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Social Institutions How do the institutions in society affect you? Social Institutions • Structures to provide stability to social life as well as mechanisms to assert authority, power, and control. – – – – – – Family Education Criminal Justice Religion Government Economy Origins of the World Bank, IMF and WTO • These institutions arose out of the plans by the US to avoid financial crisis after WWII. – World Bank was to give loans to reconstruct Europe, but gave loans to poor countries instead. – IMF gives loans and advice for dealing with short term financial crisis. – Global Agreement on Tariffs and Trade (GATT) became World Trade Organization (WTO) in 1996. Global Political and Economic Institutions • International Bank for Reconstruction and Development (World Bank) – Loans for “development” projects to encourage economic growth. » http://www.worldbank.org/ • International Monetary Fund (IMF) – Deals with short-term economic crisis through loans and restructuring a nation’s economy. » http://www.imf.org/external/index.htm • World Trade Organization (WTO) – Oversees trade between nations to encourage the free flow of goods and growth of economies » http://www.wto.org/ Goals of WB, IMF, WTO and Neoliberalism • Encourage economic growth through the removal of barriers to trade. – Reduce expenses on social and governmental expenditures • Cut government employees • Sell off (privatize) state property such as natural resources, electricity and water to private companies • Cut social services and education (in some cases) • Cut health care expenditures and begin fees for care • Eliminate subsidies for basic foods – Reduce regulation and encourage competition with global companies to “get prices right” – Focus your economy on “comparative advantage” • Produce one, or a few, products for export – Reduce tariffs and price subsidies on goods – Discourage unions Results of IMF Policies • Development: IMF, Bank Wrongly Take Credit for Poverty Drop – http://www.globalexchange.org/campaigns/wbimf/1805.html • Relative Size of Argentina’s Economy (GDP) – – – – – – Compared to the rest of the nations in the world 1970 = 19th 1980 = 25th 1990 = 23rd 2001 = 17th 2006 = 31st Nicaragua • Debt incurred by the dictators of Nicaragua still had to be repaid. • Country devastated by war with “contras” who were illegally supported by US. • Economic crisis arose from falling coffee prices and a bank scandal like US S&L crisis. • IMF imposed conditions that forced the country to focus on repaying debt to the wealthy in Nicaragua and eliminated pay increases for teachers and public employees. Nicaragua • Nicaragua is now the poorest country in Latin America with the highest rate of debt per person. • It spends 2 and a half times more on debt repayment than on health and education combined. – Over half of the population live below the poverty line – Two fifths of poor children are malnourished – Three quarters of the poor live in rural areas, and half of these are extremely poor, unable to meet their daily food needs