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Case Study on International Monetary Fund and International Labour Organization: A Partnership for Success, The International Monetary Fund (IMF) is an international organization that was initiated in 1944 at the Bretton Woods Conference and formally created in 1945 by 29 member countries.
CASE STUDY ON INTERNATIONAL MONETARY FUND AND INTERNATIONAL LABOUR ORGANIZATION: A PARTNERSHIP FOR SUCCESS
The four stated purposes of the International Monetary Fund (IMF) are: 1) to ensure effective and efficient functioning of the international monetary system, 2) to encourage sound economic policies at the national level, 3) to fund member nations with temporary balance of payment problems, and 4) to facilitate expansion and balanced growth of international trade. The International Labour Organization (ILO), on the other hand, promotes internationally recognized human and labor rights, combining economic and social mandates to ensure that globalization evolves with an eye to ethical standards. Given criticisms of IMF’s performance, especially in the past 15 years since the advent of the “Washington Consensus,” a system of checks and balances that requires ILO approval of IMF measures would remind the IMF of its duties to the people it aims to assist. David Dollar of the World Bank’s Development Research Group believes that economic growth eliminates poverty. As evidence, he points to the trends since 1980 indicating that poor countries have grown faster than richer ones, that the number of poor people has declined, along with global inequality, and that the inequality within countries is not permanent. To achieve economic growth, he follows the “Washington Consensus” that nation states must hew to three concepts: 1) Privatization- converting state-run industries into private entities, 2) Liberalization- removing government interference in capital, labor, and trade markets, and 3) Fiscal austerity- lowering government spending on social services and industrial subsidies. According to Dollar, strict adherence to these rules, despite pains in the short-run, will create a climate attractive to investment, which brings economic growth, which creates jobs, and which thus eliminates poverty.
Joseph Stiglitz, former Senior Vice President and Chief Economist of the World Bank, argues that economic growth is necessary to eliminate poverty, but alone is not sufficient. Especially in developing countries, governments play an important role in development. Stiglitz criticizes the IMF’s adherence to the “Washington Consensus” on the grounds that: 1) East Asian countries have liberalized gradually and allowed the government to manage industrial policies and create new enterprises, 2) The IMF’s “one size fits all” strategy to crisis management failed in East Asia, and in Latin America, and it will continue to fail because it does not take into consideration the circumstances of individual countries, and 3) While attaching conditions to loans is important, the nature of the conditions imposed by the IMF has been detrimental to the world’s economy, political stability, and cultural ethics. “Globalization has been hijacked by the special interests of the North, often at the expense of the poor in developing countries,” Stiglitz writes. Indeed, the crux of the matter is that the IMF employs financial experts, but not the social and cultural experts necessary to evaluate these policies’ effects on other aspects of a society. It is precisely in the social realm that the ILO can help. With its focus on human and labor rights, ILO collusion with the IMF and other international financial institutions would help guarantee that the needs of working poor are being met. These two organizations have worked together in the past. In 1996, for example, they held a seminar to discuss Ukrainian wage policies. Bringing together government, trade union, and employer representatives, the ILO helped to temper the IMF’s austere policy recommendations. Similar dialogues between these two organizations would further the goal of achieving sound policies that not only ensure the growth of international trade, but also protect the economic livelihood and opportunity of the world’s workforce. There are several ways in which input from the ILO would serve the interests of the IMF. First, the ILO would increase transparency. Given the lack of political accountability of IMF officials, allowing the ILO to watch over IMF actions will help publicize IMF procedures. IMF policy decisions presented to the ILO will be discussed, altered, and improved, with more input from opposing view points to help ensure political palpability. Second, the ILO will hold the IMF accountable for its effects on employment and poverty. Driving an economically unstable nation further into the hole because of the IMF’s political
ideology is contemptible, and the ILO would help protect nation states from such maverick policies from the financial institution. Third, the ILO will hold the IMF to its economic tasks, prohibiting it from meddling in national political concerns. Finally, there is a problem of reach and scope. We have a global economy that depends on the actions of other nations, but we do not have a global government that can enforce internationally accepted norms. The ILO, by growing the international labor movement, puts the power of enforcement into the hands of the working poor. When the IMF tries to impose ignoble requirements on a nation during an economic crisis, the system of governance provided by the labor movement will facilitate collective action in response. Indeed, many of Stiglitz’s IMF reform recommendations could be addressed by simply bringing in the ILO. Of course, IMF-ILO cooperation is not enough. Problems of poverty and equity are largely institutional in nature, and will require renegotiation of trade agreements, and a reassessment of global economic goals and policies. Giving the ILO a more important role, however, will help workers in the developing world to succeed as the labor movement did for workers in the developed world. Labor empowers working citizens to control their destinies by incorporating their input into the economic and financial decisions of public and private actors. Without direct worker participation in globalized policy-making, the financial groups in the developed nations will continue to stack the deck in their favor, global inequality will continue to increase, and development will continue to stagnate.
doc_914347675.doc
Case Study on International Monetary Fund and International Labour Organization: A Partnership for Success, The International Monetary Fund (IMF) is an international organization that was initiated in 1944 at the Bretton Woods Conference and formally created in 1945 by 29 member countries.
CASE STUDY ON INTERNATIONAL MONETARY FUND AND INTERNATIONAL LABOUR ORGANIZATION: A PARTNERSHIP FOR SUCCESS
The four stated purposes of the International Monetary Fund (IMF) are: 1) to ensure effective and efficient functioning of the international monetary system, 2) to encourage sound economic policies at the national level, 3) to fund member nations with temporary balance of payment problems, and 4) to facilitate expansion and balanced growth of international trade. The International Labour Organization (ILO), on the other hand, promotes internationally recognized human and labor rights, combining economic and social mandates to ensure that globalization evolves with an eye to ethical standards. Given criticisms of IMF’s performance, especially in the past 15 years since the advent of the “Washington Consensus,” a system of checks and balances that requires ILO approval of IMF measures would remind the IMF of its duties to the people it aims to assist. David Dollar of the World Bank’s Development Research Group believes that economic growth eliminates poverty. As evidence, he points to the trends since 1980 indicating that poor countries have grown faster than richer ones, that the number of poor people has declined, along with global inequality, and that the inequality within countries is not permanent. To achieve economic growth, he follows the “Washington Consensus” that nation states must hew to three concepts: 1) Privatization- converting state-run industries into private entities, 2) Liberalization- removing government interference in capital, labor, and trade markets, and 3) Fiscal austerity- lowering government spending on social services and industrial subsidies. According to Dollar, strict adherence to these rules, despite pains in the short-run, will create a climate attractive to investment, which brings economic growth, which creates jobs, and which thus eliminates poverty.
Joseph Stiglitz, former Senior Vice President and Chief Economist of the World Bank, argues that economic growth is necessary to eliminate poverty, but alone is not sufficient. Especially in developing countries, governments play an important role in development. Stiglitz criticizes the IMF’s adherence to the “Washington Consensus” on the grounds that: 1) East Asian countries have liberalized gradually and allowed the government to manage industrial policies and create new enterprises, 2) The IMF’s “one size fits all” strategy to crisis management failed in East Asia, and in Latin America, and it will continue to fail because it does not take into consideration the circumstances of individual countries, and 3) While attaching conditions to loans is important, the nature of the conditions imposed by the IMF has been detrimental to the world’s economy, political stability, and cultural ethics. “Globalization has been hijacked by the special interests of the North, often at the expense of the poor in developing countries,” Stiglitz writes. Indeed, the crux of the matter is that the IMF employs financial experts, but not the social and cultural experts necessary to evaluate these policies’ effects on other aspects of a society. It is precisely in the social realm that the ILO can help. With its focus on human and labor rights, ILO collusion with the IMF and other international financial institutions would help guarantee that the needs of working poor are being met. These two organizations have worked together in the past. In 1996, for example, they held a seminar to discuss Ukrainian wage policies. Bringing together government, trade union, and employer representatives, the ILO helped to temper the IMF’s austere policy recommendations. Similar dialogues between these two organizations would further the goal of achieving sound policies that not only ensure the growth of international trade, but also protect the economic livelihood and opportunity of the world’s workforce. There are several ways in which input from the ILO would serve the interests of the IMF. First, the ILO would increase transparency. Given the lack of political accountability of IMF officials, allowing the ILO to watch over IMF actions will help publicize IMF procedures. IMF policy decisions presented to the ILO will be discussed, altered, and improved, with more input from opposing view points to help ensure political palpability. Second, the ILO will hold the IMF accountable for its effects on employment and poverty. Driving an economically unstable nation further into the hole because of the IMF’s political
ideology is contemptible, and the ILO would help protect nation states from such maverick policies from the financial institution. Third, the ILO will hold the IMF to its economic tasks, prohibiting it from meddling in national political concerns. Finally, there is a problem of reach and scope. We have a global economy that depends on the actions of other nations, but we do not have a global government that can enforce internationally accepted norms. The ILO, by growing the international labor movement, puts the power of enforcement into the hands of the working poor. When the IMF tries to impose ignoble requirements on a nation during an economic crisis, the system of governance provided by the labor movement will facilitate collective action in response. Indeed, many of Stiglitz’s IMF reform recommendations could be addressed by simply bringing in the ILO. Of course, IMF-ILO cooperation is not enough. Problems of poverty and equity are largely institutional in nature, and will require renegotiation of trade agreements, and a reassessment of global economic goals and policies. Giving the ILO a more important role, however, will help workers in the developing world to succeed as the labor movement did for workers in the developed world. Labor empowers working citizens to control their destinies by incorporating their input into the economic and financial decisions of public and private actors. Without direct worker participation in globalized policy-making, the financial groups in the developed nations will continue to stack the deck in their favor, global inequality will continue to increase, and development will continue to stagnate.
doc_914347675.doc