IGCSE Geography / Globalisation and migration

The WTO and the IMF revision notes

Edexcel International GCSE Geography (4GE1), chapter 8: Globalisation and migration, specification point 8.1b. Free lesson.

Watch the video lesson · IGCSE Geography past papers

The WTO sets trade rules and the IMF lends to countries in crisis. Both can make economies more connected to world trade, but each has been criticised.

What the WTO and IMF do

The WTO and IMF are global institutions because their members are countries across the world. The WTO sets trade rules and settles disputes. The IMF helps keep the world’s money system stable and lends to countries in crisis. The WTO was set up in 1995, replacing GATT, an older trade agreement from 1947. It has more than 160 members, which together account for over 98% of world trade. The IMF was agreed in 1944 and has 191 member countries. The World Bank, also from 1944, is another global institution. It lends money for development projects.

How the WTO makes trade more global

WTO members negotiate, meaning they bargain until they agree on trade rules. Cutting barriers makes it cheaper for goods to cross borders, so trade can grow. The WTO also settles disputes by applying its rules, making a trade war less likely. Tariffs are taxes on imports. Quotas limit how much can be imported. Critics say rich countries gain most from WTO rules. Talks launched in 2001 stalled over farm subsidies, which are payments governments give to their farmers.

How an IMF loan opens up an economy

The IMF lends when a country is in crisis, for example when it cannot pay for imports or repay debts. The loan has conditions. From the 1980s, these included cutting government spending and opening the country to trade, which can bring more foreign trade and foreign firms into its economy. The criticism is that spending cuts fell on health, education and food subsidies, hurting the poorest people.

Global institutions and assessing their role

The EU is not a global institution. It is a regional trade bloc because its members are all in Europe. A global institution has members across the whole world. For a six-mark assessment, compare how many countries each institution reaches and how often it affects them. One possible judgement is that the WTO has played the bigger role: its members do over 98% of world trade, so lower tariffs can raise trade almost everywhere. The IMF only reaches countries that borrow from it. An argument that the IMF has played the bigger role can also score if it is justified.

More lessons in Globalisation and migration