Page 273 - DMGT401Business Environment

Business Environment

Notes 12.3 Summary

The International Monetary Fund was established by an international treaty in 1945 to
help promote the health of the world economy.

The IMF is the central institution of the international monetary system-the system of
international payments and exchange rates among national currencies that enable business
to take place between countries.
One of the major functions of IMF is to promote exchange stability, to maintain orderly
exchange arrangements among members, and to avoid competitive exchange depreciation.
The day-to-day work of the IMF is carried out by an Executive Board, representing the
IMF's 184 members, and an internationally recruited staff under the leadership of a
Managing Director and three Deputy Managing Directors – each member of this
management team being drawn from a different region of the world.
The IMF's resources come mainly from the quota (or capital) subscriptions that countries
pay when they join the IMF, or following periodic reviews in which quotas are increased.
The IMF shares its expertise with member countries on a regular basis by providing
technical assistance and training in a wide range of areas, such as central banking, monetary
and exchange rate policy, tax policy and administration, and official statistics.

It is said that IMF policy makers support capitalist dictatorship, and is friendly to American
and European corporations. Critics claim that financial aid from the IMF is always come
bound with conditionalities, throwing the IMF's stated goals to the winds.

The World Bank is one of the world's largest sources of finance and knowledge to its
member countries to improve the condition of health centres, provide water and electricity,
fight disease, and protect the environment.
The main purpose of the World Bank is to assist economies in the reconstruction and
development by facilitating the investment of capital for productive purposes, it also
helps in reconstruction of economies destroyed or disrupted by war, and it encourages the
development of productive facilities and resources in less developed countries.

World Banks works towards generation of funds, raising loans, grants, advisory services,
etc. It includes bodies like IFC, Asian Development Bank, ICSID, MIGA and IDA.
The South Asian Association for Regional Cooperation (SAARC) was established on
December 8, 1985. It involves seven states of the Indian sub-continent-Bangladesh, Bhutan,
India, Maldives, Nepal, Pakistan and Sri Lanka.
The Association of Southeast Asian Nations (ASEAN) is a primary multinational trade
group of Asia. The goals of this group are economic integration and cooperation through
complementary industry programmes.
South Asian Preferential Arrangement (SAPTA) was signed by the SAARC members on
April 11, 1993 and came into force in December 1995. The objective of the SAPTA is the
creation of trade among the SAARC countries through the reduction of tariffs and on
preferential basis.
12.4 Keywords

ACP: African, Caribbean and Pacific Group
ASEAN: Association of South East Asian Nations

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