5. The international financial organizations (Міжнародні фінансові організації)

The main international financial institutions are united into Bretton Woods’s institutions. They include International Monetary Fund (IMF) and World Bank.

IMF - the special agency of the United Nations Organization, which is created in order to regulate the currency-credits relationship among the constituency countries and help them in case of the payments deficit with the offering of the short-term and mid-term loans in the international currency. The fund has the status of the specialized establishment of UN.

The main functions:

• the contribution into international collaboration between the monetary politics

• the expansion of the world trade

• the crediting

• the stabilization of the exchange rate

The World Bank includes:

1. the international bank of reconstruction and development

2. the international association of the development

3. the international financial corporation

4. multinational investment guarantee agency

5. the international centre of regulation of the investment discussions.

The main credit institution of the World Bank is the international bank of reconstruction and development. In contrary to IMF the International bank of reconstruction and development credits the projects of the economical development in the countries that are developing with the middle standard of living. All of the bank loans are given under the guarantee of the country-members’ governments. As usual, the loans are given for 15-20 years with the postponement of payment with the main sum of the loan from three to five years and the percentage is altered every half a year.

The credits are planned for the development of the infrastructure and agronomy. The international financial corporation is created in order to assist the economical development of the countries that are developing through the encouragement of the own business.

The aim of creating the Multilateral Investment Guarantee Agency (MIGA) was the assistance of income of the investment to the developing countries.

ICSID — International Centre for Settlement of Investment Disputes plans to stimulate the private investments through the regularization of the conflicts among foreign investors and local governments.

6. International trade (Міжнародна торгівля)

When countries engage in international trade , they are expressing the commitment to specialization, and the reason is: specialization increases total output.

Two countries that trade can together produce more output than they could in the absence of trade. So, the gain from trade will be increased world output and thus a higher standard of living in both countries.

Although the potential gains from world trade are perhaps clear, we must recognize one central fact of life: some producers have a vested interest in restricting international trade. Microeconomic resistance to international trade arises from the fact that imports mean fewer jobs and less income for some domestic industries. Exports represent increased jobs and incomes for other industries. Thus on a microeconomic level there are gainers and losers from international trade. Trade not only alters the mix of output but also redistributes income from import-competing industries to export industries.

Resistance to trade emanates from workers and firms that must compete with imports. Even though the country as a whole stands to benefit from trade, these individuals and companies may lose jobs and incomes in the process.

The means of restricting trade are many and diverse. Embargoes are outright prohibitions against import or export of particular goods. Quotas limit the quantity of a good imported or exported. Tariffs discourage imports by making them more expensive. To summarize: International trade permits each country to concentrate its resources on those goods it can produce efficiently.