BSB119 – GLOBAL BUSINESS
LECTURE 12 GLOBAL INSTITUIONS AND REGIONAL ECONOMIC INTEGRATION
Institutions impacting on International Business
UN (United Nations): international organisation comprising 192 countries charged with keeping
international peace, developing corporation and promoting human rights.
o Developed post world war 2
o Promote high standards of living, employment and conditions of economic and social
World Bank: international organise which promotes economic development primarily by offering
low-interest loans to developing nations.
o Significant player in the global economy
o Funds projects such as building dams and roads
IMF (International Monetary Fund): international organisation which maintains order in the
international monetary system.
o Has 187 members
o Used by nations which are in turmoil, where the value of the currency is rapidly depreciating
against other nations
o Loans come with strict requirements including the adoption of economic policies which aim
to return the economies to stability and growth.
o Some argue it is usurping the sovereignty of nations
WTO (World Trade Organisation): succeeded the General Agreement on Tariffs and Trade and now
acts to police the world trading system.
o Ensures nations adhere to the rules outlined in the treaty
o 153 nations account for 97% of world trade – all are WTO members
o Powerful organisation which considerable scope and influence
o Promotes lowering barriers to trade
Trade agreement = contract which defines the rules for the conduct of trade
o This is governed by the WTO.
o Three key functions of the WTO:
Provide a more orderly and predictable trading environment
Provision of a global forum for negotiation of trade barriers
Provision of rules based system for resolving trade disputes
Trade Liberalisation and the WTO
After WWII, the US and other nations realised the value of freer trade, and established the General
Agreement on Tariffs and Trade (GATT) in 1947.
o The approach of GATT was to gradually eliminate barriers to trade.
o GATT provided a set of rules and a means for their enforcement.
Formed in response to the economic damage of WW2
The clarification, strengthening and extension of GATT rules and the creation of the WTO in 1995
held out the promise of more effective policing and enforcement of the global trading system.
The Uruguay Round of GATT negotiations gave the WTO a mandate to extend global trading rules
to cover new areas of international business.
o Operates on the basis of consensus
o Four issues on the current agenda of the WTO
The increase in anti-dumping policies
The high level of protectionism in agriculture
The lack of strong protection for intellectual property rights in many nations
The continued high tariff rates on non-agricultural goods and services in many
nations A New Round of Talks: Doha
Little progress has been made on the Doha agenda.
Developing countries now account for 2/3 of membership making it difficu