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The IMFs Approach to Economic Stabilization - Essay Example
Author : kaylie07
Pages 9 (2259 words)
Economic stabilization in developing countries primarily concerns attempts to correct excessive or unsustainable balance-of-payments deficits, reduce the rate of domestic inflation, or both. "Frequently, stabilization efforts also involved exchange rate reform and changes in the systems of import protection and export incentives…
In order to truly diagnose the situation, and properly understand the IMF and its current position in the world, we must ask the following questions:
Founded in the turbulent era of the 1940s to stabilize the world economy, and based in Washington, D.C., the IMF (International Monetary Fund) is "an organization of 184 countries, working to foster global monetary cooperation, secure financial security, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty." ("IMF", 2006). The IMF's original purpose was "to establish a code of conduct that would enhance economic cooperation, and avoid the 'beggar-thy-neighbor' policies that led to the economic turbulence of the thirties." (Babb & Buira, 2005). In short, the IMF is a multilateral institution that lends money to governments in order to stabilize currencies and maintain order in international markets. Since the IMF was established its purposes have remained unchanged, but its surveillance, financial assistance and technical assistance operations have developed regularly in order to "meet the changing needs of its member countries in an evolving world economy." ("IMF", 2006). ...