Task 3 Read the text below and say why international organizations operating in the sphere of finance are so important for the economic development of various countries.
The History of International Organization
The process of internationalization started in the 19th century with innovations of industrialism and introduction of new transports and communications. Special-purpose agencies, usually called public international unions were designed to facilitate the collaboration of governments. Notable among these were the International Telegraphic Union (1865) and the Universal Postal Union (1874) were the most notable entities that resolved economic, social, and technical problems and survived to become a part of the United Nations system.
The Congress of Vienna undertook an effort to institutionalize the dominant role of the great powers of Europe in 1815. At the end of the nineteenth century, the establishment of the Pan American Union gave birth to the idea that the states of the Western Hemisphere constituted a distinct subgroup. Some regulatory structures and procedures evolved to promote an era of growth and interdependence. The League of Nations and its affiliate, the International Labor Organization, were established at the end of World War I. it was an attempt to combine disparate elements into a union, which had emerged during the previous century but was destroyed. The League was superseded by the United Nations, which derives its key functions from the nineteenth-century heritage. The total network of international institutions comprises more than one hundred intergovernmental agencies and supplemented by approximately 1,500 nongovernmental organizations.
International financial administration is of comparatively recent origin. Its emergence stems partly from the commissions set up in Europe during the nineteenth century to regulate the use of international rivers, such as the Rhine or the Danube. World War II and its aftermath were marked by a striking proliferation of intergovernmental instrumentalities, notably the United Nations (UN) and other related functional agencies (the United Nations Educational, Scientific and Cultural Organization (UNESCO), the World Health Organization (WHO), the International Bank for Reconstruction and Development (IBRD), and the International Monetary Fund (IMF).
The functional sweep of international administration in the 1960s had acquired dimensions far wider than those before World War II. This expansion can be shown quantitatively by comparing personnel and budgets. For the UN family of agencies, in the fiscal year 1962/1963 the aggregate number of persons on the payroll approximated 20,000. This is roughly fifteen times the number employed by the League and ILO a generation earlier. In addition, some 11,000 civilians were employed by the leading regional agencies, distributed as follows: NATO, 2,250; OECD, 1,200; the three European communities, 6,830; PAU, 750. In budgetary terms, the high point of aggregate League and ILO annual expenditure was only about $13 million, whereas the UN system in 1963 spent nearly $500 million. Another significant difference between international administration today and prior to World War II resides in the far greater geographical dispersion of the former’s activities.
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Comprehension
Task 4 What do the following numbers stand for in the text?
a. 1865
b. 1874
c. 1815
d. 1500
e. 1890
f. 1946
g. 11 000
h. 2 250
i. 6 830
j. 750
k. 13 000 000
l. 1963
m. 500 000 000
Task 5 What do these acronyms stand for?
1. PAU
2. UN
3. UNESCO
4. WHO
5. IBRD
6. IMF
7. ILO
8. NATO
9. OECD
READING II
Task 6 Read the text below and find out how the IMF and the World Bank interrelate to each other.
International Financial Organizations
The IMF
In July 1944, representatives of 40 countries met at Bretton Woods, a resort in New Hampshire. They laid the foundation for the post-war international financial order hoping it would prevent another worldwide economic cataclysm like the Great Depression that had destabilized the world in the 1930s and contributed to the rise of Fascism.
The conference was controversial as many states were wary of international control of their sovereign economic policy. There were extensive IMF negotiations regarding how to divide the total amount of money the IMF would have among the 44 participants. India insisted on having as high a quota as China. The Russians insisted on a quota of not much less than the British and argued that they should have to contribute less gold to the fund than other countries because of their suffering in the war. They also refused to publish accurate economic statistics. The British unsuccessfully lobbied for the IMF to be in London. Another significant dispute revolved around whether the dollar would serve along with gold as the standard for exchange rates. Now the IMF is controlled by its 187 member-countries, each of whom appoints a representative to the IMF's Board of Governors.
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A 24-person Executive Board manages day-to-day operations. The world's major economic and political powers—the United States, Great Britain, Japan, Germany, France, China, Russia, and Saudi Arabia—each have permanent seats on the executive board, while the 16 other directors are elected for two-year terms by groups of countries divided roughly by geography. Each year, the IMF sends economists to each of its member countries to analyze the country's economic situation. The team examines fiscal and monetary policy, exchange rate, general macroeconomic stability, and any related policies, such as the pension system. This process is known as an Article IV consultation. Member countries with balance of payments problems can receive credits and loans to pay off their obligations. To receive assistance, however, the member-country must agree, through a "letter of intent," to implement changes in its fiscal and monetary policies. This is the cause of some of the most vociferous resentment toward the IMF. Critics attack three interrelated aspects: the intrusive conditions placed on loans, misunderstanding of countries’ distinct characteristics and the way the policies are imposed (all at once, not in a sequence). For example, the IMF demands that countries privatize government services such as water supply and utilities rapidly. Moreover, the IMF is not open to public oversight.
The World Bank
The World Bank used to be named the International Bank for Reconstruction and Development (IBRD) founded at Bretton Woods. The World Bank has expanded beyond its initial scope and purpose of rebuilding Europe after the Second World War. The governance of the World Bank is almost identical to that of the IMF. Since 2000, the World Bank has been devoted to helping implement the Millennium Development Goals (MDGs), which concern poverty, education, gender equality, mortality, health, environmental sustainability and a global partnership for development.
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Thus, In Bangladesh, the World Bank provided a $59.8 million credit to provide medical services and nutritional supplements to children and their mothers. In Bosnia, the WorldBank helps offer "microcredit" loans, typically less than $1,000, to individuals who wish to start small businesses and otherwise would not have access to bank credit. In Peru, the World Bank helped finance the Peru Rural Roads Program, which increased the connection of rural areas to each other and to urban centers as a way to increase economic activity. In Brazil, the World Bank has provided funds to the government to run the Rain Forest Pilot Program to reduce deforestation in the state of Mato Grasso.
Comprehension
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