International Monetary Fund And World Bank

If the success of institutions were judged by the breadth and passion of their critics, then both the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank) would count among the most effective multilateral organizations in the world. It has become an annual ritual for tens of thousands of anti-globalization protesters to descend upon Washington DC in late September to disrupt their annual meetings. But the left has no monopoly on criticism of the IMF and World Bank. Republican U.S. congressmen and free market economists have long derided both entities as misguided and even corrupt. Furthermore, these protests are nothing new: both the left and the right in the United States vehemently objected to the Bretton Woods agreements that created the IMF and World Bank almost sixty years ago. Do the arguments made against the Bretton Woods institutions, both now and in the past, have any merit? And why do these multilateral institutions, created for the noble goals of preventing international monetary turmoil and alleviating global poverty, incite such heated responses, both in the United States and abroad? Finally, are the IMF and World Bank simply tools of American foreign policy, as is often claimed? At first glance, these criticisms are puzzling, especially since both the protesters today and almost six decades ago have vastly overestimated the power and effect these institutions have had and continue to have on the world economy. The past half century has witnessed tremendous changes in all parts of the domestic and global economy, including in those areas that are the responsibility of the two Bretton Woods institutions: international monetary relations and economic development. But a strong case could be made that other forces - the cold war, macroeconomic reform, technology, the massive increase in capital and trade flows, etc. - were far more crucial to unleashing and sustaining these changes than either the IMF or the World Bank.download