World Bank's decisions are controversial and are criticized on the basis of unfair treatment of the developing word, eg the denial of market access to developed nations' markets or the stringent conditions imposed on countries receiving assistance from the IMF or World Bank.
