Role of international organizations - Case Study Example

 «Role of international organizations» International organizations exist in dynamic environments politically, economically, socially and technologically. They are an omnipresent feature in international life though not much is known about their course of change. In this paper the focus is on this gap while addressing processes of change in IOs. The paper does not develop a universal theory to the change of these IOs but rather develops minimal generalizations about casual system. It first examines the purpose and rationale of IOs and the reasons for their existence. This follows by analyzing the course of change, the factors affecting this change and the major mechanisms resulting to the change. Finally, we briefly discuss the UN (United Nations), IMF (International Monetary Fund) and the WTO (World Trade Organization) and give comprehensive theoretical framework for casual systems in the topic of study. IOs develop a way for cooperation and collective action among nations; they act as a basis of supporting international cooperation according to Endres and Fleming (2002). This may be through organizations including the Brettonwoods institutions and United Nations (UN). There are less formal arrangements including various alliances of countries like the G- 8, G-10 and the GATT (General Agreement on Tariffs and Trade) before the formal constitution. They all serve related purposes whether their memberships are non-governmental or inter- government. These include lower transaction costs, create connections across social issues, produce beneficial information among the members and act as agents to promote ideas and norms. Their administrative methods provide important negotiating forums for interaction among members and this promotes reputation. The IO staff provides support and assistance to the members and this helps to shape understandings, solve disputes and explain norms for human rights standards. International cooperation is likely to occur where same interests exist across all the parties. There are important theories that share an assumption that interstate bargaining is costly as it involves money, energy, personnel and resources (Martins and Simmons, 1998). This idea that there is high transaction costs involved in the formation of IOs has led to the conclusion that the institutions are naturally sticky. This means change in IOs does not easily take place and it is a slow process. Public organizations are governed by a complex system of rules. The public institutions are led by international administrators thus it is not out of the ordinary to note that change hardly occurs. It was observed that only a few IOs that existed in the 1980s were still active in the 1990s. This period saw the collapse of many IOs but new ones were created. These were known as the second generation IOs that include UNDP, UN, UNCTAD, IDA, IFC and World Bank. These were created through the actions of other IOs and are probably less important than the traditionally created ones but they are led by institutional rules, goals and commitments. These emanations comprised 70% of the population in 1992; this was an increase from 64% a decade earlier as stated by Cheryl et al. (1998). The mortality of IOs is hard to understand given that they are known to be naturally sticky. First, the longer the institutions have been in existence, the more likely they are to survive. Secondly, the failure of the Eastern bloc and the political and economic instability in Africa led to the collapse of the IOs in the region. Finally, the mortality rate was higher for second and third generation IOs than the treaty ones where the stickiness issues were more likely to be seen. Causes of changes in IOs The current work on IOs has provided limited insight on the processes of institutional change. IOs in the policy areas characterized by unattractive options leave dissatisfied member states with minimum leverage therefore tend to be dependent and rigid (Mibler, 2008). Those with attractive options change relatively in response to underlying shifts in the member interest and capabilities. The causes of change may be exogenous or endogenous depending on their nature and characteristics. The forces leading to change may be exogenous to the system and the factors affecting include disasters, crisis and broad structural changes. Endogenous change is as a result of a combination of factors that influence the interests and preferences of members including change in norms and competition. Domestic politics and leadership are major contributions to change. Endogenous change may also be due to institutional learning that leads to adaptive change. Generally, the greater the IOs institutional independence the more is the likelihood that the cause of change is endogenous in nature. Competition Competition arises when the organization scrambles for resources and mandates and this acts as a key factor driving change (Joachim, 2008). The organizations faced minimal competition in the 1950s and 1960s. This marked an era of expansion of the IOs as both market and non- market transnational mechanisms were limited. Though the competition led to change in some instances, some IOs were still resistant to change. There were strict measures in the lending standards due to competition of alternative sources of funds whether from development banks and agencies, government export agencies and the private sector lending. Conditions were stricter in the Bretton wood Institutions due to the scarce alternative of funds. The big picture showed that the lending conditions had become tighter in this period. The IMF (International Monetary Fund) has resulted to less strict conditions in the early 1980s but this was driven by fear of less importance of IOs when the course of commercial bank lending threatened to undermine its liquidity function (Boughton et al., 2004). Conditions of the Bretton Woods institutions have become even more where there is greater competition especially from private sources. This change can be attributed to changing norms on the use of strict conditions and structural changes. In the 1990s, the IOs environment had become more competitive especially for the development oriented ones. These had their market experience a decrease in the market share in NGOs social sectors or in the hands of the private sector in infrastructure related projects. The decline in the IOs can also be due to availability of resources and battles among the ideas of the old fashioned bureaucracies as explained by Joachim (2008). This decrease was less in real terms as the resources were distributed to more countries and where there was more demand due to civil conflicts and increase in population. Competition leads to the formation of new IOs through changes in institutional arrangements. In the recent times the formation of regional groups has been driven by competition from other groups. Subsequent to the example of the EU and NAFTA, trade has become an essential issue in controlling regional institutional arrangements whether SAACDC, ASEAN or AU. Structural change IOs operate worldwide and the structural changes have led to the creation of conditions that demand change in the organizations. The Cold War era led to the weakening of markets and civil society actors including NGOs. This led to the growth of globalization and this factor has led to huge change in the environment of IOs. Globalization led to an increase in the demand for global public goods and which led to the expansion of the IOs since they supply these goods. This has led to the easier access of information from original sources reducing the significance of intermediaries as stated by Joachim (2008). Leadership and domestic politics It is important to note that change in leadership in IOs goes hand in hand with change in the institutions as observed in the recent years. Moravesik (1999) documents the importance of ‘supranational entrepreneurship’ which can be described as informal political leadership by the officials of IOs. This influences the results of joint relations though the degree of importance and the means are debatable. It is noted that leadership was a deciding factor in the degree and direction of change in IOs. The importance of leadership in shaping the pattern of change is an increasing function of IOs’ relative independence and the institutions’ relative value. In the recent time, there have been disputes affecting the leadership of UNESCO, IMF, ADB (African Development Bank), ITU and IMF. It is noted that people view leadership as a way to choose a leader who shares their interests and preference as explained by Fearon (1999). A good example of such a case is the WTO whereby actions were affected by the interests of member states. This led to a split in the six year term election of the Director General in 1999. Domestic politics has been a major factor in shaping change in IOs especially when it comes to issues affecting the powerful nations. It is important to note that in the previous years, the actions of the IOs have been largely affected by the domestic politics in the United States. The results of the UN peacekeeping operations are well recorded and were an essential factor in the United States’ decision to block the re-election of Boutros Ghali as the Secretary-General (Wade, 1999). Domestic politics also play an important role in international trade. The United States affects the decisions made by the IOs concerning the international trade policies and styles. Crises and disasters The Bretton Wood Institutions and the UN can be viewed to have originated from the crises and disasters that were faced by the international system. In the past few years there have been a strong drive for change. The agreement signed by the ICC (International Criminal Court) in 1998 reached a common consensus that the existing IOs are not adequately equipped to address the current world crises. The UN only takes military action or imposes sanctions which have consequences on the citizens. The massacre in Bosnia in 1995 led to the change in the UN peacekeeping policies. Well publicized environmental issues acted as a basis for the World Bank to change its infrastructural projects calling for accountability and transparency (Fox and Brown, 1998). Financial crises have led to demand of funds and this has led to the expansion of the operations of the IOs. Norms The IOs agenda is occupied by norms involving human rights, gender, governance and the economic issues among others. These are complex sets of meanings that play an important role in institutional change and play an important regulatory purpose. The complexity is enhanced by the period it takes for norms to impact on the behaviour of the IOs (Martha and Kathryn, 1998). Some norms are easily acceptable and enjoy legitimacy based on the evidence that is presented by a legal body of research. Examples of this trend include the WHO anti-smoking campaign and the attention that is paid by different agencies on girls’ education. Systematic changes can hasten the acceptance and recognition of norms in IOs. The rising importance of governance in the agendas of the UN system and IFIs during the 1900s was due to the continued development crisis in Africa and the problems in Europe resulting from the transition process. Norms in different sectors have caused changes in most IOs. Change in the IMF (International Monetary Fund) A brief history The International Monetary Fund (IMF) was founded during the Second World War by people whose world view was influenced by the Great War and the Great Depression. Their ideas on how the post war global monetary system should operate were shaped by their nationalities and economics knowledge. It then began to operate as an institution whose evolution was determined by trends and cycles in economic theory, economic events and world politics. These factors had effects that were viewed as adaptations to the present events and the new ideas within a set institutional structure and mandate. The IMF was founded due to failure to restore peace and prosperity following the meeting of the great powers in Paris in 1918 as stated by Boughton et al. (2004). The delegations of the forty four countries met at the Bretton Woods in New Hampshire in 1944 to establish institutions that govern international economic activities. Establishment of the IMF was to assist in the restoration of multilateral trade, currency convertibility and removing trade barriers. Causes of change At the end of the last decade, economic changes and development had become a global social norm. IOs including the UN were promoting the human development approach that focuses on people not economics. The World Bank followed this trend in the mid 1990s by setting up new policies and reforms including Strategic Compact that enhanced the social development agenda leading to poverty eradication. The IMF was left out in these activities but joined in by signing the Bank’s Reduction Strategy Paper (PRSP) in 1999 (Park and Vetterlein, 2010). The structural change in the organization can be attributed to globalization and global trends in international trade and economic situations worldwide. The leadership and political environments have led to changes as the funds are given to poor countries by the great powers mainly the United States. Financial crises in the recent times have resulted to an increased demand for funds leading to the IMF expanding its services and activities. Change in the UN (United Nations) A brief history The UN was founded in 1945 after the World War II after the League of Nations failed to prevent the war. The mandate was to sustain global peace, solve international economic, humanitarian and social problems and promote international cooperation and cohesion among nations. The term ‘United Nations’ was formulated by the Franklin D. Roosevelt who was the United States President in 1942 as stipulated by Mibler, 2008. The first conference on international organization was held in San Francisco which was attended by fifty governments and led to the drafting of the Charter of the UN. The first general meeting took place in 1946 at Westminster Central Hall and was attended by 51 national representatives. Currently, almost all sovereign states are members. The organization has faced controversies and criticisms over the years but it has not diverged from its original mandate of sustaining peace and economic stability globally. Causes of change The UN has undergone major structural, administrative and financial reforms over the past twenty years. The process of change in the UN can be described by the use of two approaches: the reflective adaptation process and the purposive change process (Molot, Riekoff, 1994). The reflective adaptation can be described as a relatively uncoordinated response to systemic forces. It can be described as a way in which organizations ‘learn’ to respond to the current challenges in the global environment through organizational creativity and innovation. The purposive change basically involves the reform agenda which entails collaborative efforts to improve activities of the system through a selection of strategies at major intervention points in the change management process. These are the two major approaches used to describe change in the UN. Change in the WTO (World Trade Organization) A brief history The WTO was formed in 1995 resulting from the Uruguay Round of multilateral trade talks under the Marrakech Agreement as explained by Bown (2009). The WTO replaced the GATT which was formed after World War II with the agenda of international economic cooperation. The GATT was the single multilateral organization governing trade until the establishment of the WTO. Another round of negotiations was held in Doha, Qatar in the year 2001. The major purpose of this round was to incorporate globalization and help the poor states by reducing barriers and subsidies on farming. The negotiations were controversial and there was no agreement reached. Causes of change The GATT began as a political forum whereby disagreements between parties were settled. At a later date, with the adoption of the Marrakesh Agreement, the judicial model was clearly established as explained by Palmeter (2003). The change in structure and function of the organization can been attributed to change in global governance as explained by Tulchin and Selee (2003). The changes in policy formation are also due to the declining economic situation globally. The number of poor countries has increased calling for the organization to extend financial aid to them especially in the agricultural sector. The WTO was formulated in order to incorporate the current trends in globalization. Conclusion IOs play a significant role in different sectors in the global scene including trade, education, health, environment, peace and cohesion among different nations. The change and transition in the organizations is gradual and takes place over a long period of time. This change is caused by a number of factors including globalization, competition, global governance, and world politics among many others. This change leads to structural, functional and adjustment of scope and mandate of IOs. Many IOs were formed after World War II to help countries to deal with the effects. They later advanced to second and third generation IOs that have improved agendas and functions. Change is an inevitable process for the IOs and they should adapt fully to this by use of proper leadership and policy formulation. The current study proves to be a rich area for study in the following avenues: i. Financial structure and IOs behaviour ii. Competition and IO behaviour iii. Governance and IO behavior References Boughton, MJ, International Monetary Fund & Review Dept. 2004, The IMF and the force of history: Ten events and ten ideas that have shaped institutions issues 2004- 2075, International Monetary Fund. Bown, CP 2009, Self-enforcing trade: Developing countries and WTO dispute settlement, Brookings Institution Press. Cheryl, S, Jacobson, H & Kaplan, J 1998, Inertia and change in the constellation of international governmental organizations, Autumn. Endres, AM & Fleming, GA 2002, International organizations and the analysis of economic policy, 1919-1950,Cambridge University Press. Fearon, J 1999, Accountability and the control of politicians: Selecting good types versus sanctioning poor performance. Fox, J & Brown, D 2000, The struggle for accountability: The World Bank, NGOs and grassroots movements, Cambridge: MIT Press. Joachim, J, Reinalda, B & Verbeek, B 2008, International organizations and implementation: enforcers, managers, authorities? 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