Corporate Social Responsibility

NEED FOR GLOBAL GOVERNANCE AND

INSTITUTIONS

Submitted by
GROUP 10:
Rakshak Lodha (338)
Nilesh Chandra Sinha (359)
Ankur Ahuja (303)
Abhishek Kumar (332)
Jaybind Jha (328)
Gaurav Kumar (334)
Vivian Asthana (380)

Need for Global Governance and Institutions

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CONTENTS

Introduction – Global Governance

Global Trade

World Health Issues

World Security

World Financial Markets

Environmental Issues

Conclusion

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1.

Introduction

Traditional way of thinking about governance has been associated with "governing", or with
political authority, institutions, and ultimately control. Governance in this particular sense
denotes formal political institutions that aim to coordinate and control interdependent social
relations and that have the ability to enforce decisions. However, authors like James Rosenau
have also used "governance" to denote the regulation of interdependent relations in the
absence of overarching political authority, such as in the international system. Some now
speak of the development of 'global public policy'.

"Global governance" is not a normative term denoting good or bad practice. It is a descriptive
term, referring to concrete cooperative problem-solving arrangements. They may be formal,
taking the shape of laws or formally constituted institutions to manage collective affairs by a
variety of actors such as state authorities, intergovernmental organizations, non-governmental
organizations (NGOs), private sector entities, other civil society actors, and individuals. But
these may also be informal as in the case of practices or guidelines or temporary units as in
the case of coalitions.

Definitions

Global governance is the political interaction of transnational actors aimed at solving

problems that affect more than one state or region when there is no power of enforcing
compliance.

Mr. Adil Najam, a scholar of global governance at Boston University and now at the Fletcher School
of Law and Diplomacy, has defined global governance simply as "the management of global
processes in the absence of global government.

In the words of Mr. Thomas G. Weiss, director of the Ralph Bunche Institute for International Studies
at the Graduate Center (CUNY) and editor (2000-5) of the journal Global Governance: A Review of
Multilateralism and International Organizations; "global governance" is "collective efforts to identify,
understand, or address worldwide problems that go beyond the capacity of individual states to solve."

Gathering from what all these learned person have said, global governance may be defined as
"the complex of formal and informal institutions, mechanisms, relationships, and processes
between and among states, markets, citizens and organizations, both inter- and non-
governmental, through which collective interests on the global plane are articulated, rights
and obligations are established, and differences are mediated.”

Global governance acts on various fronts in order to bring order and peace in the world and to
fight the global issues effectively and on a lasting basis. It provides strategic direction and
then marshals collective energies to address global challenges. To be effective, it must be
inclusive, dynamic and should operate through soft power rather than hard power. We can
broadly categorize focus areas of global governance into Trade, Health, Security, Finance and
environment related issues and challenges.

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The Global Governance Architecture

Global governance wants to fill the resulting vacuum in the deficit in regulation with international
cooperations - here, the nation state retains its central regulatory function as well as with new forms of
politics, in particular, by including the (global) civil society and by strengthening international
organisations. The diagram below details an appropriate architecture for this:

NEED
The desire to rule the world has been a part of the human experience throughout recorded
history. From great wars of dominance to overt wars of imperialistic and capitalistic
dominance and to this day of post world war era, History is a record of the competition for
global dominance. In every age, there has always been a force somewhere, conniving to
conquer the world with ideas clothed in promises imposed by military might. The 20th
century is no different from any other: Marx, Lenin, and Hitler reflect some of the ideas
which competed for world dominance in the 1900s. The competition is still underway. One of
the competitors is the idea that people are born free, “totally free and sovereign,” and choose
to surrender specified freedoms to a limited government to achieve mutual benefits. The other
competitor is the idea that government must be sovereign in order to distribute benefits
equitably and to manage the activities of people to protect them from one another.

In 1995, a Commission on Global Governance, an independent group of 28 world leaders

meet in US and attempted to create a balance between these competitors for the general good
for all. It argued that ‘global values must be the cornerstone of global governance’; and went
on to list seven core values. These were:

 Respect for life;

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 Liberty;
 Justice;
 Equity;
 Mutual respect;
 Caring;
 Integrity.

The Commission proposed a ‘global civic ethic’, based on the notion of balancing rights and
responsibilities, it recognized that a new global ethic would require modification of cherished
elements of the international system, including the ideas of sovereignty and self-
determination neither could be pursued without regard to its effect on other members of the
global community.

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Global Trade

Globalization, the buzz word few years back, has impacted almost every aspect of the
organizational functioning and peoples’ lives. It brought out revolution in the way trade is
done bringing people near and interdependent in unprecedented ways. Sourcing of raw
materials from one nation to utilization of labour in other and then selling of these finished
goods almost in every corner of the world has become a normal way of functioning of
corporate behemoths. This integration of economies, big and small, lead to creation of various
non-existent methodologies of working which were complex from other existent
methodologies. Successful integration in turn requires both enhanced market access in the
advanced industrial countries and a range of institutional reforms at home (ranging from legal
and administrative reforms to safety nets) to render viable and growth-promoting economic
openness.
And for profitable utilization of these changes, a need for different codes of governing the
related activities began to be felt. With firms dealing with others in other geographic domains
needed a common ground for understanding the need and required standard procedures to
make their functioning manageable and productive. This need of governance on the global
level lead to the World Trade Organization (WTO), an initiative of the United Nations.
The World Trade Organization is a major player in the field of global governance. Since its
creation in January 1995, it has expanded the reach of trade rules deep into the regulatory
structure of almost 140 sovereign states, affecting the daily lives of all citizens. As a result, it
has found itself at the centre of controversy in areas that are well outside the domain of
traditional trade policy. The WTO is successful in reducing barriers to trade and conducting
trade according to agreed rules. It focuses on expanding market access and deepening
integration through the harmonization of a wide range of ‘trade-related’ practices.
WTO strives to balance and sustain ‘Growth’ and ‘Poverty reduction’. It enshrines development
at the top of its agenda. The issues and objectives of WTO in terms of the objectives laid down
by United Nations Development Program (UNDP) are as follows:

•To assist developing country governments and civil society organizations in ensuring that their
countries can selectively and strategically seize the opportunities of global economic and trade
integration for advancing national progress in human development and poverty eradication.
•To strengthen the participation and substantive negotiating and advocacy positions of
developing countries in the debate and negotiations on the emerging global trading regime.
• To present a UNDP position on the human development outcomes of the current global
trading regime and the reforms needed to make it more inclusive and balanced, thereby
enabling trade to become an instrument for enhancing human development and reducing
poverty.

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Well before moving further into having a detailed look at the impact of WTO has made on the
issue of global governance and corporations, a look at institutions of global governance which
where precursor to WTO deems necessary for better understanding. Below is the brief look at
International Trade organization (ITO) and GATT:
 In the context of pre-Doha debate, the previous grand design for global governance was
ITO and the Havana Charter. ITO was a big failure.
 GATT was successful as it was built on successful experience, and ideas which were
thoroughly discussed and widely shared. Moreover negotiators did not look for a supra-
national code and organization within which countries would work together for a common
good, during the creation of GATT. The GATT was possible because there was sufficient
coincidence among original signatories to make it work.
 ITO tried to work and adopt the same ideologies of GATT but could not do it as not many
members aligned themselves with most of the ideologies it aimed at.
 GATT also eventually lost its standing leading to the development of a more
comprehensive code on commercial policy: the Uruguay Round and the WTO. The
demise of GATT was due to the conservatism of thinking and interests which somehow
limited the expansion and momentum of GATT and its work.
GATT resulted in permitting trade policy, previously a politically sensitive issue, to “recede
from high to low politics”, trade became an issue preoccupying bureaucrats, and Geneva a
place where “officials solved international trade problems... incrementally and
cautiously.... Not until the 1980s, when new trade frictions flowing from globalization of the
economy exposed new problems, did trade again begin to assume a high profile.” As a
consequence, GATT members decided to shed conservatism and try once again to develop a
more comprehensive code on commercial policy... the Uruguay Round and the WTO...
- Michael Hart (Professor at Carleton University in Ottawa), in
his book ‘Also Present at the Creation’

Effectiveness of Global Governance institutions like WTO

The increasingly interconnected world economy requires effective global governance. And
Building global governance is a gradual process, involving changes to longstanding practices,
entrenched interests, cultural habits and social norms and values. Key issues like global
warming, AIDS, terrorism, peacekeeping, and protection from global economic crises are just
a few of the concerns beyond the grasp of national governments. Citing cooperation and
consultation, and example of the European Union the new models of governance are needed
to respond to the needs of the age.
 Ten years of dispute settlement shows that the WTO has been sensitive to maintaining
the balance between trade and non-trade values.
 The WTO acts as a forum where members negotiate international agreements which
are then adopted.
 It permits and promotes monitoring and surveillance mechanisms — including peer
reviews — of member states' actions.
 It provides a venue of adjudication in case of international trade litigation and
maintains transparency of international trade.

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Issues with WTO

Although WTO is a global body meant for governing and safeguarding the interests of the
member bodies, off late a number issues and objections have been raised on its working and
existence:
 WTO and as a matter of fact UN itself being heavily dependent on US for its major
operating expenses, it heavily biased towards USA. Hence WTO’s credibility is in
question.
 The occurrence of events like the debacle of Enron and Aurther Anderson
Corporation, Daewoo Corporation etc undermines the effectiveness of WTO.
 Although WTO’s core values talks about balancing between growth and poverty
reduction, not much has been achieved in this sense. MNCs like Nike and Reebok
continue to exploit labours in inhumane sweatshops, in Asian firms for their own
benefits.

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World Health Issues

In today’s world, the health risks are changing because of

shrinking world geography and intensification of cross border.
There is an increasing trend of trans border flows of people,
goods, services, and ideas. In the wake of globalization, national
action alone cannot ensure proper health monitoring, status and outcomes of various
initiatives.
It is becoming clear that the existing rules, institutional mechanisms and forms of
organization should be modified in order to face the challenges posed by globalisation in a
better way. There is a great need to ensure the welfare of the people who were left behind in
the development process. The need for more effective collective action by governments,
business and civil society to better manage the health risks are leading us to re-evaluate the
rules and institutions that govern health policy and practice at the sub-national, national,
regional and global levels. The health determinants are increasingly getting affected by
external factors like trade and investment flows, violence and conflict, criminal activity,
environmental change and communication technologies.
Many people believe that the current system of international health governance is not able to
meet the expectations and has a number of limitations and gaps. In light of these perceived
drawbacks, the concept of global health governance (GHG) has become a subject of interest
and debate in the field of international health.
WHO-An Overview:

The World Health Organization (WHO) is a specialized agency of the United Nations (UN)
that acts as a coordinating authority on international public health. Established on 7 April
1948, and headquartered in Geneva, Switzerland, the agency inherited the mandate and
resources of its predecessor, the Health Organization, which had been an agency of the
League of Nations.

Apart from coordinating international efforts to monitor outbreaks of infectious diseases, such
as SARS, malaria, and AIDS, the WHO also sponsors programs to prevent and treat such
diseases. The WHO supports the development and distribution of safe and effective vaccines,
pharmaceutical diagnostics, and drugs.In addition to its work in eradicating disease, the WHO
also carries out various health-related campaigns — for example, to boost the consumption of
fruits and vegetables worldwide and to discourage tobacco use.

The WHO is financed by contributions from member states and from donors

Health governance: the challenge of globalization

in broad terms, governance can be defined as the actions and means adopted by a society to
promote collective action and deliver collective solutions in pursuit of common goals. Such
organization requires agreement on a range of matters including membership within the co-
operative relationship, obligations and responsibilities of members, the making of decisions,

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means of communication, resource mobilisation and distribution, dispute settlement, and

formal or informal rules and procedures concerning all of these. Defined in this way,
governance pertains to highly varied sorts of collective behaviour ranging from local
community groups to trans-national corporations, from labour unions to the UN Security
Council.
The impact of globalization upon the capacity of states and other actors to co-operate
internationally to protect human health is discussed below:
1. Globalization has introduced or intensified trans-border health risks which is defined as
risks to human health that transcend national borders in their origin or impact. Such risks may
include emerging and re-emerging infectious diseases, various non communicable diseases
(e.g. lung cancer, obesity, and hypertension) and environmental degradation (e.g. global
climate change).
2. Globalization brings with it, a growth in the number, and degree of influence, of non state
actors in health governance. Many argue that the relative authority and capacity of national
governments to protect and promote the health of domestic populations has declined in the
face of globalizing forces beyond national borders that affect the basic determinants of health.
Non-state actors, including civil society groups, global social movements, private companies,
consultancy firms, think tanks, religious movements and organized crime, in turn, have
gained relatively greater power and influence both formally and informally. The emerging
picture is becoming more complex, with the distinct roles of state and non-state actors in
governance activities such as agenda setting, resource mobilisation and allocation, and
dispute settlement becoming less clear. New combinations of both state and non-state actors
are rapidly forming, in different forms such as partnerships, alliances, coalitions, networks
and joint ventures.
3. Current forms of globalization appear to be problematic for sustaining, and even worsening
existing socioeconomic, political and environmental problems. UNDP (1999), for example,
reports that neoliberal forms of globalization have been accompanied by widening
inequalities between rich and poor within and across countries. Although many of these
problems are most acute in the developing world, they are of concern to all countries given
their transborder nature (i.e. unconfined to national borders).
4. Globalization has contributed to a decline in both the political and practical capacity of the
national governments, acting alone or in cooperation with other states, to deal with global
health challenges. While globalization is a set of changes occurring gradually over several
centuries, it has brought attention to the fact that states alone cannot address many of the
health challenges arising. Infectious diseases are perhaps the most prominent example of this
diminishing capacity, but equally significant are the impacts on non communicable diseases
(e.g. tobacco-related cancers), food and nutrition, lifestyles and environmental conditions.
This reducing role of the state has been reinforced by initiatives to further liberalise the global
trade of goods and services.
Essential elements of global health governance:
Based on above discussion, we can identify some essential elements of Global health
governance and also we need to look at the challenges for achieving them. They are discussed
below:

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1. There has to be a complete change in the way of how we think about and promote health. It
creates the need to address factors which cross, and even ignore, the geographical boundaries
of the state. All of the efforts by international health governance have been focused on point
of contact, the national board of states. However forces of global change have made it
imperative to go for some concrete measures. The worldwide flows of information and
communication across the Internet; the ecological impacts of global environmental change;
the illicit trade in drugs, food products and even people; render border controls irrelevant.
Many of these global changes impact on health and require forms of cooperation that go
beyond IHG.
2. A second essential element of GHG is the need to define and address the determinants of
health from a multi-sectored perspective. Traditionally biomedical approach has dominated
where the focus was on disease based research and policy. However increased involvement of
other forms of expertise in health policy making (e.g. economics, anthropology) and links
with other social sectors (e.g. education, labour) has marked the existence of GHG. Informal
consultations between WHO and WTO, for example, have been prompted by the importance
of multilateral trade agreements to health. The main challenge to achieving greater cross
sectored collaboration lies in the danger of casting the health net so widely that everything
becomes absorbed within the global health umbrella.
3. The third essential element of GHG is the need to involve, a broader range of actors and
interests. As described above, while Non-state actors have long been an important part of the
scene, IHG has been firmly state-defined. Importantly, this does not mean that the role of the
state or IHG will disappear or become redundant, but that they will rather need to become
part of a wider system of GHG. Many existing institutions will be expected to play a
significant role in GHG, and states will continue to be key actors. However, states and state-
defined governance alone is not enough. Forms of governance that bring together more
concertedly state and non-state actors will be central in a global era

Defining and shaping the architecture for Global health governance

After having understood the concept of GHG, what is required is to define and shape the
architecture of GHG and identify the challenges for research and policy. The challenges are
discussed below:
1. The first, and perhaps the most fundamental, is the need to agree to the framework which
should be adopted to build the system of GHG. There is a need to reach some degree of
consensus about the underlying moral and ethical principles that define global health
cooperation. ‘Health for All’ and health as human right have been some of the approaches in
this direction. However the basic framework still needs to be defined.
2. Another challenge is the need to define leadership and authority in GHG. Leadership will
help in generating public awareness, mobilising resources, using resources judiciously, setting
priorities. In this complex arena of actors, the issue of leadership and authority is a difficult
one. United Nations Children’s Fund (UNICEF), International Labour Organization (ILO),
United Nations Development Programme (UNDP), and United Nations Population Fund
(UNFPA) being some of the actors in this field with some influence. The problem is that there
is no single institution which has the authority and capacity to act decisively in order to

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address the health issue. The willingness of state to sacrifice their sovereignty and act
collectively through GHG mechanism is a great concern.
3. The challenge for GHG is the need to garner sufficient resources for global health
cooperation and ensure that they are distributed proportionally in line with agreed priorities.
At present, this system is very ad-hoc in nature, depending more on the government annual
spending and corporate funding. The creation of a ‘Tobin Tax’ can help in facing this
challenge.
4. The sovereignty of states is also a hurdle to giving support to global health initiatives
because of the lack of effective enforcement mechanisms. With the exception of the
International Health Regulations, WHO can recommend rather than command action by
member states. The reporting of outbreaks of yellow fever, cholera and plague, for example,
is traditionally reliant on governments who may not be willing to report such information for
fear of causing adverse economic reactions. Reliance on voluntary compliance in absence of
any monitoring can have serious impact. The next task is to better understand the nitty-gritty
of global governance in terms of what, in concrete terms, it looks like in practice.

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World security

The world security situation is more dangerous now than it was during the Cold War. The
continuous violence in Iraq & Afghanistan, tension of a looming attack on Iran (dubbed as
World War III) and terrorist organizations acquiring nuclear weapons are pointers to this
situation. The global warming and climate change crisis has posed a major threat to the
planet. Here we are talking about the survival of human race. If we sit still and take no action
to mitigate the climate change crisis, we will have no planet to live.

Global, Human and Collective Security

We can broadly define security into three categories: Global, Human and Collective. We need
to integrate all the three security challenges for achieving lasting peace.
Global security focuses on the security of territories and borders. States often deploy arms,
weapons and threats of weapons of mass destruction to defend their boundaries.
Human security is concerned with preservation of human life and their safety in a changing
world. It is an alternative way of looking at the world as it challenges the basic concept of
military security. Instead it takes concepts of democracy, human rights, social equity and
elimination of poverty as essential elements of what constitute human security.
The collective security forms the foundation of United Nations charter and has served the
global community for decades. At its minimum, it requires a commitment to multilateralism
and seeking the cooperation of widest possible number of groups, institutions and civil
society at large.
Present day threats and challenges
The challenges are terrorism, climate change, weapons of mass destruction (WMD),
globalization (rich poor divide), and the recent increases in military spending, unilateral or
pre-emptive attacks by powerful nations on sovereign states. All these need to be tackled for
the maintenance of world security.

Terrorism
The world and specially the US have identified the War on Terror as its top priority. The
heightened state of alert in US and in various other western states is creating lot of problems
for normal citizens. War on terror is used as an excuse for increase in military spending in
order to secure power and control. The recently formed Counter Terrorism Council (CTC) by
the UN is monitoring the worldwide terror networks and responding to them.
Climate Change
The threat of climate change is so grave that it has potential of destroying our civilization.
The effects climate change are already apparent with increased floods, droughts, water
shortages and rising sea levels; phenomena which is expected to grow over the course of next

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century which is most likely to hit the poorest the hardest. What the world needs presently is
the global action plan to fight climate change crisis otherwise rising temperatures and rising
sea levels will result into shortages of food and water, intense struggle for resources and
gradual weakening of global institutions thereby posing a severe threat to the planet.

Weapons of Mass Destruction (WMD)

Towards the world is awash with 36000 nuclear warheads worldwide. After the unilateralist
military approach of the USA, most countries in the world, including five 5 veto wielding
members of Security Council, have increased their military spending in the post Cold war era.
This shows the increase in the sense of insecurity in the minds of various national
governments. The USA has proposals to develop low yield nuclear weapons or so called mini
nukes. This is a very dangerous precedent for other countries in the world to follow. This will
only result in boosting the nuclear arms race which can threaten the very existence of human
community. The world needs to get rid of all military hardware in order to achieve lasting
peace on earth.

Recent increase in military spending

There are various reasons for increase in military spending: terrorism, civil wars, border
conflicts, etc. At present global military spending stands at over $1 trillion per year in contrast to
$6 billion spent on basic education. This highlights the paradox of the world in which we spend
more to destroy each other than to spend on peace, international cooperation, education and the
eradication of poverty.

Tackling World Security and Way Forward

The way forward for global institutions is to tackle new security threats by promoting
disarmament, human rights and building a global rule of law and order. It also includes
managing environmental degradation, emergencies and disasters, clash of religions and
cultures and unrestrained tide of globalization. The implementation and completion of
Millennium Development Goals must be a top priority as poverty, inequity and lack of
opportunity are fertile grounds for violence and terrorism. Moreover the international
community has moral obligation to intervene and control the situation in countries if they are
sliding into chaos, lawlessness and are unable to protect its citizens from murder, rape and
killings. Following are few recommendations to be followed to achieve the security of each
and every individual on the planet.

1. We should try and find holistic solutions to the global problems and take responsibility to
deal collectively and have multilateral approach in dealing with present day threats and
challenges.
2. The international community needs to integrate the agenda of development, environment
and disarmament together by partnering at national and global level.
3. Unilateralist approach of major powers of the world cannot solve the global governance
and world security problems. The international community should make efforts to give
opportunity to all the stakeholders of global security to have their say in resolving the
issue of global security.
4. The international community should work towards phasing out the nuclear weapons as the
threat of these weapons falling in hands of terrorist and fundamentalist organizations is
looming large.

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5. In the globalized world where fundamentalism is rife, the clash of cultures and religions
are bound to happen and so we should try and make efforts to promote discussion and
dialogue leading to inter cultural and inter religious harmony.
6. The international community needs to implement comprehensive global counter terrorism
strategy, help countries emerge out of violence and civil conflicts and deal more
objectively and credibly with human rights violation.
7. We should promote democracy and multilateralism which paired with rule of law can
provide civil liberty, economic opportunity and security which can change life in a
positive way.
8. We should promote free and fair participation of media across the globe so that true
picture of the global security and challenges to it can be known to each and every
stakeholder.
9. We should work towards ensuring peaceful and environmentally sustainable use of natural
resources.
10. We should make efforts towards making 21st century about power in the hands of people
and not governments.

The role of UN and the goal of global governance is to promote peace and disarmament,
protection of human rights and environment, rule of law, and development of the poorest regions
of the world. If that can be put into action by leaders and global institutions then we stand a fair
chance of solving the huge security problems of the 21st century.

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World Financial Markets

In the summer of 2007, millions of homeowners in the United States discovered that the
terms on their mortgage loans had worsened at the same time that the market values of their
homes were falling. The squeeze quickly led to a sharp rise in foreclosures, and many
families lost their homes. Within weeks, the turmoil spread to other advanced economies with
complex financial systems, where businesses and individuals found that loans were harder to
obtain and were unexpectedly expensive. Suddenly, the solvency of major banks and other
financial institutions across the globe was in danger.
What is surprising about this episode is that most people seem to have thought that advanced
financial systems were sophisticated enough to absorb risks and to spread them widely
enough to prevent a sudden drying up of liquidity. But once the problem began, it spread
around the world before any one country could resolve the matter or protect itself from its
trap. What began as a banking crisis spilled over into equity markets, destabilizing stock
markets in industrial countries and raising fears that emerging markets could also be at risk.
Even the Indian economy had to deal with the spill over effect as the Sensex fell sharply
following the said crisis. The problem has still not been resolved.
The financial turbulence of 2007 illustrates—not for the first time—both the benefits and the
risks of financial globalization. The global pooling of money has made it possible for
companies in Tanzania, for farmers in Vietnam, for entrepreneurial women in villages in
Bangladesh, and for young families in American cities to realize dreams that were beyond the
reach of earlier generations. But it also has made them vulnerable to shifts in invisible forces
that they cannot be expected to understand, much less influence or control. In this instance,
quick responses by major central banks may have isolated the shock before it spread too
widely. The episode thus illustrates another important point: in a world of globalized financial
markets in which a systemic weakness in one country can affect many other markets,
oversight and regulation should be acknowledged as a global responsibility. Hence Global
Financial Governance has become one of the most vital and difficult challenges of the
modern world.

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Financial Institutions and Global Governance

International Monetary Fund (IMF) and World Bank are the two
primary International Financial Institutions dealing with financial
issues around the world. The formation, purpose and the functions of
the above said institutions are explained below:
International Monetary Fund (IMF): The IMF was created in 1945
to help promote the economic health of the world after the Great
Depression of the 1930s through international monetary cooperation.
Headquartered in Washington DC, it is governed by and accountable
to the governments of the 185 nations that make up its global
membership.
Fast Facts about IMF:

 Current membership of 185 countries

 Staff: approximately 2,596 from 146 countries
 Total Quotas :$352 billion (as of May 31,2008)
 Loans outstanding(as of May 31,2008) : $19.4 billion to 65 countries of which $6.4
billion to 57 countries on concessional terms
 Field delivery of technical assistance: 186.2 person years during FY 2008.
 Surveillance consultations concluded: 123 countries during FY 2008,of which 115
voluntarily published information on their consultation.

Main Responsibilities of IMF:

 Promoting international monetary cooperation

 Facilitating the expansion and balanced growth of international trade
 Promoting exchange stability
 Assisting in the establishment of a multilateral system of payments
 Making its resources available (with adequate safeguards) to members experiencing
balance of payments difficulties.

IMF activities
The IMF is generally, responsible for promoting the stability of the international monetary
and financial system—the system of international payments and exchange rates among
national currencies that enable trade and financial transactions to take place between
countries. The Fund's job is to promote economic stability, help prevent crises, and help
resolve them when they do occur, thereby promoting growth and alleviating poverty. The
IMF works to promote global growth and economic stability and thereby prevent economic
crisis by encouraging countries to adopt sound economic policies. Its three main activities—
surveillance, technical assistance, and lending—are intended to meet these goals.
Surveillance: It consists of bilateral surveillance under which the IMF provides periodic
assessments of global and regional developments and prospects, published twice each year in

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the World Economic Outlook, and bilateral surveillance which is the regular dialogue and
policy advice that the IMF offers to each of its members. Usually once a year IMF conducts
in depth appraisals of each member country’s economic situation and policies, and advices on
desirable policy adjustments.
Technical assistance: Technical assistance and training are offered (free of cost) to help
member countries strengthen their capacity to design and implement effective policies.
Technical assistance is offered in several areas, including fiscal policy, monetary and
exchange rate policies, banking and financial system supervision and regulation, and
statistics.
Lending: Financial assistance is available to give member countries the breathing room they
need to correct balance of payments problems. A policy program supported by IMF financing
is designed by the national authorities in close cooperation with the IMF, and continued
financial support is conditional on effective implementation of this program. In low-income
countries, the IMF provides financial support through its concessional lending facilities—the
Poverty Reduction and Growth Facility (PRGF) and the Exogenous Shocks Facility (ESF)—
and through debt relief under the Heavily Indebted Poor Countries Initiative (HIPCI) and the
Multilateral Debt Relief Initiative (MDRI). In most low-income countries, this support is
underpinned by Poverty Reduction Strategy Papers (PRSP). These papers are prepared by
country authorities—in consultation with civil society and external development partners—to
describe a comprehensive economic, structural and social policy framework that is being
implemented to promote growth and reduce poverty.
Through all these activities, the IMF contributes to international efforts to reduce poverty
around the globe, in collaboration with the World Bank and other organizations.
IMF governance and organization
The IMF is accountable to the governments of its member countries. At the apex of its
organizational structure is its Board of Governors, which consists of one Governor from each
of the IMF's 185 member countries. All Governors meet once each year at the IMF-World
Bank Annual Meetings. Twenty-four of the Governors sit on the International Monetary and
Finance Committee (IMFC) and meet twice each year. The day-to-day work of the IMF is
conducted at its Washington DC headquarters by its 24-member Executive Board; this work
is guided by the IMFC and supported by the IMF's professional staff. The Managing Director
is Head of IMF staff and Chairman of the Executive Board, and is assisted by three Deputy
Managing Directors.
The IMF's resources are provided by its member countries, primarily through payment of
quotas, which broadly reflect each country's economic size. The total amount of quotas is the
most important factor determining the IMF's lending capacity. The annual expenses of
running the Fund have been met mainly by the difference between interest receipts (on
outstanding loans) and interest payments (on quotas used to finance the loans "reserve
positions"), but the membership recently agreed to adopt a new income model with a range of
revenue sources more suited to the diverse activities of the Fund.

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World Bank
The World Bank is an internationally supported bank that provides
financial and technical assistance to developing countries for
development programs (e.g. bridges, roads, schools, etc.) with the
stated goal of reducing poverty. The World Bank consists of two
organisations-- International Bank for Reconstruction and
Development (IBRD) and the International Development
Association (IDA). The World Bank was formally established on
December 27, 1945, following the ratification of the Bretton
Woods agreement. The concept was originally conceived in July 1944 at the United Nations
Monetary and Financial Conference. Two years later, the Bank issued its first loan: $250
million to France for post-war reconstruction, the main focus of the Bank's work in the early
post-World War II years. Over time, the "development" side of the Bank's work has assumed
a larger share of its lending, although it is still involved in post-conflict reconstruction,
together with reconstruction after natural disasters, response to humanitarian emergencies and
post-conflict rehabilitation needs affecting developing and transition economies. At present
185 countries are the members of the World Bank.
World Bank Background and Objectives
World Bank background and objectives have expanded and evolved over the years. The
original purpose and objectives as the International Bank for Reconstruction and
Development was a facilitator role in post-war reconstruction. Since 1944, this role has
expanded and World Bank's objectives have grown to develop its current mandate to alleviate
worldwide poverty. They work closely with their affiliate, the International Development
Association.
With all this expansion and growth, World Bank's original focus has not changed. Today,
reconstruction remains a top priority in such situations as:

 Natural disasters
 Needs affecting developing economies
 Post conflict rehabilitation
 Needs affecting a transitioning economy

Expanded Focus
In 2000, the World Bank background and objectives expanded with the adoption of the
Millennium Development Goals. This effort cemented a historic, global partnership with
specific goals targeted to reduce not only poverty but also hunger, illiteracy and disease. In an
effort to accomplish these goals, the World Bank background and objectives have grown to
include ventures in social sector lending. The purpose of these projects is to alleviate poverty
and offer debt relief. Today World Bank considers the reduction of poverty as an overarching
goal. Within this effort, they strive to alleviate poverty in developing countries with
sustainable economic growth by encouraging the poor to take part in development. World
Bank hopes to accomplish this goal with incentives like strengthening governments and
educating government officials. Other objectives include:

 Creating infrastructure

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 Develop financial systems

 Protect individual and property rights
 Implement legal systems that encourage business
 As an overall objective, World Bank strives to combat corruption to ensure that the
progress they make remains effective.
 Improving Living Standards: Across the earth, World Bank objectives touch lives for the
better. World Bank development projects engage people to improve living standards while
reducing poverty. In 2006, the World Bank contributed $23.6 billion for projects
worldwide. Current projects within developing countries like Bosnia, Herzegovina,
Mexico and India number more than 1,800.

Evaluating Results
It’s one thing to set goals and objectives, but without an effective way to measure the results
it's difficult to know if they are effectively being met. In 1998, the World Bank adopted a
Comprehensive Development Framework. This framework directs the development of
poverty-reduction strategies and is specifically designed to reach objectives. It outlines four
principles:

 Development strategies should be comprehensive and shaped by a long-term vision.

 Each country should devise and direct its own development agenda based on citizen
participation.
 Government donors, civil society, the private sector and other stakeholders should work
together in partnership led by recipient countries to carry out development strategies.
 Development performance should be evaluated on the basis of measurable results.

Working Together
Currently, the more than 63,000 donor-funded development projects supported worldwide by
the World Wide bank are individually governed by guidelines and procedures put in place to
ensure aid gets into the hands of the poor. As donors coordinate their activities and
synchronize procedures, that capacity within developing countries can be strengthened and
improved.
Since its inception in 1944, World Bank has proven to be a vital financial source around the
world.
Criticism
Considering the state of the world's economy and the disparity between rich and poor nations,
the Bretton Woods institutions have come under much criticism. This criticism has come from
the entire spectrum of political thought, ranging from the "aid is imperialism" school, which
believes that foreign aid has been used as a tool of coercion by the rich against the poor
countries, to the more conservative critics who believe that foreign aid gets in the way of the
market forces that will be the ultimate rectifier of poverty.
Societal Factors

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The IMF lacks the expertise to deal with social and environmental issues, and does not
adequately accommodate the widely differing economic situations in each country. The lack
of country-specific policies has hindered the stabilization of economies, and has rendered the
IMF sometimes ineffective at the realization of its own goals. By aiming to focus only on
correcting short-term balance-of-payment problems, the IMF has harmed the social fabric of
the countries they claimed to have helped.
Some recent examples are in Eastern Europe. In 1986, the IMF imposed a SAP in Yugoslavia
which devalued the dinar. The resultant inflation is considered a contributing factor to the
already tense environment of ethnic tension and nationalism which has led to the current
conflict throughout the region. In Russia and other former Soviet bloc countries, the IMF
imposed "economic shock therapy" measures, which involved the sudden introduction of
capitalism into what were previous command economies. The result has been widespread
unemployment, and in the case of Poland going from 0% in 1990 to 15% in 1993. This has
also led to the devaluation of pensions and large cuts in social services. In Russia, similar
conditions are commonly attributed to the rise in popularity of ultra-nationalism, and the rise
of Vladimir Zhirinovsky.
The Environment
More than half of the World Bank's $24 billion annual lending supports projects in
environmentally sensitive areas. According to the campaign, the record of lending in these
areas has been characterized by "needless environmental destruction and missed opportunities
for economically more efficient and environmentally more friendly alternatives." As an
example, between 1986 and 1993, 15% of World Bank loans were for projects (such as dams)
which forcibly displaced 2 million people.
No Public Access
The campaign points out the problems of secrecy with which the two institutions operate. In
the case of the World Bank, decisions that are made by the management are sometimes kept
secret from the Bank's Executive Directors. Those citizens of the country who will be most
affected by the decisions are left out of the decision-making process, with the exception of
community meetings with World Bank officials which the campaign deems as public
relations-driven window dressing. It was discontent with this culture of secrecy that led to the
recent resignation of Herman Daly, formerly the Senior Economist of the Bank's Environment
Department.
Not Addressing the Root Causes of Poverty
The World Bank has failed to address the structural problems of poverty, and these problems
are exacerbated by SAPs. The Bank is "throwing good money after bad" by creating poverty
situations, which lead to the necessity of further loans to attack the symptoms of the disease.
Perpetuation of the Debt Crisis
Currently, $278 billion is owed to the World Bank and the IMF. The pressure of the debt, as
well as export-oriented SAPs and collapsing global prices for exports, have put many
countries on an accelerating treadmill, forcing them to sell their assets, mine their natural
resources and cut spending. Often this debt occurred because of loaning to corrupt regimes,
such as that of Marcos in the Philippines, Mobutu in Zaire and Somoza in Nicaragua. While

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many commercial banks and creditor nations have agreed to some debt reduction and
rescheduling, the IMF and World Bank refuse to reschedule or reduce debt payments.

Destructive Agricultural Practices

The emphasis on World Bank agricultural lending programs is the development of export
crops. The result is farming practices which emphasize chemical-intensive methods which are
designed to achieve high economic rates of return. This includes hybrid seeds requiring
intensive watering, chemical fertilizer, and pesticide use. Environmental problems stemming
from these methods include soil degradation, limited and contaminated water supplies, loss of
crop genetic diversity and deforestation. While the emphasis on export crops is designed to
alleviate debt, food production for local consumption has fallen behind demand in some
countries.
According to the World Bank's own evaluation process, of 82 agricultural projects, 45% were
considered unsatisfactory. In a 1990 evaluation report, it was found that projects in the
Northeast of Brazil benefited 100,000 owner companies while excluding most of the targeted
3 million low-income families from credit and agricultural services, as well as from the
design of projects. An internal report on projects in India in 1991 reported that "project
performance and economic viability have been poor all along for most projects" for many
reasons, including cost and time overruns, declining construction and maintenance standards,
and environmental degradation.
The Road Ahead
From the above discussion we can observe that though IMF and the World Bank has
undertaken several steps to eradicate poverty and promote equality across nations, the gap
between the rich and the poor has in fact increased and poverty still prevails, Sub Saharan
Africa being the poorest of all. Developing and undeveloped nations often criticise these
financial institution of being driven by developed nations. These countries want a louder
voice in the workings of these financial institutions. Developing countries want to see
changes in staffing, top management and voting system. The Developing countries are poorly
represented in these institutions. The votes are weighted, in line with member nations'
financial contributions, which in turn are loosely related to the size of their economies and
certainly not their population. The result is that the US has 17% of the vote in the IMF,
whereas India, with more than three times the population has less than a third. A group of
developing countries (called G 24) recently met at Dubai to discuss about the above said
matter ahead of the annual meetings of these financial institutions. In order to achieve its
objectives IMF and the World Bank need to be reformed so that all the nations are equally
represented and a greater degree of transparency, democratization, accessibility and
accountability is required. The nation states along with the civil society can decide upon the
way forward of these institutions so that the ultimate objective of poverty eradication and
equality is actually achieved.

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Environmental issues

Global Environmental Governance refers to the sum of organizations, policy instruments,

financing mechanisms, rules, procedures and norms that regulate global environmental
protection. Within the context of the evolution of global environmental politics and policy, the
end goal of global environmental governance is to improve the state of the environment and
to eventually lead to the broader goal of sustainable development. In a condition of overshoot,
in which we are using environmental resources faster than they can be renewed, sustainable
development also strives to balance economic and environmental needs.
Improving global environmental governance has been an issue of dynamic debate in
academic and policy-making circles ever since environmental issues entered the international
agenda in the 1970s. Since then, both environmental threats and international responses to
them have increased in their number and complexity. The key challenge of global
environmental governance has, however, remained the same: how to design an institutional
framework (system) that would best protect the global environment.
The major institutional decision coming out of the United Nations Conference on the Human
Environment (Stockholm, 1972) was the establishment of the United Nations Environment
Programme (UNEP), which was created to play the lead role in GEG by coordinating
environmental activities within the UN agencies and acting as a catalyst for new initiatives.
Since then, the world has seen hectic activity in global environmental policy (and, more
recently, in sustainable development policy) and a host of treaties, organizations and
mechanisms have emerged. The two important international treaties are the Montreal Protocol
on Substances that Deplete the Ozone Layer and the Kyoto Protocol to the United Nations
Framework on Climate Change. The first is the most successful example ever of international
environmental cooperation; it led to a substantial decrease in the emission of
chlorofluorocarbons that harm the ozone layer. This is largely because the treaty was self-
enforcing, providing a mixture of incentives and punishments. The ready availability of
substitutes for chlorofluorocarbons also helped the treaty.

Kyoto Protocol
The Kyoto protocol is one of the recent global environmental governance initatives,
Countries that ratify the Kyoto Protocol commit to reducing their emissions of carbon dioxide
and five other greenhouse gases (GHG), or engaging in emissions trading if they maintain or
increase emissions of these green house gases. Carbon credits used in emission trading are
generated by enterprises in the developing world that shift to cleaner technologies and
thereby save on energy consumption, consequently reducing their greenhouse gas emissions.
For each tonne of carbon dioxide (the major GHG) emission avoided, the entity can get a
carbon emission certificate, which they can sell either immediately or through a futures
market, just like any other commodity.

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The certificates are sold to entities in rich countries, like power utilities, which have emission
reduction targets to achieve and find it cheaper to buy 'offsetting' certificates rather than do a
cleanup in their own backyard. This trade is carried out under a UN-mandated international
convention on climate change to help rich countries reduce their emissions. Countries are
required to reduce their emissions 5.2 % below 1990 baseline over the 2008 to 2012 period .

The Kyoto Protocol now covers 181 countries globally but only 60% of countries in terms of
global greenhouse gas emissions. The United States of America is the only developed country
that has not joined the Kyoto Protocol.
Economic Impact of the Kyoto Protocol
The Kyoto protocol will certainly leave an imprint on the economies of the signatory
countries, as well as on the global economy in general. Economists perceive that this impact
will be crystallized in the financial burdens that the countries will shoulder in accordance
with their commitments to the protocol. The protocol will similarly affect macroeconomic
variables such as inflation, unemployment and consumption and saving trends. International
reactions towards the protocol varied.
The problem of global warming is a pressing one that should be more firmly addressed.
Developing countries should not consider themselves in isolation from the commitments of
the protocol. Rather, they should prepare themselves to adapt to the commitments and
economic impact of the protocol.
Developing countries have to make full use of the privileges provided by the protocol.
According to the protocol, developed countries have to transfer environmentally friendly
technology to developing ones. The protocol provides developing countries with flexible
mechanisms such as the clean development mechanism and the emission trading system.
On the other hand, the commitment of developed countries to reduce emissions will increase
oil prices. This will, in turn, negatively affect petroleum-producing countries, which have had
to accept the fact that there is a shift in the long term towards the use of technology that
consumes less energy. This will eventually lead to a regress in the importance of oil, and that
would affect the revenues of these countries, which underscores the importance of
diversification of resources.
The expected inflation that developed countries will suffer from in the short term would help
increase the competitiveness of the products of developing countries. The economic impact of
the Kyoto protocol will include developed as well as developing countries, which necessitates
coordination between them to make the ultimate use of the protocol.

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Conclusion

Global governance system comprises of national governments, international organizations,

nongovernmental organizations and transnational corporations. The mass media have created
a global theatre that is also inescapably a part of this system.

Global Governance is extensive and multi layered because it can embrace pretty well any
challenge facing the global community. The people across the globe are becoming
interconnected and mutually concerned. Be it on the issue of climate change, human rights,
environmental degradation, health of national economies or operation of financial markets.
This is the case of “What affects one affects all”.

A healthy form of global governance is that it must be implemented by popular consent and
yet consented and implemented by nation states. We need to understand that today ideas and
values are as important tools as economic might in effort to guarantee our security.

However, the world institutions of today are slow to react and bureaucratic. They are in need
of radical reforms if they are to work effectively and be relevant to fight the present day
challenges. The leaders of the governments of the world are relentlessly pursing their national
agendas to the detriment of planet.

Clearly present system of global governance is ill-equipped to handle the challenges of global
agenda. National interest dominates to the detriment of global interests. Also the existing
institutions tend to be compartmentalized with separate organizations for health, security,
trade and environmental issues. Hence they are ill equipped to address the interrelated issues
of 21st century.

We need government and institutions which are transparent, democratic, accountable and
ready to work with NGOs and civil society. The need for international cooperation has grown
stronger. Solution to current security concerns lie in policies that strengthen civilian rather
than military institutions, policies that are preventive in nature and which address the root
causes of insecurity; and policies that draw insights from different disciplines transcending
geographical boundaries. And this is UN’s role.

On the positive side, some of the successful examples of global governance can be listed as
newly formed International Criminal Court, Kyoto Protocol and MDGs where the
governments of various nations, NGOs and civil society have worked together certain code of
conduct which can be used to fight some of the challenges including prosecution for crime
against humanity, prevention of HIV AIDS, reducing poverty, etc.

Non proliferation treaty has made major contributions to maintain world peace and economic
well being. NPT has been remarkably successful in achieving its goals with 190 countries
adhering to the treaty. It has become indispensable tool in preventing the spread of nuclear
weapons.

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The role of UN and global governance is to promote protection of human rights and
environment, peace and disarmament, rule of law and development of the poorest regions of
the world. If efforts can be made towards achieving these goals by national leaders and
international institutions like UN, then we stand a fair chance of solving the major problems
of 21st century.

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