International institution:

UNCTAD
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 The United Nations Conference on

Trade and Development (UNCTAD)
was established in 1964 as
permanent intergovernmental body.
It is the principal organ of the UNs
General Assembly dealing with trade,
Investment and development issues.

Objectives of organisation

The objectives of the organisation

are to Maximize the Trade,
Investment and Development
Opportunities of developing countries
and assist them in their efforts to
improve economy.

 The creation of the Conference was

based on concerns of developing
countries over the international
market, multi- national corporations,
and great disparity between
developed nation and developing
nations.

 UNCTAD provide a forum where the

developing countries could discuss
the problems relating to their
economic development.

 UNCTAD grew from the view that

existing institutions like GATT, now
replaced by the World trade
Organisation, WTO, the International
Monetary Fund ( IMF), and World
Bank were not properly organised to
handle the particular problems of
developing countries.

 So, the primary objective of the

UNCTAD is to formulate policies
relating to all aspects of
development including trade, aid,
transport, finance and technology.

 The first conference took place in

Geneva in 1964.
UNCTAD has its permanent
secretariat in Geneva.
It was argued in UNCTAD, that in
order to promote exports of
manufactured goods from developing
countries, it would be necessary to
offer special tariff concessions to
such exports.

 Accepting this argument, developed

nation formulated a scheme under
which manufacturers exports and
some agricultural goods from the
developing nations enter duty-free or
at reduced rates In the developed
countries.

 Currently , UNCTAD has 194

members countries and its
headquarter in Geneva, Switzerland.
It is also a member of United
Nations Development Group.

 UNCTAD members are divided into

four lists. The list originally defined in
19th General Assembly Resolution
1995 serve to balance geographical
distribution of member states
representation on the Trade
Development Board.

List A

List A consist mostly of countries in

the African and Asian Groups of UN.
List A consist 100 members like
Afghanistan , Algeria, Bahrain,
Bangladesh, Bhutan , Bosnia,
Botswana, Cambodia, Cameroon,
China, South Korea, Congo, Egypt
and so on

List B
List B consist 31 members.
Australia, Austria, Belgium, Canada,
Cyprus, Denmark, Finland, France,
Germany, Greece, Iceland , Ireland,
Italy, Japan, Luxembourg,
Netherlands, New Zealand, Portugal,
Spain and so on

List-C
List C consist 33 members.
Antigua, Argentina, Bahamas,
Bolivia, Brazil, Chile, Colombia, Costa
Rica, Cuba, Ecuador, Guyana,
Jamaica, Mexico, Panama, Peru,
Trinidad, Uruguay and so on

International Monetary
Fund

 IMF an international organisation

with 185 member countries was
established in 1944 to promote :
International Monetary Cooperation,
Exchange rate stability,
To provide temporary financial
assistance to countries to help ease
balance of payments.

 IMF based in Washington D.C.,

currently has 2,693 staff from 141
countries and 75 countries owe the
Fund around $ 34 billion.
IMF operations include surveillance of
member countries economies and
the global economy, technical
assistance and financial support.

 The IMF plays three major roles in the global

monetary system.
The fund surveys and monitors economic
and financial developments, lends funds to
countries with balance of- payment
difficulties and provides technical assistance
and training for countries requesting it.

 The IMF describe itself as An

organisation of 185 countries,
working to foster global monetary
cooperation, secure financial
stability, facilitate international trade,
promote high employment and
sustainable economic growth, and

Functions Of International Monetary Fund

IMF main function is to purchase and

sell the member countries
currencies.
If any country is facing adverse
balance of payments and facing the
difficulty to get the currency of
creditor country, it can get short
term credit from the fund to clear the
debit.

 If demand of any particular country

currency increases and its stock with
the fund falls, IMF tries to increase its
supply by these methods:
IMF borrows from those countries
scarce currency that has surplus
amount.
IMF allows the debtor countries to
impose restrictions on the imports of
creditor country.

 When the devaluation policy is

indispensible for any country then
IMF provides loan to correct the
balance of payment of that country.

 IMF develop policies regarding

money monitoring, uniform
standards for currency exchange and
stable payment systems that should
be mutually accepted by all the
members countries of IMF.

 IMF also provides Training and

Technical Assistance in the areas of
financial management system , Tax
system, Banking System
Development to its member
countries.

 It is done through : IMFs Monetary

and Exchange affairs Department,
The Fiscal Affairs Department, and
Bureau of Statistics.

International Bank For

Reconstruction and Development
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IBRD
The International Bank for Reconstruction
and Development( IBRD) aims to reduce
poverty in middle- income countries and
creditworthy poorer countries by
promoting sustainable development
through: loans , guarantees, risk
management products, and analytical and
advisory services.

 Established in 1944 as the original

institution of the World Bank Group.
IBRD is structured like a cooperative
that is owned and operated for the
benefit of its 188 member countries.

 IBRD is the part of the World Bank, to

promote sustainable, equitable and
job-creating growth, reduce poverty
and address issues of regional and
global importance.

Features of IBRD
IBRD supports long-term human and social
development needs.
Middle- income countries , where 70
percent of the worlds poor live, have made
profound improvements in economic
management and governance and are
rapidly increasing their demand for the
strategic, intellectual and financial
resources the world Bank has to offer.

 The challenge facing the IBRD is to

better manage and deliver its
resources to meet the need of these
countries.

 Investors see IBRD bonds as safe and

profitable place to put their cash
finances projects in middle-income
countries.
The IBRDs borrowing requirements
are primarily determined by its
lending activities for development
projects.

 IBRD raises most of its funds on the

worlds financial markets.
It has become one of the most
established borrowers since issuing
its first bond in 1947 to finance the
reconstruction of Europe after World
War Two.

 In 1998, for example, IBRD

borrowing peaked at $28 billion with
the Asian financial crises.
It is now projected to borrow
between $ 10 to 15 billion a year.
IBRD borrows at attractive rates
thanks to its triple A status it has
had with credit ratings agencies
since 1959.

 IBRD enjoys its high credit ratings because

it is backed by the capital commitments of

its 188 shareholder governments.
It is also the result of IBRDs strong

balance sheet, prudent financial policies

and anticipating shifts in investor
preferences.

WTO
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 The General Agreement on Tariffs

and Trade( GATT) was the outcome of
the failure of negotiating
governments to create the
International Trade
Organisation( ITO).
GATT was born in 1948 and lasted
until 1994, when it was replaced by
the Word Trade Organisation ( WTO).

 Following of the Uruguay Round ( UR)

Agreement , GATT was converted
from a provisional agreement into a
formal international organisation
Called Word Trade Organisation
( WTO) with effect from January 1,
1995.

Principles of the Trading System

The WTO agreements are lengthy
and complex because they are legal
texts covering a wide range of
activities.
They deal with : Agriculture, Textiles
and clothing Banking,
Telecommunications, Government
Purchases, Industrial Standards and
Product safety, Intellectual standards

Objective
Basic objective is promoting fair
competition
The WTO system does allow tariffs
and the rules of non-discrimination
and national treatment are design to
secure fair conditions of trade.
So too are on dumping i.e.
exporting at below cost to gain
market share

 The rules try to establish what is fair

or unfair, and how governments can
respond, in particular by charging
additional import duties calculated to
compensate for damage caused by
unfair trade.

 Many of the other WTO agreements

aim to support fair competition:
In agriculture, Intellectual Property,
Services.

Functions
The WTO has following specific
functions:
A. ) The WTO shall facilitate the
implementation, administration and
operation of the Multi Trade
Agreements AND shall provide the
framework for the implementation,
administration and operation of Trade
Agreements.

 B.) The WTO shall provide the forum

for negotiations among its members
concerning their multilateral trade
relations.

 C.) The WTO shall administer the

Understanding on Rules and
Procedures Governing the Settlement
of Disputes.

D.) With a view greater coherence in

global economic policymaking, the
WTO shall cooperate with the IMF
and IBRD.
E.) WTO to act as a dispute
settlement body.

Role and Advantages of WTO.

WTO has come to play a very
important Role in the global and
national economies.
National economic policies are
significantly influenced by the
principles, policies and agreements
of WTO.

 A.) WTO has made significant

achievements in reducing the tariff
and non- tariff barriers to trade.
B.) The liberalisation of investments
has been fostering economic growth
of a number of countries.

C.) The liberalisation of trade and

investment has been resulting in
increase in:
Competition.
Efficiency of resource utilisation.
Improvement in quality and productivity.
Fall in prices and
Acceleration of Economic Development.

 D.) WTO provides a forum for

multilateral discussion of economic
relations between nations.
E.) WTO has a system in place to
settle trade disputes between
nations.

 F.) WTO has a mechanism to deal

with violation of trade agreements
G.) Research: WTO does considerable
research related to global trade and
disseminates a wealth of information
around the world.

Regional Economic
Integration

Economic Integration
Economic Integration is the
uniformity of economic policies
between different states ( Countries)
through the partial or full abolition of
tariff.

 Regional Economic Integration, refers

to the growing economic
interdependence that results when
countries within a geographic region
form an alliance aimed at reducing
barriers to trade and investment.

Regional Economic
Integration In EUROPE

European Union
This was originally established as
European Common Market by the
treaty of Rome in 1957, and came
into operation in 1959.

 The founder members of the

community were France, West
Germany, Italy, Belgium, Netherlands
and Luxembourg.
In the year of 1973 UK joined the
community.

 Today it is known as EU or European

Union and comprises Belgium,
Denmark, France, Greece, Ireland,
Italy, Netherlands, Portugal, Spain,
United Kingdom, Germany,
Luxembourg, Finland, Austria, and
Sweden.

 The association for removing most

trade barriers and allowing free
movement of persons and goods with
in the European Union.
They have common currency which is
EURO.

Significance/Objectives of
European Union

 A.) To eliminate trade barriers on

members nations.
B.) To assist member nations during
the times of emergencies.

 C.) To promote free transfer of labour

and capital among member nations.

D.) To develop cultural and social

relations.

 E.) To impose common external

barriers on non-members.
F.) To bargain collectively with the
non-members by means of collective
strength.

Policies of European Union

i) Fiscal Policy
It aims at unification of tax rates, and
other fiscal matters.
It monitors common value added tax
on products in member nations.

ii.) Industrial Policy

It facilities research and development
among member nations.
It aims at improving international
competitiveness of EU member
nations.

iii.) Common Agriculture

Policy
The main aim of this policy is
improving the agricultural production
and to improve the position of EU
farmers.
Also aims to make available food
products at reasonable rates.
Policy allows free movement of food
products among member nations.

iv) Common Fisheries Policy

This policy provides equal access to
fishing areas to all nationals of EU.
It adopts common market standards
for marine products.

v.) Common Transport Policy

It aims at integration of transport
facilities of the entire community.
It monitors and control of transport
system within the community.

vi) Competition Policy

This policy prohibits agreements
which lead to prevention or
restriction of competition within the
EU
It aims to promote non- competition
within the EU by restricting anticompetitive practices.

Regional Economic
Integration In USA

 The North American Free Trade

Agreement ( NAFTA) is the most
powerful trade bloc in the world.
The members of the block are USA,
CANADA, and Mexico.

 This bloc came into operation in

1994.
The NAFTA is basically a trade and
investment agreement with a view to
reduce barriers on the flow of goods,
services and people among three
countries.

 The agreement covers only goods

and services manufactured in North
America or if imported goods and
services that meet certain local
content requirements, the nationality
of ownership does not matter, as
long as such local content

 NAFTA has a total population of 360

millions.
Its formation is an attempt to gain
comparative advantage against the
enlarged European Union.