Efficacy of institutions in the global system Research Paper

Efficacy of institutions in the global system - Research Paper Example This denotes the significance of international institutions, such as International Monetary Fund (IMF), World Trade Organization (WTO), and World Bank in helping countries respond more to the challenges of globalization (Milner 836). This paper attempts to demonstrate the significance of international institutions to enhance the economy of various countries. It also provides evidence that these multilateral institutions have a valuable impact on the economy of developing nations. Role of International Institutions The primary goal of International Monetary Fund (IMF) is to help improve the economy of less developed countries by providing them with short and long term loans at low interest rates. The institution has been active in delivering this role which is evident in the various programs that it has successfully implemented in over sixty developing countries in 2000 alone. Moreover, the mission of World Bank was also to support the growth of less developed nations and to help them overcome the financial crisis. This goal was efficiently carried out through the provision of grants and loans at zero interest to poor nations especially in Africa. In fact, over 50% of the fund of World Bank for 2003 went to projects in the nearby countries of Sahara. On the other hand, the mission of World Trade Organization (WTO) was to enhance bilateral partnerships among countries and to encourage them to adopt trade liberalization as an effective strategy for enhancing their economy (Milner 836). The WTO has successfully performed this mission which is evident in the emergence of various multinational companies in developing countries. These giant companies significantly contribute to the economy of emerging countries through the creation of jobs. This was revealed in the study of Greenaway and Wright on the effects of trade liberalization in the economy of developing countries. The findings showed that liberalization of trade policies and entry barriers has a significant po sitive impact to the economic growth of less developed countries (229). Impact of International Institutions on Economic Growth The WTO plays a significant role in enhancing the value international trade of its member countries. For instance, Rose conducted a study on whether or not WTO together with its previous counterpart (Generalised Agreement on Tariffs and Trade (GATT) has been effective in promoting the value of international trade among its 175 member countries for 50 years. Through the analysis of the gravity model, the study revealed that WTO has a direct contribution for doubling the value of trade among member nations (98). In addition, Subramanian and Wei also conducted a study on whether or not WTO has a significant impact on the trading condition of its member countries. Their findings revealed that WTO provides a significant positive impact on trade which translates to 120% marginal increase for 2000. However, the study revealed that the positive impact of WTO is not evenly achieved by its member countries. In addition, increase in bilateral trade is high when each partner nation adopt liberalization while countries without trade liberalizations did not acquire trade increase. The World Trade Organisation (WTO) plays a significant role in creating and enforcing relevant trading rules across different countries. This has been supported by various research showing the relevance of WTO in