After the coming of the globalisation the world market has been opened for business organisations all over the world. Now, the commercial purposes are served with multi-national companies and big business houses. However, the dominance of the big companies stalls the growth of the companies originated in developing countries. In fact, poor infrastructure and financial inadequacy play a determinant role in this regard. As a result of that the need of neutral global platform is required to push the developing countries towards development (Mansfield and Reinhardt 2015). International organisations like the IMF and UNCTAD play the same role to guide and advice the backward countries in order to give them the light of progress and development and at the same time foster equilibrium in the global trade. In this context, the purpose of this report is to figure out the role of the IMF and UNCTAD to create a balance in the international trade practices and boost up the developing countries to take part in the global trade and commerce.
The International Monetary Fund (IMF) has been designed in 1944 with the purpose to serve as a game changer during the economic crisis (Reinhart and Trebesch 2016). Primarily, the IMF aims to stabilise the exchange rates and provide loans to the countries to set up infrastructure and economy in a healthy manner. Economic and financial stability are the core concern that the IMF has prevailed in its functions (IMF 2018). In this regard, the organisation operates in three categories, such as surveillance, technical assistance and lending.
The primary function of the IMF is to monitor the economic and financial developments of its 189 member countries. As per the mandate of the IMF, it can be argued that the organisation assesses the domestic policies and balance of payments stability in order to give advice on policy adjustments of an individual country (Haggard and Kaufman 2018). There are two separate functions in this regard.
According to the Article IV of the IMF, the country surveillance is a part of the functions of IMF. The Integrated Surveillance Decision plays a major part in the consulting framework of the IMF monitoring process (Broome 2015). It incorporates the risks and vulnerabilities and analyse the fiscal and monitory policies in domestic and international arena. In addition to this, there are some initiatives that the IMF is taken in the form of analysing the vulnerability crisis of individual countries, Financial Sector Assessment Program and the Standards Code Initiatives (Kentikelenis, Stubbs and King 2016). The purpose of these initiatives is to stabilise the international trade and commerce and facilitates the development of the countries.
In the light of the global economic crisis the International Monitory Fund puts emphasis on continuous monitoring on the economic development across the world. These analysis and surveys are also being expressed by the periodic reports of IMF. For instance, the World Economic Outlook, Fiscal Monitor and the Global Financial Stability Report are considered to be the most authentic studies on the global and regional macroeconomic and financial progresses (Mansfield and Reinhardt 2015)
In course of providing technical assistance, the primary task of the IMF is to train the member countries in different financial functions. For example, central banking, monitory and the tax policies are the key concerns on which the IMF puts most of its focus. In fact, it can be argued that about 80% of the IMF technical assistance is covered the lower and medium income countries locate primarily in sub-Saharan Africa and Asia (IMF 2018). As a matter of fact, the IMF is responsible to create a financial equilibrium in the world with an approach to overcome the possible financial crisis around the world. In this regard, the organisation has arranged a number of donor countries and tries to facilitate bilateral and multilateral understandings between the donor countries and the donated countries. Moreover, monitoring the financial disputes and managing resource wealth is also a part of the technical assistance of IMF.
It can be considered that lending is a very important aspect of the IMF in order to stabilise the global economy and international trade. There are several countries across the globe that are suffering with the problem of financial crisis due to inadequate domestic policies or lack of infrastructure (Broome 2015). Therefore, the IMF provides them financial assistance in terms of loans to tackle the balance of payments and stabiliser the economy. As a result of that the global trade also becomes developed with the influx of money in the countries. This financial support role of the IMF is associated with the effective global financial safety that not only puts emphasis on the economic benefits of the countries but at the same time able to develop a continuous transaction in the world trade as well (IMF 2018).
The United Nations Conference on Trade and Development (UNCTAD) is a permanent organ of the United Nations General assembly with the purpose to trade, invest and develop the poor and middle income countries. In fact, the UNCTAD was established in 1964 with approximately 190 members around the world (Unctad.org 2018). It is the responsibility of the UNCTAD to provide policy guidelines and formulate plans for creating a balance in the international trade and commerce. Generally, there are four division of UNCTAD in the form of globalisation and development strategies, international trade, technology and the enterprise development and the service infrastructure (Brack 2017). Besides this, according to the mandate of the UNCTAD there are three functions that the UNCTAD follows, such as, forum for intergovernmental deliberations, policy analysis and data collection and technical assistance to the developing countries.
This part puts emphasis on the competition and consumer policy issues in the light of reduction of poverty and strengthening markets. The respective governments of the member countries play a major role in this regard. In fact, the UNCTAD organises annual conventions every year with the name of Intergovernmental Group of Experts on Competition Law and Policy (IGE) (Unctad.org 2018). The purpose of the IGE is to discuss regarding the issue of competition policies and the effectiveness of the associated agencies. Furthermore, international cooperation and capacity building program are also incorporated into the work of the IGE. As a matter of fact, IGE comprises the framework of making a better relationship between the consumers and the competitive market.
In addition to this, the role of the IGE is also resembles with the competition and consumer policy program. It is related to the development of a research partnership program and circulated the research outcome to IGE. The purpose of this function is to figure out the current situation of the international trade and its relationship with the consumers (Van Marrewijk 2017). Moreover, one of the reasons behind this practice is to foster a balance in the international trade by assisting the developing countries.
Assistance to the developing countries requires technical assistance in developing their infrastructure and economic situation so that those countries are also able to participate in the international trade and business. For an example, the UNCTAD introduces a delivery program for technical assistance on behalf of the development of the 12 Latin American countries (Mayer, Phillips and Posthuma 2017). In fact, the organisation also delivers different kind of assistance programs, such as,
In the Latin America, Africa and Asia the organisation is going to develop a comprehensive long term technical assistance to enhance the consumer protection system through programs like COMPAL and AFRICOMP (Ciuriak et al. 2015). As a matter of fact, this program is planned in 2014 and is expected to increase the number of countries and in return expanding the significance of UNCTAD.
The capacity building program on competition and consumer policies has been developed with the assistance of the regional leaders. In fact, the regional leaders play a significant role in the assistance activities of UNCTAD. Countries like Indonesia, Brazil, South Africa are eagerly participated in those program and attracting other countries to take part in the project activities (Ciuriak et al. 2015).
As far as the technical expertise is concerned, these programs and activities facilitate high quality advice based on the future opportunities of trade development. In addition to this, advanced infrastructure and training programs are also considered to be beneficial for the developing countries in order to understand the existed international trade (Baier, Bergstrand and Feng 2014).
Conclusion
It can be concluded that due to the advancement of globalisation it becomes a threat to the developing countries to create an impression in the international trade market. In fact, the big powers do not give them the opportunities to penetrate into their monopoly. It requires some neutral agencies to neutralise the market and create a better environment where every country can participate in trade and commerce. In this regard, the International Monetary Fund or the UNCTAD plays a significant role to not only provide the developing countries the opportunity to enter into the global market but also succeed to maintain a balance in the world trade by giving them economic assistance and training programs.
Reference
Baier, S.L., Bergstrand, J.H. and Feng, M., 2014. Economic integration agreements and the margins of international trade. Journal of International Economics, 93(2), pp.339-350.
Brack, D., 2017. International trade and the Montreal Protocol. Routledge.
Broome, A., 2015. Back to basics: the great recession and the narrowing of IMF policy advice. Governance, 28(2), pp.147-165.
Ciuriak, D., Lapham, B., Wolfe, R., Collins?Williams, T. and Curtis, J., 2015. Firms in International Trade: Trade Policy Implications of the New New Trade Theory. Global Policy, 6(2), pp.130-140.
Haggard, S. and Kaufman, R.R. eds., 2018. The politics of economic adjustment: international constraints, distributive conflicts and the state. Princeton University Press.
IMF., 2018. How the IMF Promotes Global Economic Stability. [online] Available at: https://www.imf.org/en/About/Factsheets/Sheets/2016/07/27/15/22/How-the-IMF-Promotes-Global-Economic-Stability [Accessed 12 Aug. 2018].
Kentikelenis, A.E., Stubbs, T.H. and King, L.P., 2016. IMF conditionality and development policy space, 1985–2014. Review of International Political Economy, 23(4), pp.543-582.
Mansfield, E.D. and Reinhardt, E., 2015. International institutions and the volatility of international trade. In The Political Economy Of International Trade (pp. 65-96).
Mayer, F.W., Phillips, N. and Posthuma, A.C., 2017. The political economy of governance in a ‘global value chain world’. New Political Economy, 22(2), pp.129-133.
Reinhart, C.M. and Trebesch, C., 2016. The International Monetary Fund: 70 Years of Reinvention. Journal of Economic Perspectives, 30(1), pp.3-28.
Unctad.org., 2018. UNCTAD | Mandate and key functions. [online] Available at: https://unctad.org/en/Pages/DITC/CompetitionLaw/ccpb-Mandate.aspx [Accessed 12 Aug. 2018].
Van Marrewijk, C., 2017. International trade. Oxford University Press.
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