Reform of the International Institutions

Reform of the International Institutions

The IMF, World Bank and the WTO

Peter Coffey and Robert J. Riley

The seemingly endless problems encountered by the IMF, WTO and World Bank provide major reasons for seeking reform. However, an additional impetus is the changing balance of economic power in the world. The volume begins with an overview of the Bretton Woods and international trading systems. Following this are discrete, in-depth discussions of the three institutions from American and European points of view. The authors emphasise the need for making the IMF and World Bank more regional in structure and, like the European Bank, more frugal in the lifestyles of their officials. Similarly, they call for a narrower focus in the mission of the World Bank and the IMF. In the case of the WTO, they call for a democratic reform of the organisation comprising participation by experts and, above all, better representation and support for Third World countries.

Chapter 6: The IMF

Peter Coffey and Robert J. Riley

Subjects: economics and finance, international economics

Extract

Robert J. Riley INTRODUCTION The United States has much at stake in the architecture of the international economic system and the effectiveness of its primary organisations, including the International Monetary Fund. These stakes are not just economic in nature; they have very important military and political dimensions as well. American economic conditions and relations with the rest of the world influence its strategic, geopolitical decisions; the causality also goes in the opposite direction, so any discussion of economic policy should not take place in a vacuum, divorced from a broader conversation about security and political stability. As such, we cannot separate, say, our trade ties with Europe from the geopolitical alliance with our European allies. Concerned with these relationships are standards of living, domestic security and the ability to preserve our social values, all of which enter the calculus. Genuine general equilibrium thinking is needed, but is often missing from the very heated debate around narrower – albeit important – issues, such as the role of the IMF in stabilising foreign exchange rates. In the end, the proper place and duties of the IMF and the other international organisations in the world economy depend critically, of course, on what we construe their objectives to be, as well as on our perception of the constraints they face in the global political, economic, and cultural environment. A frank assessment of these goals and parameters is thus part of the broader discussion. The nature of regional and bilateral agreements, domestic politics, and military alliances (among...

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