This essay aims to analyse and evaluate the impact of three international institutions namely, the International Monetary Fund (IMF), the World Bank and the World Trade Organisation (WTO) in securing global health and wellbeing. Their legitimacy and accountability have attracted a lot of debate and criticism. In the essay, the roles, functions and organisation of these institutions will be discussed followed by critique relating to presentation, influence and impact on global health/wellbeing and finally concluding with a critical evaluation and considerations of possible alternatives and improvements.
Ideas of Harry Dexter White of United States and the British economist John Maynard Keynes led to the establishment of the IMF which began its operations on the 1st of March 1947 in Washington D.C. Its purpose was to rebuild the international economy and prevent the economic crises such as the Great Depression. Membership to the IMF is voluntary and a country has to deposit a “quota subscription” which determines the voting power of that country and also how much that country could borrow from the fund in terms of financial crisis. The highest decision-making body in the fund is the Board of Governors who are not involved in the day to day running of the Fund and they meet once yearly. Currently with a membership of 187 countries the IMF provides systematic mechanisms for foreign exchange transactions in order to promote balanced global economic trade. The IMF advises and focuses on member countries’ macroeconomic policies to ensure its own wealth and that of its members are safeguarded. It does surveillance of the member countries policies to ensure they do not have a negative effect on the exchange rates and trade markets. The IMF also does periodic consultations to check member countries overall economic positions and advises them on how to improve their economy. It also provides loans to countries that have problems with their balance of payments, (www.imf.org). The loans have conditions attached to them and the borrower countries must implement the economic reforms as determined by the IMF. These structural adjustment programmes (SAPs) are meant to help the countries to overcome the problems of their balance of payments (Driscoll, 1996).
The World Bank was established in 1944 to play a role in the reconstruction of post-war Europe. It has a similar governance structure as the IMF, with a board of Governors with representatives from all member states as the highest decision-making body and the voting system is the same as that of the IMF. America holds the largest share of votes and the president is also by tradition a US citizen (Peet, 2003). The World Bank group consists of five organizations but only two are usually referred to as the World Bank. For the purpose of this essay we will restrict our attention to these two. The International Bank for Reconstruction and Development (IBDR) provides long term loans and aid for economic development. It is financed from the sale of bonds on international finance markets and from interest gained from loan repayments. The International Development Association (IDA) focuses on giving credits and grants to poor countries. These interest free grants attract a 0.75 percent administrative charge per annum and are aimed to assist programmes of economic growth, reduce inequalities and improvement of living conditions. IDA is funded from contributions from richer member countries and from income earned from IBDR financing. Like the IMF, the World Bank has conditions attached its loans (Global Health Watch, 2005-2006). The bank also provides technical assistance on development issues. It provides knowledge through education and analytical services. Since its establishment, the World Bank has become more engaged in issues of institutional and policy change in borrowing countries. The bank defines what would be the best development approach on different projects at a particular time. Currently the Bank defines its mission as reducing global poverty by helping member countries through ensuring economic growth by “capacity building” and helping to create “infrastructure” (www.worldbank.org)
The WTO was established in 1995 as a successor to the previous General Agreement on Tariffs and Trade (GATT) which was established in 1947 after failed attempts to establish an International Trade Organisation (ITO) that would regulate trade. The idea of the ITO was discussed at the Bretton Woods Conference as necessary to complement the World Bank and the IMF. Due to the nature of the policies of the ITO, the US was not willing to commit itself to trade policies which would compromise its power thus efforts to establish the ITO failed (Peet 2003). The WTO’s function is to promote free and fair trade between member states with a view of promoting economic prosperity and contributing to international peace. This is achieved through the administration of trade agreements and acting as a forum for trade negotiations, helping to settle trade disputes, reviewing national trade policies, providing assistance to developing countries in trade policy issues through technical assistance and training programmes and cooperating with other international organisations such as the IMF and the World Bank, (www.wto.org). Unlike the IMF and the World Bank, the WTO is a more member-driven organisation where all major decisions are made by member states by reaching a consensus and the Secretariat has very limited powers. The WTO operates a one country one vote system. Members of the WTO agree to abide by the rules of the organisation.
Criticisms on IMF and the World Bank originate from their policies which many argue promote neoliberalism. Transparency on the functioning of the institutions has also been questioned. Governance of the two institutions is dominated by the industrialised countries mainly the G8. Due to their voting power, the industrialised countries act without much consultation with poor /developing countries who are underrepresented in the two institutions. As such, poor countries influence in policing change is limited, (www.brettonwoodsprojcet.org ). The Bank and the IMF have also been accused of promoting the top-down approach in development which has made them to be regarded as the experts in the field of financial regulation and economic development. Their prescriptive rules are viewed by many as able to undermine or eliminate alternative perceptions on development therefore are not always beneficiary to the recipients (Baum 2008).
The IMF and the World Bank’s policies have had negative economic and social impact on many countries that have had financial assistance from them. They impose conditions on their loans based on what is termed the “Washington Consensus” which is criticised by many as a neoliberalist approach of trade liberalisation and development, investment and the financial sector, deregulation and the privatisation of nationalised industries and conditions that are not flexible to individual countries circumstances. The prescriptive recommendations by the World Bank and the IMF fail to address the economic problems within countries thereby promoting massive global economic inequalities (Darrow 2003:76). While it is argued that individual nations are responsible for their own social and economic policies, national policies are overridden by the conditions of the SAPs thereby leaving such countries indirectly losing their governance to the World Bank or the IMF (Peet, 2003). The introduction of the SAPs forced countries to enter the global market where they are struggling to survive due to its competiveness.
The emphasis on privatisation by the Bank led to a lot of job losses and states losing control of the provision of essential goods and services such as health care and education resulting in the collapse of such services. The market-driven approach to health services led to the commodification of the services leaving them unaccessible to many as they could not afford to pay for them (Darrow 2003). Although the overall global life expectancy over the past century has increased, in developing countries that were affected by the SAPs, especially sub-Saharan Africa, the life expectancy decreased dramatically in some countries to as low as 36. This decline in life expectancy is attributed to the rise in poverty and the rise in infectious diseases such as the HIV/AIDS pandemic (WHO 1996). The rise in HIV/AIDS is also arguably linked to the SAPs in the sense that the introduction of user fees on infectious diseases, people only accessed health services only when they showed symptoms and even still not all could access the services as they could not afford them (Rowden, 2009:148)
Baum, (2008) supported by Rowden (2009) argue that the influence of the World Bank in health issues as seen in its 1993 and 2004 reports, saw the WHO and UNICEF losing their positions as the International Public Health leaders, to the bank. They argue that the WHO’s primary care policies were overshadowed by the market-driven ideologies that led to the commodification of the health services and the increase in donor aid. The bank’s influence led to the promotion of a top-down approach which regards it as the expert in health issues at the expense of the indigenous knowledge. Such ideologies also promote the influence of imported culture which may not be appropriate for the communities, Farmer, (1999:35). The Bank has also been criticised for the types of projects it funds many of which are said to have social and environmental implications for the affected areas, (Nagel 2004).
The shortage of essential medical and drug supplies and personnel as state expenditure was reduced has led to the monopolising of the world’s trade in drugs, (Greenland, Labonte 2007). SAPs also adversely affected food security as food subsidies were withdrawn, price supports for goods removed and prices rose, (www.fao.org). National laws such as those that protect health, safety, environment, industries and farming have also been affected by the interference of the global institutions in domestic policies of individual countries. Small industries and farmers are greatly affected as their products are undermined by cheaper imports. The free markets have also increased the monopoly of corporations at the expense of the indigenous knowledge and wealth of the poor causing uneven distribution of wealth therefore creating a wide gap between the rich and the poor countries, Global Health Watch, (2005-2006).
Although the WTO appears to be a more democratic organisation, debates on its transparency formulate from that it as a more closed organisation where many meetings are informal. These informal meetings are crucial before negotiations reach the more formal levels before a consensus can be reached between member countries. Although all member states are formally equal, in the fact that they all have the same opportunities regarding their voting power, the WTO is to a large extent controlled by the G8 while others have very limited influence and ability to keep up to date with all issues, (Global Health Watch, 2005-2006, Baum, 2008:101). The free trade agreements have negative effects on poor countries as they struggle to match the markets from developed countries. As the labour markets were deregulated, a lot of jobs were lost leading to massive increase in unemployment consequently leading to an increase in poverty. According to the WHO, over one fifth of the world’s population is living on less than two dollars a day. Furthermore the health expenditure in countries affected by SAPs declined to $13 per capita compared to the WHO’s recommended $32 per capita, (Rowden, 2009).
The three organisations have taken cognisance of some of the criticisms and debate over their legitimacy and accountability. They have demonstrated an increase in transparency through publication of policies and research which have contributed to effectiveness especially the Bank. It has improved on the way it is working with NGOs and also considered the environmental concerns of its project although some argue that there is still a lot be done in that area, (Peet, 2003). Pressure exerted on the Bank made it to reconsider its position against the universal ARV treatment. The IMF and the World Bank cancelled debts of some the poor countries. The three organisations have a lot of input in the road to achieve the Millennium Development Goals (MDGs). However, there are arguments that the MDGs alone do not address the issues of global political economic systems where rather than countries relying on donor aid; countries should be able to finance their own people’s needs using their national policies (Rowden, 2009).
Critics of the World Bank, IMF and the WTO are calling for a transformation of the global governance from neoliberalism towards governance that promotes policies that empower individual states to be responsible for their economic development. Ranges of ways on how this could be achieved have been suggested such as radical reform through collective action by different groups and organisations, decommissioning of the institutions, participation of representatives from different parts of the globe during global meetings. The representatives should be well-equipped with detailed knowledge and alternatives to policies. The NGOs have been praised and encouraged to continue with their contribution in the fight for fair global governance and some of their efforts have yielded results, (Peet, 2003; Rowden, 2009; Greenland, Labonte, 2007; Baum, 2008).
Despite the criticisms on the World Bank, IMF and WTO, their role in securing the health and wellbeing of the world’s population is essential but there is need to address the way their policies have deviated from their original purpose to neoliberal market driven ideologies that promote the interests of a handful of countries at the expense of the lives of thousands of people who die everyday due to such policies. Similarly other international institutions responsible for health and development such as the WHO and the United Nations should also ensure that their primary aims are not being compromised by such policies.
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