Government Business Relation - Essay Example

Government Business Relation: OECD and WTO and Economic Hindrance in Third World Countries Student’s Name: Lecture’s Name: Course Code: Date of Submission: OECD and WTO: Third world argument Different organizations around the world seek out to assist developing countries to grow their economies, but not all are out to help. Instead, some oppress these developing countries, while others spur growth all based on their vision and internal structures. as such, the goal of this essay is to discuss the position of these international organizations, while at the same time invoking democratic deficit concepts. The key issues under discussion in this essay entail donations and provision of aid to developing countries, concessions and policies, as well as market harmonization and globalization. All this is in an effort to draw attention to the merits and demerits that international organizations bring to these nations. This is due to the large difference in opinion and factual information portraying the disparity between the advantages and exploitation imposed on the developing countries. International organizations do plenty to assist developing nations increase their gross domestic product while conserving their resources. As such, organizations such as the World Trade Organization tend to promote the growth of these countries through spurring domestic and international growth, while promoting trade ties (International Labour Office and World Trade Organization, 2007). International organizations in this case boost the economies hanks to their abilities to network international conglomerates, and harmonise the playing field for all countries to offer fair trade practices. This is to say the organizations serve as agents of globalization, where services and resources are spread to the wider population besides being localized to their parent countries. Similarly, they act as agents of harmonization in that the policies developed by different countries have to be similar and in agreement to international terms of trade (Das, 2001). Developing nations, therefore, become attractive to international companies who bring in business to increase their input through the use of locally available resources. Trade agreements are also facilitated by international organizations such as OECD and WTO, as well as the International Monetary Fund, where they offer aid and promote international trade. With regard to this, these organizations determine the thriving of various economies through funding and negotiating for concession, as well as advantages for developing countries, but with the requirement for accountability and reduced corruption. Besson (2011) states that there is a democratic deficit in the efforts that these organizations input to the developing countries’ economies. According to Higgot and Erman (2010), these concessions and merits that the international organizations bring with them to the developing countries to boost their economies are usually marred by policy issues. This points to a negative aspect that hinders the progress of the developing countries economically sicken the concession require alignment of policies in accordance to the requirements of individual member countries of the international organizations, as is the case with International Monetary Fund. This implies that there is little that can be done the developing countries to boost their Gross Domestic Product unless they implement the policies to the letter or risk funding withdrawal. Further look into the case of the World Trade Organization indicates that the organizations, thanks to their democratic deficit force policies on developing countries for the benefit of all member countries with little benefit to the former. Elsig and Cottier (2012) mention that the democratic deficit presented in these organizations pressures the world countries into an economic playfield dominated by developed nations with little regulation to protect the developing economies from collapses. This would as a result of unfair trade practices enforced by mature policies on young markets as is the common case with international conglomerates venturing in developing countries for the first time. Often, as a requirement, international organizations require that the developing countries streamline their policies to be in harmony with those of the home nations in order to attract the investors. Consequently, this comes up more as a dictatorship in policy influencing and lobbying at the expense of local businesses and companies (Elsig and Cottier, 2012). However, there are further benefits in the running of developing countries' economies thanks to the presence of international organizations lobbying. Alonso and Garcimartin (2010) argue that international organizations often prevent effective running of sovereign states in that despite issuance of funds, decision makers and lawyers in the international organization come with demands for implementation of unrelated laws (Elsig and Cottier, 2012). The above points to issues of democratic deficiencies aimed at assisting nations become more liberalised for their own economic benefit. For example, developing countries that receive funds from institutions such as International Monetary Fund are required to implement accountability measures to eliminate corruption. As such, OECD (2008) states that the democratic deficits found in its institution is aimed at enhancing economic development through liberal policies and plans to diversify revenue collection, as well as transparent expenditure of allocated funds. In addition, arguments by Rajan and Subramanian (2005) suggest the beneficial nature of international organizations in promoting economic growth in developing countries rather than creating a vicious cycle of aid provision and poor expenditure practices. Implications are that democracy deficits in these international organizations remains in favour of the developing countries based on their record of accomplishment in overcoming corrupt practices, and enhancing accountability. The argument goes on to mention well-informed decision by the said organization for the benefit of the organizations and their principles, rather than those of developing nations. This is to say that mostly, the deficit in international organizations draws on the challenges that these countries face, and how to overcome them (Alonso and Garcimartin, 2010). To counter this, there exist arguments that international organizations work against developing countries for personal benefits of countries interested in the former’s resources. As a result, international organizations focussing on trade matters such as the International Monetary Fund and world trade organisation often impose taxes on governments (Nkusu, 2004). The taxes imposed in this case refer to taxes working against the locals for the benefit of incoming investors (Morrisey et al, 2007). Developing countries often have no choice, but to implement the taxes in an effort to conform with requirements for aid and concessions to boost international trade. Similarly, the democracy deficit in the said organizations in this case influences negatively on the economy of developing countries in that revenue collections tend to dwindle since laws do not consult involved governments (Brautigam & Knack, 2004). The lack of consultation, but imposition of brute force principles on developing countries, thus increases taxes for local populations and the benefits of infrastructure development do not reach them. Similarly, the increase in taxes on the local populations contributes to increased losses rather than increased efficiency as depicted by Gupta (2007). Various schools of thought have mixed opinions on this relationship between aid and revenue collection in that democracy deficits in imposition of taxes actually leads to increased efficiency in revenue collection and infrastructure development in developing countries, but only for those with accountability compliance (Brun et al, 2007). This is in addition to claiming the effectiveness of democracy deficits in generating stability with councils such as the United Nations. In addition, international organizations help developing nations in their economies, where they direct behaviours of industries and other commercial entities as directed. This is evident in the case of unfair trade practices, where the organizations attempt to promote fair and balanced trade between developing countries and their developed counterparts. As such, they focus on environmental matters, in which case they offer options to local government in developing countries for purposes of development (Davis, 2003). This means that the various institutions ensure that, despite internal democracy deficiencies, the needs of the various developing countries are met. Similarly, they attempt to bring the countries close to their developed counterparts through levelling the playing field for purposes of promoting international trade. Jansky and Prats (2013) suggest these international organizations prevent exploitation of legal loopholes by recommending ways of sealing the loopholes. These serve as the only means of blocking, preventing or countering democracy deficits, but in a positive light, while they can. This is embraced by most organizations that suffer from the deficiency, but still intend to assist developing countries in overcoming their challenges involving exploitation and countering poverty, as well as spurring their economies. On the other hand, this is not an embraced policy by developing countries, since the organizations are perceived as interfering in the sovereign issues of their countries. This creates trouble in the economy as most of the policy changes are opposed to preserve self-governance and fend off external influences. Conclusion Altogether, the role of international organization in promotion of developing countries remains a hotly debated topic since there are both positive and negative aspects indicating success and failure. Successes include levelling the playing field for both developing and developed countries. The concept of democratic deficiency comes up in the internal running of these institutions and their law making processes, which enforce policies and requirements to developing countries. As such, this is positive and negative in that policies oppress developing countries and at times assist these countries albeit at a minimal since the countries they represent are largely developed and seek to utilise resource from the developing countries. The oppression goes further to dim the economies of the developing countries thanks to competition from international conglomerates seeking new areas of operation, but exploiting economic loopholes. References Alonso, J. A., & Garcimartín, C. (2013). The determinants of institutional quality. More on the debate. Journal of International Development, 25(2), 206-226. Besson, S. (2011). International Law, Sovereignty and Democracy: A Reply to Waldron. European Journal of International Law 22(2), 373-387. Brautigam, D. and Knack, S. (2004). Foreign Aid, Institutions, and Governance in SubSaharan Africa. Economic Development and Cultural Change, vol. 52(2), 255- 286. Brun, J. F., Chambas, G., & Guerineau, S. (2011). Aide et mobilisation fiscale dans les pays en développement. Das, B. L. (2001). WTO: challenges for developing countries in the near future. Penang, Malaysia: TWN. Davis, Christina. (2003). Food Fights Over Free Trade: How International Institutions Promote Agricultural Trade Liberalization. Princeton: Princeton University Press. Cottier, T., & Elsig, M. (Eds.). (2011). Governing the World Trade Organization: Past, Present and Beyond Doha. Cambridge University Press. Gupta, A. S. (2007). Determinants of tax revenue efforts in developing countries. International Monetary Fund. Higgott, R., & Erman, E. (2010). Deliberative global governance and the question of legitimacy: what can we learn from the WTO?. Review of International Studies, 36(02), 449-470. International Labour Office; World Trade Organization. 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