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THE ROLE OF INTERNATIONALINSTITUTIONS IN ECONOMIC

DEVELOPMENTKULIAH 9 PEMBANGUNAN INTERNASIONAL

ANDRE ARDI

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Responsible for the

performance of its nationaleconomic developmentwith the goal to improvethe standard of living of

domestic inhabitants

DEVELOPMENT POLICY

the role of internationalinstitutions

Supporting development ofthe national economy through

aid, providing global publicgoods (such as global

security, global economicstability, knowledge and globalenvironment) and enforcinginternational cooperation.

Domestic policy in whichthe internal political

economy has to play adominant role.

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WHY

INTERNATIONALCOOPERATION

to counter the problems of inefficient resourceallocation caused by market failures, how to solve

the problem of (hidden) unemployment and howto compensate the loser from trade liberalization

to control cross-border economicactivities

International cooperation has usually brought awinwin situation for every player, either to enforce

international trade or to prevent an internationalcrisis and to avoid the contagion effect of a crisis.

International institutions have contributedsignificantly to enforce international cooperation.

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THREE WAVES OF GLOBALIZATION

The first wave

(1870 to 1914)

International flows ofgoods, capital and

labour increased rapidly.

The period betweenWorld War I and WorldWar II, with beggar-thy-

neighbourprotectionism, caused a

giant step backward inglobal economicglobalization, with a

sharp reduction in thetradeincome ratio

compared with the levelof 1870.

The second wave

(1950 to 1980)

Economic integration wasconcentrated among themembers of the OECD

The world was separatedinto (1)market-oriented

capitalistic countries,(2)central planning socialisticcountries and (3)Developing

Countries. International institutionshave contributed to

liberalization of the cross-border economic activities

(The GATT, the IMF and the

World Bank)

The third wave

(1980)

The WashingtonConsensus

Privatization,

liberalization and deregulation

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World Trade

International Trade Organization (ITO) - fail(USAdidnt ratified)

General Agreement on Tarrif & Trade (GATT) -Uruguay Round

WTO (1995)

InternationalMontary

Fund

to solve short-run balance of payments problemsfor a world of fixed exchange rates.

WorldBank

provide development funds needed by themembers in the Developing Countries to support

their economic development.

Bretton

WoodsSystem

Other international institutions include UNCTAD,UNDP, ILO, FAO and the Regional Development

Banks.

UN System

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INDIVIDUAL DEVELOPMENT POLICY INSTEAD OF THEONE-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 intoaccount these complexities will be crucial for the future

success of the Developing WorldWednesday, December 12, 12