Introduction: After the Second World War two beginning, the third world. Basically , we know that this term “third world” is origin of conflict between two countries such as the united states of America and the soviet union. Besides, Korean conflict (1950-1953) and arguably going, a new geopolitical imagination began to emerge as the conflict between the Soviet Union and the united states. The term “third world” arose during the cold war to define countries that remained non- aligned with NATO ( North Atlantic treaty organization) or the communist bloc. We know that about many countries associated with first world war such as The United states, Canada, Japan, Korea, Western European nations and their allies. Besides, Soviet Union, China, Cuba and their allies represented the second war. This terminology provided a way of broadly categorizing the nations of the earth into three groups based on political and economic divisions. The fall of the Soviet Union and the end of the cold war. The term third world has been used less and less. When the United States and the Soviet Union has started of cold war and then at this time both countries published own power. But at this time many country people thought and said they do not associated both country but they thinking and planning and established NAM ( Non- Align Movement). Basically, third world country means we say that developing countries, least developed countries or the global south. The third world was normally seen to include many countries with colonial parts in Africa, Latin America, Oceania, and Asia. It was also sometimes taken as synonymous with countries in the Noon- Aligned Movement. In the dependency theory of thinkers like Raul prebisch, Wlwaltet Rodney, theptonio das Santos, and Andre Gunder frank , the third world has also been connected to the world systemic economic division as ” periphery” countries dominated by the countries comprising the economic ” core” . We know, there is no clear or agreed upon definition of the third world. Some countries in the Communist Bloc, such as Cuba, were often regarded as ” third world”. Because many world countries were economically poor and non- industrialized. The creation of the international and world bank were two of its most enduring legacies. The world bank and IMF often called the Bretton Woods institutions, are twin intergovernmental pillars supporting the structure of the world economic and financial order.
Similiarities to IMF and World Bank:
the Bank and IMF exhibit many common characteristics. Both are in a sense owned and directed by the governments of member nations, and virtually every country on earth is a member of both institutions. Both institutions concern themselves with economic issues and concentrate their efforts on broadening and strengthening the economies of their member nations. Staff members of both the Bank and IMF often appear at international conferences, speaking the same recondite language of the economics and development professions, or are reported in the media to be negotiating involved and somewhat mystifying programs of economic adjustment with ministers of finance or other government officials. The two institutions hold joint annual meetings, which the news media cover extensively. Both have headquarters in Washington, D.C., where popular confusion over what they do and how they differ is said to be as pronounced as everywhere else. For many years both even occupied the same building, and share a common library and other facilities, regularly exchange economic data, sometimes present joint seminars, daily hold informal meetings, and occasionally send out joint missions to member countries.
what the IMF does?
1)surveillance: Involves the monitoring of economics and financial development and the provision of policy advice, aimed especially at crisis prevention.
2) Lends: The IMF also lends to countries with balance of payments difficulties, to provide temporary financing and to support policies aimed at correcting the underlying problems, loans to low- income countries are also aimed especially at poverty reduction.
3) Technical Assistance: The IMF provides countries with technical assistance and training in its areas expertise.
purposes of the International Monetary Fund are as follows:
To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.
To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.
To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.
In addition to financial assistance, the IMF also provides member countries with technical assistance to create and implement effective policies, particularly economic, monetary, and banking policy and regulations.
All member nations, both wealthy and poor, have the right to financial assistance from the IMF. Maintaining an orderly and stable international monetary system requires all participants in that system to fulfill their financial obligations to other participants. Through the use of IMF resources, countries have been able to buy time to rectify economic policies and to restore growth without having to resort to actions damaging to other members’ economies. The IMF has gone through two distinct phases in its 50-year history. During the first phase, ending in 1973, the IMF oversaw the adoption of general convertibility among the major currencies, supervised a system of fixed exchange rates tied to the value of gold, and provided short-term financing to countries in need of a quick infusion of foreign exchange to keep their currencies at par value or to adjust to changing economic circumstances.After five years of analysis and negotiation (1973-78), the IMF’s second phase began with the amendment of its constitution in 1978, broadening its functions to enable it to grapple with the challenges that have arisen since the collapse of the par value system. These functions are three.
How can the IMF help third world countries?
when a country imports more then it experts, it has a trade deficit. It cancause foreign exchange
2. Flexibility and speed. “In March 2009, the IMF created the Flexible Credit Line (FCL), which is a fast-disbursing loan facility with low conditionality aimed at reassuring investors by injecting liquidity…Traditionally, IMF loan programs require the imposition of austerity measures such as raising interest rates that can reduce foreign investment…In the case of the FCL, countries qualify for it not on the basis of their promises, but on the basis of their history. Just as individual borrowers with good credit histories are eligible for loans at lower interest rates than their risky counterparts, similarly, countries with sound macroeconomic fundamentals are eligible for drawings under the FCL. A similar program has been proposed for low-income countries. Known as the Rapid Credit Facility, it is front-loaded (allowing for a single, up-front payout as with the FCL) and is also intended to have low conditionality.
3.Cheerleading. “The Fund is positioning itself to be less of an adversary and more of a cheerleader to member countries. For some countries that need loans more for reassurance than reform, these changes to the Fund toolkit are welcome.” Foreign Policy in Focus, this enables more domestic political and economic stability.
4.Adaptability. “Instead of providing the same medicine to all countries regardless of their particular problems, the new loan facilities are intended to aid reform-minded governments by providing short-term resources to reassure investors. In this manner, they help politicians in developing countries manage the downside costs of integration.”
5.Transparency. The IMF has made efforts to improve its own transparency and continues to encourage its member countries to do so. Supporters note that this creates a barrier to any one or more countries that have more geopolitical influence in the organization. In reality, the major economies continue to exert influence on policy and implementation.
To underscore the global expectations for the IMF’s role, China, Russia, and other global economies have renewed calls for the G20 to replace the US dollar as the international reserve currency with a new global system controlled by the IMF.
What is World Bank?
The World Bank Group was established in 1944 to rebuild post world war 2 Europe under the development. The world Bank is an international financial institution that provides loans to countries of the world for capital projects. It comprises two institutions: The international Bank for Reconstruction and development(IBRD) ,and the international development Association(IDA)
How can the World Bank help the third World countries?
1. Give loans and offers advice and training in both the private ;public sectors.
2. Aims to eliminate poverty by helping people help themselves.
3.Fights poverty by offering Development Assistance to middle income ; low- income countries. seeks to promote the economic development of the world’s poorer countries
4.assists developing countries through long-term financing of development projects and programs
5.provides to the poorest developing countries whose per capita GNP is less than $865 a year special financial assistance through the International Development Association (IDA)
6.encourages private enterprises in developing countries through its affiliate, the International Finance Corporation (IFC)
7.acquires most of its financial resources by borrowing on the international bond market
8.has an authorized capital of $184 billion, of which members pay in about 10 percent
9.has a staff of 7,000 drawn from 180 member countries
World Bank overcome the Food crisis in third world countries such as:
1.The food crisis: A man made problem High fuel costs have resulted in higher agriculture costs. faling food stocks, and land shifted out of food production to produce biofuels .The international community should help those in danger today and ensure the poor do not suffer this tragedy again.
2.World Food programme: Fully fund the world programmes emergency needs supports its drive to buy food aid locally ensure the unhampered movement of humanitarian assistance.
3.Safety Nets: support safety nets, such as distributing food in schools or offering food for work. To quickly help those in severe distress.
4.Seeds and Fertilizer: Get seeds fertilizer for coming planting season to farmers in poor countries. The key is not just financing, but fast delivery system.
5.Agriculture research: Double spending on agricultural research and development to $800 million over the next 5 years through the consultative group on International agricultural research.
Conclution: The International Monetary Fund promotes monetary cooperation internationally and offers advice and assistance to facilitate building and maintaining a country’s economy. The IMF also provides loans and helps countries develop policy programs that solve balance of payment problems if a country cannot obtain financing sufficient to meet its international obligations. The loans offered by the IMF, however, are loaded with conditions. Often, a loan provided by the IMF as a form of “rescue” for countries in serious debt ultimately only stabilizes international trade and eventually results in the country repaying the loan at rather hefty interest rates. For this reason, the IMF has many critics worldwide.The World Bank’s purpose is to aid long-term economic development and reduce poverty in developing countries. It accomplishes this by making technical and financial support available to countries. The bank initially focused on rebuilding infrastructure in Western Europe following World War II, and then turned its operational focus to developing countries. World Bank support helps countries reform inefficient economic sectors and implement specific projects, such as building health centers and schools or making clean water and electricity more widely available. World Bank assistance is typically long term, funded by countries that are members of the bank through the issuing of bonds. The World Bank also has a pool of about $200 billion with which to offer aid to less-developed countries. The bank’s loans, however, are not used as a type of bailout, as in IMF style, but as a fund for projects that help develop an underdeveloped or emerging market nation and make it more productive economically.