THE ROLE OF INTERNATIONAL INSTITUTIONS IN ECONOMIC DEVELOPMENT

KULIAH 9 PEMBANGUNAN INTERNASIONAL ANDRE ARDI

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DEVELOPMENT POLICY

Domestic policy in which the internal political economy has to play a dominant role.

the role of international institutions Supporting development of the national economy through aid, providing global public goods (such as global security, global economic stability, knowledge and global environment) and enforcing international cooperation.

Responsible for the performance of its national economic development with the goal to improve the standard of living of domestic inhabitants

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to counter the problems of inefcient resource allocation caused by market failures, how to solve the problem of (hidden) unemployment and how to compensate the loser from trade liberalization

WHY INTERNATIONAL COOPERATION

to control cross-border economic activities

International cooperation has usually brought a winwin situation for every player, either to enforce international trade or to prevent an international crisis and to avoid the contagion effect of a crisis. International institutions have contributed signicantly to enforce international cooperation.

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THREE WAVES OF GLOBALIZATION

The rst wave (1870 to 1914)
goods, capital and labour increased rapidly. The period between World War I and World War II, with beggar-thyneighbour protectionism, caused a giant step backward in global economic globalization, with a sharp reduction in the tradeincome ratio compared with the level of 1870.
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The second wave (1950 to 1980)

Economic integration was concentrated among the members of the OECD The world was separated into (1)market-oriented capitalistic countries, (2)central planning socialistic countries and (3)Developing Countries. International institutions have contributed to liberalization of the crossborder economic activities (The GATT, the IMF and the World Bank)

The third wave (1980)

International ows of

The Washington Consensus Privatization, liberalization and deregulation


World Trade

Bretton Woods System

International Trade Organization (ITO) - fail(USA didnt ratied) General Agreement on Tarrif & Trade (GATT) Uruguay Round WTO (1995) to solve short-run balance of payments problems for a world of xed exchange rates.

International Montary Fund

World Bank

provide development funds needed by the members in the Developing Countries to support their economic development.

UN System
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Other international institutions include UNCTAD, UNDP, ILO, FAO and the Regional Development Banks.

INDIVIDUAL DEVELOPMENT POLICY INSTEAD OF THE ONE-SIZE-FITS-ALL POLICY

: the variety of societal properties, political systems, cultures, education systems, geographical situations, economic structures and their dynamics makes development economics much more complex The challenge to design appropriate policies taking into account these complexities will be crucial for the future success of the Developing World
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