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Global Institutions

Purpose of Creation

Main Achievements

The United Nations (UN)

• to preserve peace through international co-operation and collective security;

• to promote international cooperation, justice, social equity and economic development;

• to provide humanitarian relief and development services.

The World Bank

• has given interest-free grants and interest-based loans to help economically vulnerable communities and countries;

• has lent money for what it calls adjustment projects, which are to support governments undertaking policy reforms, such as improved public sector management.

The International Monetary Fund (IMF)

• to secure global financial stability;

• to maintain order in international finance markets;

• to encourage stability in exchange rates and orderly systems for exchanging money between countries;

• to foster global monetary cooperation. 

The World Trade Organization (WTO)

• supervises 95% of the world’s global trade, assists trade related issues of its member nations that produce, export and import goods and services in a smooth manner.

• contributes to the growth of trade by lowering of barriers, such as tariffs and import quotas.

• improved monitoring by introducing the Trade Policy Review and the World Trade Report

• increased transparency by removing green room negotiations

The North Atlantic Treaty Organisation (NATO) 

• to unite Europe and North America in an alliance to safeguard the freedom and security of all its members using political and military means;

• to evolve its role beyond the Euro-Atlantic area in dealing with the growth of global terrorism.

The International Court Of Justice (ICJ)

• has settled legal disputes between states in accordance with international law.

• is effective in territorial disputes between countries such as "Fisheries" case when the court settled a long-standing dispute between the United States and Norway involving British fishing vessels operating inside Norwegian claimed waters.

• in its role as an advisory body, the court has given some important opinions with regard to the costs of peacekeeping, which could be reckoned as normal expenses.

G8

• to secure political commitment to action on key global issues such as cancelling the debt of the world's poorest countries or making safe nuclear facilities.

• to foster consensus on global issues such as economic growth and crisis management, global security, energy, and terrorism.

The Organisation for Economic Cooperation and Development (OECD)

• has offered peer reviews to member nations about their performance.

• has offered expertise and ideas to over 100 non-member countries for their economic development.

• shifted to ‘Think global, act local’ to maximize new opportunities for democratic participation.

• continued focus on economic growth through innovation.

The Organisation of the Islamic Conference

• to consolidate cooperation among member states in economic, social, cultural, scientific, and other fields of activity.

• to endeavor to eliminate racial segregation and discrimination and to oppose colonialism in all its forms.

• to support all Muslim people in their struggle to safeguard their dignity, independence and national rights.

The World Economic Forum (WEF)

• the Investment Climate Facility for Africa was launched in Cape Town with secured seed funding of US$ 100 million and a strong, business-led mandate to improve Africa's investment climate.

• ensured access to education. For instance The NEPAD e-Schools Initiative project operates in 16 African countries and funded e-access in 120 schools by completion in mid 2007.

• has worked out guidelines for large companies to support the HIV/AIDS programmes of smaller companies in their supply chains.

International Chamber of Commerce

• to serve world business by promoting trade and investment, opening markets for goods and services, and the free flow of capital.

•  to endorse globalisation and efforts to lower barriers to international trade and investment.

• to lobby for open trade, business self-regulation, fights corruption and commercial crimes.

Other

Activities of multinational corporations

Beneficial outcomes

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Multinational companies are sensitive to global opportunities.

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Multinational companies invest in an area.

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Multinational companies may provide training and education for employees.

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Multinational companies purchase existing national assets through the privatisation process.

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Positive effects

1

Investment and increased export income improves a country’s balance of payment.

2

Multinational corporations introduce otherwise unavailable goods and services that are essential for diversifying production.

3

Transnational corporations increase productivity of labor by supplying foreign technology and training a skilled workforce.

4

Workers of multinational corporations receive wages that are often substantially higher than those earned from traditional jobs in developing countries.

5

Multinationals stimulate local entrepreneurship by subcontracting to local industries and enhancing competition.

6

New domestic industries appear due to an opportunity for technology transfer.

7

Host government consider multinationals to be a source of tax revenue.

8

Specialization of production creates economies of scale, making exports more profitable and competitive, which increases national income.

Negative effects

A

Transnational companies exacerbate income inequality by generating jobs and producing goods that primarily benefit the richest portion of the population.

B

Transnational corporations limit the transfer of patents, industrial secrets, and other technical knowledge to local subsidiary.

C

Growth is concentrated; investment in infant industries is neglected.

D

Multinational corporations repatriate profits and restrict exports by a subsidiary when they undercut the market of the parent company, which worsens a country’s balance of payments.

E

Multinational corporations require the subsidiary to purchase inputs from the parent company even when domestic supplies are cheaper.

F

Labor-saving technology increases unemployment.

G

Multinationals often demand tax concessions and subsidies, and what is more they can evade taxes by overpricing inputs transferred from another subsidiary or underpricing outputs sold by the multinational to another country.

H

Multinationals introduce inappropriate products, technology, and consumption patterns (Nestle infant formula).

Data on the activities

of multinationals

Grounds for criticism

1.

The WTO makes decisions by “consensus” among its members rather than by voting. In practice this means that the rich nations band together and negotiate policies which they then impose on other member states. The WTO tradition is to present various deals as a fait accompli that other countries must accept if the multilateral trading system is to survive. In practice, this would mean that many smaller developing countries (the majority of the WTO’s members), that have been excluded from the negotiations, could be forced into accepting a deal that could wreak havoc on their economies and the environment and undermine their democracies. All decisions at the IMF and World Bank are taken on the basis of “one dollar one vote”, which guarantees the world’s richest countries an inbuilt majority.

International organizations are undemocratic.

2.

The rules of international organizations like the WTO are written by and for corporations with inside access to the negotiations. International organizations sign treaties that facilitate fiscal cross-border operations and reduce tariff barriers aiming to support domestic producers. In reality only multinational corporations benefit from such agreements as local companies aren’t competitive on the global market. The WTO has become the vehicle for liberalisation, with the multinationals at the wheel. It has the power to punish governments who “interfere” with free trade, leaving the field wide open for multinationals in pursuit of profit. The WTO agreement on intellectual property rights (TRIPs) also benefits corporations. It imposes strict rules protecting patents, copyrights and trademarks – most of which are held by multinationals. This increases the monopoly control some multinationals have, preventing local firms from developing similar products. It also allows multinationals to own rights to the use of plants and natural derivatives, like the natural pesticide from the Neem tree, which has been used for hundreds of years by farmers but has now been patented by a US corporation.

3.

Workers in poor countries may have to work 12 hours a day, seven days a week with few protections for health and safety. In some countries, globalization leads to the exploitation of child, and prison labour. The rules of international organizations don’t protect workers’ rights to organize, which leads to workers’ exploitation and lack of defense by trade unions. For example, a woman who sows a $200 Liz Claiborne jacket in El Salvador is paid just 74 cents. In the US, the labour cost to sew a garment is typically 10 per cent of the retail price.

Coca-Cola is said to be one of the most discriminatory employers in the world. In the year 2000, 2,000 African-American employees in the U.S. sued the company for race-based disparities in pay and promotions.

In Colombia, the IMF complained in January 2003 that labor market reforms do "not go far enough" because the minimum wage is still indexed to the cost of living.

Even for Germany, the IMF has recommended “wage moderation”, an “aggressive elimination of spending on active labor market policies” and reduced unemployment benefits.

4.

Multinational and intergovernmental organizations promoting trade consider environmental protections to be “barriers to trade”. Some countries’ officials are bribed to give permissions to fell rainforests, to use cyanide heap leach technology for mining, to increase the amount of GMO seeds in agriculture. The petrochemical company Chevron left more than 600 unlined oil pits in pristine northern Amazon rainforest and dumped 18 billion gallons of toxic production water into rivers. The toxic crude oil and formation water seeped into the subsoil, contaminating surrounding freshwater and farmland. As a result, local communities suffered severe health effects, including cancer, skin lesions, birth defects, and spontaneous abortions. It is known that the WTO is negotiating an agreement that would eliminate tariffs on wood product, which would increase the demand for timber and escalate deforestation.

5.

International organizations like the WTO are responsible for violating national and individual independence by promoting mass homogeneity, sameness, and standardization which erases individuality, specificity and difference. Mass consumption of standardized goods brought up by international trade and Foreign Direct Investment in cultural and other sectors may be seen as negative because it crowds out self-produced, traditional and locally manufactured goods and services or tends to reduce the perceived value of these goods to their so-called “pure” market value. The growth of sameness and a presumed loss of cultural autonomy is viewed as a form of cultural imperialism of international organizations and multinational corporations.

Companies like McDonald’s popularize similar patterns of consuming food all over the world. MTV, the television rock music station, was launched in 1981 when it reached 1.5 million householders. By 1991 it reached 201 million householders in 77 countries, across 5 continents. Given the global reach of MTV and the nature of popular music, this example might be regarded as a good illustration of cultural homogenization.

6.

The IMF and World Bank practice ideological interference and determine development paths of countries. WTO rules mean that governments are not allowed to “interfere” with trade. Increasingly this is being interpreted to mean that governments cannot even make normal domestic policy if it might have an impact on an overseas company wishing to sell its goods. Even government rules to protect the health of their citizens have come under attack.

The processes of apartheid – declared a crime against humanity by the United Nations in the 1960s – witnessed close collaboration between foreign corporations including mining, banking, technology, automotive and energy corporations such as Fujitsu Ltd, Barclays, IBM, Daimler AG and the Ford Motor Company among others, intentionally financing, aiding and abetting the regime, in exchange for access to natural resources such as gold and diamonds, and deliberately cheapened human resources or labour. The reasoning – business as usual – was quickly justified by corporations such as Ford who stated, “Why are we in South Africa? We would not be there were there not an opportunity to make a profit.”

7.

Free trade pitches powerful rich countries against the Third World. Developing countries are prohibited from nurturing their industries in the way that industrialised countries did during their own development. The significant impact on power disparity is due to the profits extracted by the multinationals that take over developing country systems. For example, the 20% of world’s richest population devour 86% of world’s natural resources while the 80% of the underprivileged are left with 14% of the resources.

Global trade rules, and especially International Monetary Fund and World Bank conditions, have required developing countries to remove tariffs on agricultural imports. That has left them vulnerable to accepting the international market price – even if it is the product of a rigged system, and even if it impoverishes the countries’ farmers and drives them out of their livelihoods. One of the World Bank’s present fads is water privatization. Clean drinking water is a basic need for survival, but widely unavailable in poor countries. Privatization in water and sanitation has led to much higher fees, sometimes overnight and sometimes with disastrous consequences. Diarrhea kills more than a million children a year in developing countries, simply because their families lack access to clean drinking water.

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