Abstract
The end of a bipolar regime after the collapse of the Soviet Union diverted the world economies to globalization regime, where economic freedom and liberalization were adopted as most powerful and popular philosophies of the economic welfare and development. The origination of a free trade regime, decentralization in public finance, and revival of the classical school of thought in economic policies are the natural outcomes of the global failure of centrally controlled economic planning experiences. Autonomy of the central banks, market-oriented exchange rates, convertibility of the currencies, privatization, deregulation, and free trade are the banners of classical economic thoughts in the present regime. Meanwhile, the International Monetary Fund (IMF) came into force when the world was divided into left and right arms. The IMF conditionality and recommended measures are still based on demand management mechanism where most of the advices belong to exchange rate mechanism (devaluation), increase in interest rate, increase in tax revenue, reduction in subsidies, transfer payments, so on. The core objective of this study is to review the IMF policies and practices in the contemporary world where supply-side policies and classical theories are regaining their importance in post-Soviet regime. Before any recommendation and contemplating the role of the IMF in the contemporary world, it will be appropriate to review and analyze the current practices of the IMF by three dimensions: History and cause of the creation of the IMF, its governance and financial structure, and its role in global economy and lending activities. The study suggests the change in the IMF governance structure and the coordination between World Trade Organization (WTO), World Economic Forum (WEF), and IMF policies.
Highlights
The role of the International Monetary Fund (IMF) has been controversial since last 30 years, and its opponents argue against the IMF policies that are typically based on the following common intuitive: Some IMF policies may be antidevelopmental
Stage IV: Unification and Transition in Europe The dissolution of the Soviet Union has pushed the transitional economies to join the IMF in the 1990s, and the IMF membership reached at 189 that make up its near-global membership.The IMF plays a central role in helping the countries of the former Soviet bloc transition from central planning to market-driven economies
Monetary policy should address this issue to develop the small and medium businesses to derive the demand of the large industrial products.The estimated results indicate that easy access to credit is an important and significant determinant of the investment, and the investment activities in isolation cannot be succeeded unless parallel investment activities are not available in the associated sectors
Summary
The role of the International Monetary Fund (IMF) has been controversial since last 30 years, and its opponents argue against the IMF policies that are typically based on the following common intuitive:. In African countries, the IMF policies and imposed restrictions have prevented spending on education and health They have undermined possibility of meeting the Millennium Development Goals (MDGs). Raghuram Rajan, former chief economist of IMF and former governor Reserve Bank of India (RBI), criticized the IMF for praising the monetary policies of the United States, which he believed were wreaking havoc in emerging markets. He had predicted financial crisis of 2007-2008 and criticized the IMF for remaining a sideline player to the developed world.
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