Group 1 Market Integration Handout

Republic of the Philippines
WESTERN MINDANAO STATE UNIVERSITY

Normal Rd., Baliwasan, Zamboanga City
Subject : Contemporary World 101

Lesson : MARKET INTEGRATION
Topics :  International Financial Institution (IFI)
 The Bretton Woods System
 The General Agreement on Tariffs and Trade (GATT) and the World
Trade Organization (WTO)
 North American Free Trade Agreement (NAFTA)
 The International Monetary Fund (IMF) and the World Bank
 The Organization for Economic Cooperation and Development
(OECD)
 The Organization of Petroleum Exporting Countries (OPEC)
 The European Union (EU)
Reporters :  Jan Kristel A. Quijano
 Nesrin U. Imdani
 Mary Joy P. Cabating
 Joji Shaira N. Antocan
 Lea Marie M. Reyes
 Fatima Tajryanne D. Sanrimal
 Nurshayma M. Rasid
 Chryst Louise M. Saavedra
 Loela E. Zamoras
 Lady Guivenere N. Viloria
INTERNATIONAL FINANCIAL INSTITUTIONS
An international financial institution is one that was founded by more than one
country and is thus governed by international law. National governments are usually
the owners or shareholders.
 International Law- a system of treaties and agreements between nations that

governs how nations interact with other nations, citizens of other nations, and
businesses of other nations.
Major sources of financial and technical support for developing countries and play a
critical role in promoting economic development and global stability.
Importance
IFIs play a significant role in supporting large scale infrastructure projects in emerging
markets- provide critical capital and catalyze the participation of other players.
 Critical Capital- IFIs provide a marketplace for money and assets, so that
capital can be efficiently allocated to where it is most useful.
 Catalyze the participation of other players
- Lender (IFI) and the borrowers
Goals and Objectives:
 to reduce global poverty and improve people's living conditions and standards
 to support sustainable economic, social and institutional development and
 to promote regional cooperation and integration.
IFIs achieve these objectives through loans, credits and grants to national
governments. Such funding is usually tied to specific projects that focus on economic
and socially sustainable development. IFIs also provide technical and advisory
assistance to their borrowers and conduct extensive research on development issues.
Steps:
1. IDENTIFYING: A country strategy begins by analyzing the causes of poverty

within the population and identifying key areas where the IFI's assistance can
reduce it most effectively.
2. PREPARATION: Once a proposed project has entered the project pipeline, the
borrower and IFI technical staff study and define it further.
3. APPRAISAL: IFI staff conducts in-depth assessments of the technical, financial
and economic elements of the project.
4. NEGOTIATION: The IFI and the borrower negotiate the funding agreement and
the project implementation plans.
5. Implementation and Supervision: Implementation of the project, including
procurement, is the responsibility of the borrower and is carried out with
minimal IFI assistance. However, the IFI does oversee all major procurement
decisions made by the borrower.
6. EVALUATION: assessment of the project and of the results achieved
TYPES OF INTERNATIONAL FINANCIAL INSTITUTIONS
Multilateral Development Banks
- A multilateral development bank (MDB) is an international financial

institution chartered by two or more countries for the purpose of
encouraging economic development in poorer nations.
- Multilateral development banks consist of member nations
from developed and developing countries .
- MDBs provide loans and grants to member nations to fund projects that
support social and economic development, such as the building of new
roads or providing clean water to communities.
How a Multilateral Development Bank (MDB) Works
Multilateral development banks are subject to international law. They and other
international financial institutions, such as the International Monetary Fund (IMF) ,
originated in the waning days of World War II when the United States and its allies
established the Bretton Woods institutions to rebuild war-ravaged nations and
stabilize the post-war international financial system.
 Do not seek to maximize profits for their shareholders

 Prioritize development goals, such as ending extreme poverty and reducing
economic inequality.
"At a time when few institutions were lending during the global financial
crisis, the MDBs provided $222 billion in financing, which was critical to
global stabilization efforts," according to the U.S. Department of the
Treasury.
FACT: Along with financial assistance, multilateral development banks often provide
member nations with advisers, auditors, and expert assistance in implementing and
monitoring bank-funded projects.
2 TYPES OF MULTILATERAL DEVELOPMENT BANKS
1. Includes the largest and best-known institutions, makes loans and grants-
These banks often distinguish between poorer, borrowing members and
wealthier, non-borrowing members.
Examples:
 World Bank- founded in 1945
 Inter-American Development Bank (IDB) , founded in 1959
2. Formed by governments of low-income countries that can then borrow

collectively via the MDB in order to secure more favorable rates.
Example:
 Caribbean Development Bank (CDB) , founded in 1969
FACT: According to the World Bank's 2019 Annual Report, the organization
disbursed $49.4 billion during the year to member countries in the form of grants
and low-interest loans.
Regional Development Banks
- Consist of several regional institutions that have functions similar to the

World Bank group's activities, but with particular focus on a specific
region.
- Established to provide investment capital for startup businesses and
businesses in low or middle-income countries.
- Finance is allocated through low-interest loans and grants for a range of
development sectors such as health and education, infrastructure, public
administration, financial and private-sector development, agriculture,
and environmental and natural resource management.
Four institutions are summed up to RDB, these are:
Examples:
 African Development Bank (AfDB)

 Asian Development Bank (ADB)
 European Bank for Reconstruction and Development (EBRD)
 Inter-American Development Bank (IDB).
Bilateral Development Banks and Agencies

- Set up by one individual country to finance development projects in
a developing country and its emerging market.
Examples:
 Netherlands Development Finance Company FMO, headquarters in The Hague;

one of the largest bilateral development banks worldwide.
 DEG German Investment Corporation or Deutsche Investitions- und
Entwicklungsgesellschaft, headquartered in Cologne, Germany.
BRIEF HISTORY:
In developing Asia, the United States (US) was the largest ODA provider in the 1960s and
early 1970s. Since the late 1970s, Japan has consistently increased ODA and has become
the single largest bilateral aid provider, using large concessional lending
BRETTON WOODS SYSTEM
 Created the efficient foreign exchange system or the collective international

currency exchange regime using gold as the universal standard.
 Gold was used as basis for U.S. dollar and other currencies were pegged to the
U.S. dollar’s value.
 Created the two important organizations – the International Monetary Fund
(IMF) and the International Bank for Reconstruction and Development (IBRD);
formally introduced in 1945.
 Planned and designed by John Maynard Keynes and Harry Dexter White.
 Lasted from the mid-1940s to the early 1970s; representatives from several
nations met at Bretton Woods, New Hampshire in July 1 to 22, 1944, however,
the system collapsed during the 1973
The 44 Allied Nations:
 Australia  Iceland
 Belgium  Iran
 Bolivia  Iraq
 Brazil  Liberta
 British India  Luxemburg
 Canada  Mexico
 Chile  Netherlands
 China  New Zealand
 Colombia  Nicaragua
 Costa Rica  Norway
 Cuba  Panama
 Czechoslovakia  Paraguay
 Dominican Republic  Peru
 Ecuador  Philippines
 Egypt  Poland
 El Salvador  South Africa
 Ethiopia  Soviet Union
 France  United Kingdom
 Greece  United states
 Guatemala  Uruguay
 Haiti  Venezuela
 Honduras  Yugoslavia
Three main results of the agreement:
 Articles of Agreement establishing the IMF whose mission was to promote

exchange rate and financial flow stability.
 Articles to establish the IBRD whose mission was to speed reconstruction post-
World War II and to foster economic development, particularly through
infrastructure finance.
 Other suggestions for international economic cooperation These agreements

and recommendations were incorporated into the conference's Final Act.
Purpose:
 To create and stabilize currency exchange rates after economy declination from
Great Depression
 To reduce the frequency and severity of balance-of-payments deficits
 To eliminate destructive mercantilist trade policies
The Collapse:
 In 1971, President Richard M. Nixon announced that exchanged of gold for U.S.
currency will “temporarily” be suspended due to the inadequate supply of U.S.
gold to cover the number of dollars in circulation.
 In 1973, Bretton Wood System eventually collapsed.
Significance:
 The creation of IMF and World Bank remains significant to the global economy
till present
 Unified 44 nations to arrive at an agreement and achieved peace and prosperity
with others and within home.
 Resolved a growing global financial crisis
 Promoted world trade, investment, and economic growth by maintaining
convertible currencies at stable exchange rates.
Advantages and Disadvantages:
 The Bretton Woods system's greatest benefit was that it offered a stable
exchange rate environment that aided in the restoration of the global economy
as well as the expansion of international trade and finance. The biggest
downside was that it required member countries to coordinate their policies
(Yang, n.d.).
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
 The GATT was intended to boost economic recovery after World War II through
reconstructing and liberalizing global trade. The General Agreement on Tariffs
and Trade (GATT), which was signed in Oct. 30, 1947, is a multilateral
agreement regulating trade among 153 countries.
 The General Agreement on Tariffs and Trade (GATT) was the first multilateral
free trade agreement.
Purpose and how it works
 The purpose of the General Agreement on Tariffs and Trade (GATT) was to make
international trade easier.
 Minimizing barriers to international trade by eliminating or reducing quotas,
tariffs, and subsidies while preserving significant regulations.
 The purpose of the GATT was to eliminate harmful trade protectionism.
Pros and Cons of the GATT
Pros
 Encourages international trade.

 Reduces the likelihood of war.
 Improves communication.
Cons
 Domestic industries may struggle to compete.

 Exposes more of the world to risks within a given domestic industry.
 Governments cede some level of control to an international agreement.
Key Takeaways
 The General Agreement on Tariffs and Trade (GATT) was a treaty created after
World War II to help the economies of countries affected by the war.
 This agreement would pave the way for the creation of the World Trade
Organization.
 The benefits of the GATT included an increasing interconnection among
national economies, which reduced the likelihood of war and bolstered
communication.
 The GATT did have drawbacks, including the requirement that countries give
up some level of autonomy to adhere to the rules of the free trade agreement.
WORLD TRADE ORGANIZATION
 Created in 1995, the World Trade Organization (WTO) is an international

institution that oversees the global trade rules among nations. It superseded
the 1947 General Agreement on Tariffs and Trade (GATT) created in the wake
of World War II.
 In brief, the World Trade Organization (WTO) is the only international
organization dealing with the global rules of trade. Its main function is to
ensure that trade flows as smoothly, predictably, and freely as possible. It does
this by:
 administering trade agreements

 acting as a forum for trade negotiations
 settling trade disputes
 reviewing national trade policies
 building the trade capacity of developing economies
 cooperating with other international organizations
 The WTO’s primary purpose is to serve as a negotiating forum for member

nations to dispute, discuss, and debate trade-related matters. More than just a
series of trade agreements, as it was under GATT, the WTO undertakes
discussions on issues related to globalization and its impact on people and the
environment, as well as trade-specific matters.
 No negotiation, mediation, or resolution would be possible without the
foundational WTO agreements. These agreements set the legal ground rules
for international commerce that the WTO oversees. They bind a country’s
government to a set of constraints that must be observed when setting future
trade policies. These agreements protect producers, importers, and
exporters while encouraging world governments to meet specific social and
environmental standards.
The Doha Round
 Headquartered in Geneva, Switzerland, the latest round is called the Doha

Round and began in 2001. It was launched to achieve major reform of the
international trading system through the introduction of lower trade barriers
and revised trade rules.
Structure
 As of 2021, the WTO has 164 member countries, with Liberia and Afghanistan
the most recent members, having joined in July 2016, and 25
“observer” countries and governments.
Advantages and Disadvantages of WTO
 The history of international trade has been a battle

between protectionism and free trade, and the WTO has fueled globalization,
with both positive and adverse effects. The organization’s efforts have
increased global trade expansion, but a side effect has been a negative impact
on local communities and human rights.
 Proponents of the WTO, particularly multinational corporations (MNCs), believe
that the organization is beneficial to business, seeing the stimulation of free
trade and a decline in trade disputes as beneficial to the global economy.
Skeptics believe that the WTO undermines the principles of organic democracy
and widens the international wealth gap. They point to the decline in domestic
industries and increasing foreign influence as negative impacts on the world
economy.
Key Takeaways
 The World Trade Organization (WTO) oversees global trade rules among

nations.
 The WTO has fueled globalization, with both positive and negative effects.
 The main focus of the WTO is to provide open lines of communication
concerning trade among its members.
NORTH AMERICAN FREE TRADE AGREEMENT
What is (NAFTA)?
- North American Free Trade Agreement is an international agreement signed by

the governments of Canada, Mexico, and the United States.
- January 1, 1994
- It was replaced by the United States-Mexico-Canada Agreement (USMCA) on
July 1, 2020.
How the North American Free Trade Agreement (NAFTA) Worked?
- NAFTA granted most-favored-nation status to all co-signers.

- NAFTA eliminated many tariffs on imports and exports among the three
countries.
- Exporters were required to get certificates of origin to waive tariffs.
- NAFTA established procedures to resolve trade disputes.
- All three NAFTA countries were required to respect patents, trademarks, and
copyrights.
- The agreement allowed business travelers easy access throughout all three
countries.
Pros and Cons of the North American Free Trade Agreement (NAFTA)
Pros
- Lower grocery prices

- Lower gas prices
- Increased trade and growth
Cons
- Fewer manufacturing jobs

- Lower wages
- Worker exploitation in Mexico
Key Takeaways
- The North American Free Trade Agreement (NAFTA) was implemented in 1994
to encourage trade between the U.S., Mexico, and Canada.
- NAFTA was the world’s largest free trade agreement when it entered into force
on January 1, 1994.
- NAFTA reduced or eliminated tariffs on imports and exports between the three
participating countries, creating a huge free-trade zone.
- Two side agreements to NAFTA aimed to establish high common standards in
workplace safety, labor rights, and environmental protection, to prevent
businesses from relocating to other countries to exploit lower wages or looser
regulations.
- NAFTA was a controversial agreement: By some measures (trade growth and
investment), it improved the U.S. economy; by others (employment, balance of
trade), it hurt the economy.
- The United States-Mexico-Canada Agreement (USMCA), which was signed on
Nov. 30, 2018, and went into full force on July 1, 2020, replaced NAFTA.
THE INTERNATIONAL MONETARY FUND (IMF) AND THE WORLD BANK
The International Monetary Fund (IMF) and the World Bank are institutions in the
United Nations system. They share the same goal of raising living standards in their
member countries. Their approaches to this goal are complementary, with the IMF
focusing on macroeconomic and financial stability issues and the World Bank
concentrating on long-term economic development and poverty reduction.
What is the difference between the World Bank Group and the IMF?
Founded at the Bretton Woods conference in 1944, the two institutions have
complementary missions. The World Bank Group works with developing countries to
reduce poverty and increase shared prosperity, while the International Monetary Fund
serves to stabilize the international monetary system and acts as a monitor of the
world’s currencies.
 World Bank Group provides financing, policy advice, and technical

assistance to governments, and also focuses on strengthening the private
sector in developing countries.
 The IMF keeps track of the economy globally and in member countries,
lends to countries with balance of payments difficulties, and gives practical
help to members. Countries must first join the IMF to be eligible to join the
World Bank Group; today, each institution has 189 member countries.
The World Bank’s mandate
The World Bank promotes long-term economic development and poverty reduction by
providing technical and financial support to help countries reform certain sectors or
implement specific projects—such as building schools and health centers, providing
water and electricity, fighting disease, and protecting the environment. World Bank
assistance is generally long term and is funded both by member country contributions
and through bond issuance. World Bank staff are often specialists on particular
issues, sectors, or techniques.
The IMF’s mandate
The IMF promotes monetary cooperation and provides policy advice and capacity
development support to preserve global macroeconomic and financial stability and
help countries build and maintain strong economies. The IMF also provides short- and
medium-term loans and helps countries design policy programs to solve balance of
payments problems when sufficient financing cannot be obtained to meet net
international payments obligations. IMF loans are funded mainly by the pool of quota
contributions that its members provide. IMF staff are primarily economists with wide
experience in macroeconomic and financial policies.
Framework for cooperation
The IMF and World Bank collaborate on a routine basis and at many levels to assist
member countries, including joint participation in several initiatives. The terms for
their cooperation were set out in the 1989 concordat and subsequent frameworks to
ensure effective collaboration in areas of shared responsibility.
Collaboration
IMF and Bank staffs collaborate closely on country assistance and policy issues that
are relevant for both institutions. The two institutions often conduct country missions
in parallel and staff participates in each other’s missions. IMF assessments of a
country’s general economic situation and policies inform the Bank’s assessments of
potential development projects or reforms. Similarly, Bank advice on structural and
sectoral reforms informs IMF policy advice. The staffs of the two institutions also
cooperate in specifying the policy components in their respective lending programs.
 The 2007 external review of Bank-Fund collaboration led to a Joint

Management Action Plan on World Bank-IMF Collaboration (JMAP) to
further enhance the way the two institutions work together.
 A review of Bank-Fund Collaboration underscored the importance of these
joint country team consultations in enhancing collaboration.
Reducing debt burdens
 The IMF and World Bank have worked together to reduce the external debt
burdens of the most heavily indebted poor countries under the Heavily
Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief
Initiative (MDRI).
 IMF and Bank staff jointly prepares country debt sustainability analyses
under the Debt Sustainability Framework (DSF) developed by the two
institutions.
Climate Change
The IMF and the World Bank introduced on a pilot basis in 2017 joint IMF-World
Bank Climate Change Policy Assessments (CCPA) that provided overarching
assessments of preparedness, macroeconomic impact, mitigation, adaptation, and
financing strategies for small, vulnerable, and capacity-constrained countries.
Assessing financial stability
The IMF and the World Bank are also working together to make financial sectors in
member countries resilient and well regulated. The Financial Sector Assessment
Program (FSAP) was introduced in 1999 to identify the strengths and vulnerabilities of
a country's financial system and recommend appropriate policy responses.
THE WORLD BANK: WORKING FOR A WORLD FREE OF POVERTY
Figure 01. The World Bank Group building in Washington, D.C.

What is World Bank?
 The World Bank is an international development organization owned by 187

countries.
 Role: to reduce poverty by lending money to the governments of its poorer
members to improve their economies and to improve the standard of living of
their people.
How the World Bank was established?
 Established in 1944 to help rebuild Europe and Japan after World War II.
 Its aofficial name was the International Bank for Reconstruction and
Development (IBRD).
 First operations in 1946 with 38 members.
Why do we need a World Bank?
Without a place like the World Bank from which to borrow money, the world’s poorest
countries would have few, if any, ways to finance much-needed development projects.
How the World Bank is organized?
The World Bank has created new organizations within itself that specialize in different
activities. All these organizations together are called the World Bank Group. It consists
of:
• IBRD lends to low- and middle-income countries;
• International Development Association (IDA) lends to low-income countries;
• International Finance Corporation (IFC) lends to the private sector;
• Multilateral Investment Guarantee Agency (MIGA) encourages private companies to

invest in foreign countries; and
• International Centre for Settlement of Investment Disputes (ICSID) helps private

investors and foreign countries work out differences when they don't agree.
How decisions are made?
 The Bank is run like a giant cooperative, where its members are shareholders
and is operated for the benefit of those using its services.
 The number of shares a country has is based roughly on the size of its
economy.
 The Bank's 24 Executive Directors oversee the Bank's business.
Loans and the World Bank
The Bank lends money to middle-income countries at interest rates lower than the
rates on loans from commercial banks.
Source of money
The Bank borrows the money it lends. It has good credit because it has large, well-
managed financial reserves.
World Bank loans help countries:
• Supply safe drinking water

• Build schools and train teachers
• Increase agricultural productivity
• Manage forests and other natural resources
• Build and maintain roads, railways, and ports
• Extend telecommunications networks
• Generate and distribute energy
• Expand health care
• Modernize
How Does a Project Work?
• A project begins when a country identifies a need, develops a plan, and asks the
Bank for a loan.
• Bank staff carefully review the project and ask questions like: Will the project help
the country's economy?
• Negotiations take place on how to implement the strategy.
• Assessing the effect of projects the Bank supports is essential in developing

countries.
ORGANIZATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD)
Established: 1961
Location: Paris, France
Membership: 30 countries
Budget: EUR 342.9 million (2008)

Secretariat staff: 2 500
Secretary-General: Angel Gurría
Publications: 250 new titles/year
Official languages: English/French
 The OECD is a group of like-minded countries. Essentially, membership is

limited only by a country’s commitment to a market economy and a pluralistic
democracy.
 The Organization for Economic Co-operation and Development (OECD) is a
group of 34 member countries that discuss and develop economic and social
policy.
 The OECD helps governments to foster prosperity and fight poverty through
economic growth, financial stability, trade and investment, technology,
innovation, entrepreneurship, and development co-operation. Other aims
include creating jobs for everyone, social equity and achieving clean and
effective governance.
 The OECD was established on Dec. 14, 1960, by 18 European nations plus the
United States and Canada.
How Has It Developed?
 Created as an economic counterpart to NATO

 Its founding Convention also calls on the OECD to assist sound economic
expansion in member countries and other countries in the process of economic
development, and to contribute to growth in world trade on a multilateral, non-
discriminatory basis.
 The Organization is also expanding its relationship with civil society. The OECD
also increasingly invites public comment on various aspects of its work.
 It is also renovating its Paris headquarters, including construction of a new
conference center. All these efforts are directed towards making the OECD a
more effective instrument of international co-operation.
How they work?
 Inform & Advise

 Engage & Influence
 Set standards and provide policy support
Who Does What?
 Committees
o There are about 200 committees, working groups and expert groups in
all
 The Council
o Decision-making power is vested in the OECD’s Council. It is made up of

one representative per member country plus a representative of the
European Commission
 The OECD secretariat
o Some 2 500 staff of the OECD secretariat in Paris work to support the
activities of committees. 700 economists, lawyers, scientists and other
professionals.
o Secretary-General, four Deputy Secretaries-General.
 Funding
o The OECD is funded by its 30 member countries. The largest contributor
is the United States, which provides approximately 25% of the budget,
followed by Japan.
The work of the OECD
 The OECD’s way of working consists of a highly effective process that begins
with data collection and analysis and moves on to collective discussion of
policy, then decision-making and implementation.
 Combating Bribery in International Business Transactions.
 OECD analysis of how the information technology revolution contributes to
economic growth helps governments craft economic policy.
 Crucial analytical work and consensus-building on trade issues, such as trade
in services, feed into the success of international trade negotiations.
 They can culminate in formal agreements, for example on combating bribery, on
export credits, or on capital movements.
OECD MEMBER COUNTRIES
 Australia  Ireland  Portugal

 Belgium  Italy  Slovak Republic
 Canada  Japan  Spain
 Czech  Korea  Sweden
 Denmark  Luxembourg  Switzerland
 Finland  Mexico  Turkey
 France Germany  Netherlands  United Kingdom
 Greece  New Zealand  United States
 Hungary  Norway
 Iceland  Poland
ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC)
What is OPEC?
 The Organization of the Petroleum Exporting Countries (OPEC) is OPEC is a

permanent intergovernmental organization of 13 oil-exporting developing
nations that coordinates and unifies the petroleum policies of its Member
Countries.
 OPEC was founded on September 10 - 14, 1960 as the result of a meeting that
took place in the Iraqi capital of Baghdad, attended by the five Founder
Members of the Organization: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
Who comprises the organization?
1. The Conference
 Shall consist of delegations (consist of one or more delegates, as well as
advisers and observers) representing the Member Countries.
2. The Board of Governors
 Shall be composed of Governors nominated by the Member Countries
and confirmed by the Conference.
3. The Secretariat
 The OPEC Secretariat is the executive organ of the Organization of the
Petroleum Exporting Countries (OPEC). Located in Vienna, it also
functions as the Headquarters of the Organization, in accordance with
the provisions of the OPEC Statute.
OPEC’s Headquarter at Vienna, Austria
 The Secretariat consists of the Secretary General, who is the Organization’s

Chief Executive Officer, as well as such staff as may be required for the
Organization’s operations. It further consists of the Office of the Secretary
General, the Legal Office, the Research Division (comprises Data Services,
Petroleum Studies and Energy Studies departments) and the Support Services
Division (Public Relations & Information, Finance & Human Resources and
Administration & IT Services departments).
Who are the Member Countries of the organization?
 Currently, the Organization comprises of 13 Member Countries:

 Algeria (1969)
 Angola (2007)
 Congo (2018)
 Equatorial Guinea (2017)
 Gabon (1975)
 Iran (1960)
 Iraq (1960)
 Kuwait (1960)
 Libya (1962)
 Nigeria (1971)
 Saudi Arabia (1960)
 United Arab Emirates (1967)
 Venezuela (1960)
 It is notable that some of the world’s largest oil producers, including Russia,
China, and the United States, are not members of OPEC, which leaves them
free to pursue their own objectives.
How to be a member of the organization?
 OPEC recognizes the founding nations as full members. Any country that
wishes to join and whose application is accepted by the organization is also
considered a full member. These countries must have significant crude
petroleum exports. Membership to OPEC is only granted after receiving a vote
from at least three-quarters of its full members. Associate memberships are also
granted to countries under special conditions.
Mission of the organization
 In accordance with its Statute, the mission of the Organization of the Petroleum
Exporting Countries (OPEC) is to (1) coordinate and unify the petroleum policies
of its Member Countries and (2) ensure the stabilization of oil markets in order
(3) to secure an efficient, economic and regular supply of petroleum to
consumers, (4) a steady income to producers and a fair return on capital for
those investing in the petroleum industry.
Issues and challenges encountered by the organization
 The advent of new technology, especially fracking in the United States, has had
a major effect on worldwide oil prices and has lessened OPEC’s influence on the
markets.
 Demand for oil dropped during the global crisis, which began in 2020.
Producers had an overabundance in supply with no place to store it, as the
world experienced lockdowns cutting down demand.
 High oil prices are causing some oil-importing countries to look to
unconventional—and cleaner—sources of energy.
Advantages and Disadvantages of the organization
 There are several advantages of having a cartel like OPEC operating in the
crude oil industry. First, it promotes cooperation among member nations,
helping them achieve some degree of political hostilities. And because the
organization's main goal is to stabilize oil production and prices, it is able to
exert some influence over production from other nations.
 OPEC’s influence on the market has been widely criticized. Because its member
countries hold the vast majority of crude oil reserves (79.4%, according to the
OPEC website), the organization has considerable power in these markets.
As a cartel, OPEC members have a strong incentive to keep oil prices as high as
possible while maintaining their shares of the global market.
Key Takeaways
 OPEC is an organization that controls petroleum production, supplies, and

prices in the global market.
 The group was established in 1960 and is made up of 13 different oil-producing
companies.
 It holds considerable influence in the marketplace and is often criticized for
inflating oil prices to the benefit of its members. But it isn't immune to
challenges, notably geopolitical tensions, oversupply and drops in demand, and
the adoption of new green technologies.
EUROPEAN UNION
 The European Union (EU) is a political and economic grouping of 27 European

countries.
1. Austria 10.France 20.the Netherlands

2. Belgium 11.Germany 21.Poland
3. Bulgaria 12.Greece 22.Portugal
4. Croatia 13.Hungary 23.Romania
5. Cyprus 14.Ireland 24.Slovakia
6. the Czech 15.Italy 25.Slovenia
Republic 16.Latvia 26.Spain
7. Denmark 17.Lithuania 27.Sweden
8. Estonia 18.Luxembourg
9. Finland 19.Malta
 United Kingdom, which had been a founding member of the EU, left the
organization in 2020.
 It promotes democratic values and is one of the world's most powerful trade blocs.
 Nineteen of the countries share the euro as their official currency
 EU was created by the Maastricht Treaty (November 1, 1993). The treaty was
designed to enhance European political and economic integration by creating a
single currency (the euro), a unified foreign and security policy, and common
citizenship rights and by advancing cooperation in the areas of immigration,
asylum, and judicial affairs.
3 THINGS TO REMEMBER
1. Countries pay membership dues

2. Votes on laws they all must follow
3. Citizens of member countries are automatically European Union citizens which
means you are free to live, work, and retire in any other member country.
 The EU remains focused on making its governing institutions more transparent

and democratic.
 Decisions are taken as openly as possible and as closely as possible to the citizen.
 More powers have been given to the directly elected European Parliament, while
national parliaments play a greater role, working alongside the European
institutions.
 European citizens are encouraged to contribute to the democratic life of the EU by
giving their views on EU policies during their development or by suggesting
improvements to existing laws and policies. Citizens can also submit complaints
and enquiries concerning the application of EU law.
 In 2012, the EU was awarded the Nobel Peace Prize for advancing the causes of
peace, reconciliation, democracy and human rights in Europe.
History
 EU was created in the aftermath of the Second World War to foster economic
cooperation between countries
 European Coal and Steel Community (1950) à European Economic Community
(1957) under the Treaty of Rome (6 countries: Belgium, Germany, France, Italy,
Luxembourg, and the Netherlands) à European Union (1993) under the
Maastricht Treaty
 Began as a purely economic union that evolved into an organization spanning

many different policy areas, from climate, environment and health to external
relations and security, justice and migration.
 Euro debuted as a common single currency for participating EU members on Jan.
1, 1999
Single Market
 It is EU main economic engine which enables most goods, services, money and
people to move freely.
 It fuels growth and jobs and makes everyday life easier for people and
businesses.
 EU aims to develop this huge resource to other areas like energy, knowledge
and capital markets to ensure that Europeans can draw the maximum benefit
from it
Aims and Values
The aims of the European Union within its borders are:
 promote peace, its values and the well-being of its citizens

 offer freedom, security and justice without internal borders, while also taking
appropriate measures at its external borders to regulate asylum and
immigration and prevent and combat crime
 establish an internal market
 achieve sustainable development based on balanced economic growth and price
stability and a highly competitive market economy with full employment and
social progress
 protect and improve the quality of the environment
 promote scientific and technological progress
 combat social exclusion and discrimination
 promote social justice and protection, equality between women and men, and
protection of the rights of the child
 enhance economic, social and territorial cohesion and solidarity among EU
countries
 respect its rich cultural and linguistic diversity
 establish an economic and monetary union whose currency is the euro
The aims of the EU within the wider world are:
 uphold and promote its values and interests

 contribute to peace and security and the sustainable development of the Earth
 contribute to solidarity and mutual respect among peoples, free and fair trade,
eradication of poverty and the protection of human rights
 strict observance of international law
Values
 human dignity
 freedom
 democracy
 rule of law
 human rights
What the European Union do?
WHAT THE EUROPEAN UNION DO
Health
 COVID -19 Response à The COVID-19 pandemic has led to human tragedy,
lockdowns and economic slowdown. The EU rapidly took action to protect lives
and livelihoods and developed a common European response to the public
health and economic challenges.
 Health à Health is a major priority for the European Union. The EU’s health
policy complements Members States’ policies to ensure that everyone living in
the EU is protected from serious cross-border health threats and has access to
quality healthcare.
Climate Change and the Environment
 European Green Deal à The European Green Deal is the EU’s action plan to
make Europe the first climate-neutral continent. It is a growth strategy that
aims to create, by 2050, a modern, resource-efficient and competitive European
economy with no net emissions of greenhouse gases that leaves no one behind.
 Climate Action à Cuts greenhouse gas emissions, invests in green
technologies, and protects our natural environment, while also addressing the
unavoidable consequences of climate change.
 Environment à EU has some of the world’s highest environmental standards,
which protect nature and people’s quality of life, green the economy and ensure
careful use of natural resources.
 Energy à Aims to ensure a secure, competitive and affordable supply of energy,
while meeting our climate targets.
 Transport and travel à Develop modern infrastructure that makes journeys
quicker and safer, all while promoting sustainable and digital solutions.
 Food and farming à Ensure a stable food supply produced in a sustainable
way and at affordable prices for the EU’s 447 million consumers. It also helps
tackle climate change, manage our natural resources and support jobs and
growth in rural areas.
 Oceans and fisheries à Works to protect our seas and oceans and to ensure
that they remain environmentally and economically sustainable for future
generations.
A Stronger Economy, Social Justice and Jobs
 Employment and social affairs à Contribute to the creation of more and

better jobs across Europe, and aims for decent social standards for all its
citizens, including through the €86.4 billion European Social Fund.
 Regional policy à Targets all regions and cities in the European Union in
order to support job creation, business competitiveness, economic growth, and
sustainable development and to improve citizens’ quality of life.
 Business and industry à Aim to make industry and business more
competitive and to promote jobs and growth through a business-friendly
environment.
 Research and innovation à The €77 billion research and innovation

programme Horizon 2020 is helping the EU to boost growth and jobs and tackle
some of our biggest challenges.
 Banking and financial services à Ensure the financial system remains strong
and secure and that the single market offers consumers and businesses the
financial products they need.
 Single market à The single market is one of the EU’s greatest achievements. It
fuels growth and jobs and makes everyday life easier for people and businesses.
 Consumers à EU consumer policy safeguards consumers’ rights, ensures
products are safe, helps people make informed choices when they buy goods
and services, and offers tools to solve problems if something goes wrong.
 Competition à EU competition rules aim to ensure that all companies
compete fairly and equally in the single market to the benefit of consumers,
businesses and the European economy as a whole.
 Taxation à Ensures that people or businesses from another Member State are
not discriminated against and that taxes do not hinder the EU’s single market.
 Customs à EU’s customs union means that all Member States are working
together to ensure that goods imported into the EU circulate freely and that
they are safe for people, for animals and for the environment.
EU in the World
 International partnerships à Partnerships and development cooperation lie at

the heart of the EU’s foreign policy. The EU and its Member States are the
world’s largest provider of development aid.
 EU neighborhood and enlargement à Encourages stable democracies and
economies in neighboring countries by building tailor-made partnerships based
on shared interests and cooperation at bilateral or regional level.
 Trade à EU champions free trade. EU fights for open, rules-based markets, a
level playing field and the highest international standards across the world.
 Humanitarian aid and civil protection à EU, together with its Member
States, is the world’s leading humanitarian aid donor, providing and
coordinating relief assistance to people in areas hit by disasters in Europe and
around the globe.
 Foreign affairs and security policy à EU’s foreign and security policy enables
it to speak and act as one in world affairs, allowing the Member States to tackle
challenges they cannot solve alone and ensuring the security and prosperity of
EU citizens.
Values and Rights, Rule of Law, Security
1. Justice and fundamental rights à EU guarantee a range of fundamental

rights for its citizens and protects them from discrimination, while the EU’s
common justice area helps solve cross-border legal problems for both citizens
and businesses.
Digital Transformation
 Digital economy and society à EU is determined to make the 2020s Europe’s

digital decade. It is working to ensure that digital technologies work for
everyone, while helping to achieve climate neutrality by 2050, and securing
Europe’s place as a leader in the digital economy.
 A safer internet à EU has the strictest data protection and privacy rules in the
world. Help ensure that the online environment is safe and fair for citizens and
businesses alike and protect people, in particular children, from illegal and
harmful content.
Migration
 Migration and asylum à Help Europe deal with migration challenges in an

effective manner.
 Borders and security à EU is working towards establishing a security union,
making Europe more secure by fighting terrorism and serious crime and by
strengthening Europe's external borders.
Education, Culture, Youth and Sport
 Education and training à Help improve the quality of education and provides
opportunities for people of all ages and enable young people in particular to
study, train, gain work experience, or volunteer abroad.
 Youth à Aims to make sure young people can participate fully in all areas of
society and to give them more opportunities in education and the job market.
 Culture and media à Works to preserve Europe’s shared cultural heritage and
make it accessible to all. It supports the arts and helps the cultural and creative
industries to thrive, specifically through the Creative Europe programme.
 Sport à Promotes the health benefits and positive values associated with sport,
supports cooperation between policymakers and dialogue with sports
organisations and tackles problems such as doping, match-fixing and violence.
Budget
 Budget à Helps to deliver on the things that matter to Europeans.

 Fraud Prevention à European Anti-Fraud Office ensures taxpayers’ money is
put to the best possible use by investigating cases of fraud, corruption and
illegal activities involving EU funds.
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Republic of the Philippines

WESTERN MINDANAO STATE UNIVERSITY

Subject : Contemporary World 101

INTERNATIONAL FINANCIAL INSTITUTIONS

 International Law- a system of treaties and agreements between nations that

Goals and Objectives:

1. IDENTIFYING: A country strategy begins by analyzing the causes of poverty

TYPES OF INTERNATIONAL FINANCIAL INSTITUTIONS

Multilateral Development Banks

- A multilateral development bank (MDB) is an international financial

How a Multilateral Development Bank (MDB) Works

 Do not seek to maximize profits for their shareholders

2 TYPES OF MULTILATERAL DEVELOPMENT BANKS

2. Formed by governments of low-income countries that can then borrow

Regional Development Banks

- Consist of several regional institutions that have functions similar to the

Four institutions are summed up to RDB, these are:

 African Development Bank (AfDB)

 Inter-American Development Bank (IDB).

Bilateral Development Banks and Agencies

 Netherlands Development Finance Company FMO, headquarters in The Hague;

BRETTON WOODS SYSTEM

 Created the efficient foreign exchange system or the collective international

The 44 Allied Nations:

Three main results of the agreement:

 Articles of Agreement establishing the IMF whose mission was to promote

 Other suggestions for international economic cooperation These agreements

Advantages and Disadvantages:

GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)

Purpose and how it works

Pros and Cons of the GATT

 Encourages international trade.

 Domestic industries may struggle to compete.

WORLD TRADE ORGANIZATION

 Created in 1995, the World Trade Organization (WTO) is an international

 administering trade agreements

 The WTO’s primary purpose is to serve as a negotiating forum for member

The Doha Round

 Headquartered in Geneva, Switzerland, the latest round is called the Doha

Advantages and Disadvantages of WTO

 The history of international trade has been a battle

 The World Trade Organization (WTO) oversees global trade rules among

NORTH AMERICAN FREE TRADE AGREEMENT

- North American Free Trade Agreement is an international agreement signed by

How the North American Free Trade Agreement (NAFTA) Worked?

- NAFTA granted most-favored-nation status to all co-signers.

- Lower grocery prices

- Fewer manufacturing jobs

THE INTERNATIONAL MONETARY FUND (IMF) AND THE WORLD BANK

 World Bank Group provides financing, policy advice, and technical

The World Bank’s mandate

The IMF’s mandate

Framework for cooperation

 The 2007 external review of Bank-Fund collaboration led to a Joint

Reducing debt burdens

Assessing financial stability

THE WORLD BANK: WORKING FOR A WORLD FREE OF POVERTY

Figure 01. The World Bank Group building in Washington, D.C.

What is World Bank?

 The World Bank is an international development organization owned by 187