OECD and WTO: Economic Development in Developing Countries - Case Study Example

OECD and WTO: Economic Development in Developing Countries Student’s Name: Course Code: Date of Submission: Introduction There exists numerous international organization aimed at enhancing the economic development of the world at large, but there are challenges. The challenges in this case take the form of democratic deficiency and how it affects the economic development of different countries. For this paper, the goal is to explore how international organizations assist or hinder developing nations in developing their economies, where the arguments placed revolve around democratic deficiency. As such, the report argues on the benefits that are accorded to developing countries and the hindrances presented by these organizations to the same countries, as well as their role in aiding exploitation by developed countries. With this, the perspectives vary from positivity to negativity based on opinions and facts from experts and existing literature. As a result, the conclusions drawn can then be used to determine the relevance of these organizations. International organization in the world does little to assist developing countries in the economic development with most of the countries struggling in spite of developing countries being the majority in these organizations, especially WTO. In this case, these organizations in these countries tend to be side-lined since they have fewer delegates in the WTO to cater to their needs making it rather impossible to have their needs represented. This means that countries that are capable or representing their own needs tend to have their needs catered for leaving developing countries at the mercy of these developed countries and their concessions. In addition, these organizations side-line developing nations in that, very few developing countries comprehend the gravity of being members of these organizations since most join them for political purposes and to secure agreements with developed countries (Brown& Hoekman, 2005). This implies that there are limited benefits to these developing countries since for them, membership is a formality imposed on them by developed countries in order for the developed countries to enter their economies with fewer limitations and policies hindering their growth. As such, the organizations side-line these nations due to the lack of knowledge of their rights and as members and limited resources with which to fight against unfair practices imposed by developed countries meaning that the role of these international organizations as mediators is limited. The above makes the organizations, redundant in assisting the countries achieve their goals by negotiating better terms of trade thus threatening the economies of these countries. In addition, the lack of delegates in these international organizations means that the countries have trouble in formulating policies to assist them in trade and develop their economies independent of developed countries. As such, these organizations only insist on having developing nations come up with policies that are in line with the principles of the organizations meaning that they remand at the mercy of developed nations (Gallagher, 2005). This is because developed nations tend to have high stakes in these organizations such as funding and also have lobby groups working against developing nations and only enforce policies that allow penetration into the developing economics based on their own terms rather than what is best for the developing countries. Similarly, in formulation of policies and their enforcement, these organizations have little for developing countries, where developing nations lack in experience for policy formulation, and they also lack in leverage to hold developed countries hostage. As such, the organizations act as umbrella bodies for corrupt practices and economic terrorism against developing countries since they use their resources to blackmail these countries into submission of new policies (Hanushek, 2013). Implications of this are that, these organizations serve as agencies capable of enforcing these regulations and for countries that fail to comply, they face embargoes in the form of trade sanctions and frozen trade concessions making these countries poorer. The above amounts to hindrances in economic growth, where they can only trade with other unwilling parties and not developed countries that are capable of using their high economic status to elevate these economies. In addition, international organizations dealing with trade matter tend to impose taxes against governments and nations that are developing. As such, these organizations, especially those that provide donor funds to developing countries tend to impose policies aimed at assisting these countries come up with higher revenues, but this works against the developing countries in that they impose taxes against the local populations, which heighten the cost of living (Fukuda & Lopes, 2013). Consequences of this are that in many developing nations there are high cases of civil unrest making it difficult for the economy to thrive due to loss in investor confidence. Loss in investment and political instability then follow tearing the country’s economic viability rendering these organizations a hindrance to harmonious economic development (Kharas, 2010). In addition, the same imposition of policies by the organizations take place through the placement of concessions on any form of donor funding provided, where concessions require developed nations to carry out projects in the developing countries (Gelos et al, 2011). This means that the only thing the developing countries benefit from is the development of infrastructure, but the locals do not benefit from the funds released in any way, except for low wage jobs since local labour is cheap. Considering the concept of democratic deficit, it becomes impossible to consult developing countries in the creation and implementation of these policies since the greater good according to the leaders takes precedence over the local sense. A look at the case of the WTO, shows that the democratic deficit in the organization means that decisions affecting third world countries are carried out in favour of developed countries since they hold leverage over developing nations and their needs are not considered (Bayne & Woolcock, 2011). However, there are various arguments that place international organizations in favour of developing nations in that they have the best interests of these nations at heart. An example of this lies in the implementation of policies aimed at helping these countries eliminate negative practices in governance. With democratic deficits in IMF, there are aspects that represent the needs of developing nations, especially in concessions aimed at having nations change their self-destructive practices such as corruption (Gourinchas & Jeanne, 2013). Developing nations are rarely consulted on policies involving corruption since these come as concessions meaning for funds to be released, they must implement the policies. The above is a positive aspect for the nations in that it increases accountability for the funds provided assisting them save more and generate higher revenues for use in national projects. This also assists the nation to develop further and improve its status towards a higher level, especially in development (Maddison, 2013). Similarly, in some cases, there are incidents of the organizations, especially the WTO, come in and intervene on behalf of developing nations with regard to unfair trade practices (World Bank Group, 2012). The organizations act as mediators against countries in violation of international trade agreements and violating the economic sovereignty of developing nations. The above becomes a positive intervention, where they assist the countries to come up with solid cases, and even lobby for severe punishments against violators. In addition, international organization helps developing countries in their economies using democratic deficits with which they act as agents of globalization and increase the size of the economies by attracting investors (Rodrick, 2011). With this, democratic deficits work in that they are able to match abilities and investors to their respective developing countries. This means that developing countries get in a position to attract international conglomerates by being members of these organizations, which then increases their throughput and potential for growth due to increased input by foreign investors (Castells, 2011). In addition, democratic deficiency in international organizations to enter agreements of trade, whereby they protect the interests of each country to ensure that they all benefit with regulation of exploitation of resources and trade (Porter, 2011). They also look into the needs of developing nations where this takes place from a one sided perspective to ensure that world countries are in a position to protect themselves against harmful practices instigated by developed nations. The above takes place in the form of preventing exploitation of loopholes by developed countries against developing countries (Hill et al, 2013). As such, they involve themselves in examining economic policies and principles that developing countries have in place prior to engaging in agreements. As such, all legal loopholes are sealed thanks to the presence of these organizations, in which case they protect the countries from unfair trade practices and further examine the intentions and implications of entering agreements. The above also involves creating partnerships amongst all developing nations to foster trade with developed countries (Kose, 2013). In conclusion, international organizations can be said to be both helpful and inhibitive to the development of developing countries in consideration of democratic deficiencies. As such, international organizations help in protecting developing countries from exploitation and assist these nations to develop new policies, while ensuring accountability. Similarly, they ensure that countries are capable of conducting business without risk of destruction and exploitation, while at the same time inspiring investor confidence. However, there are also demerits or inhibitions, which involve cartel like behaviour of imposing taxes, colluding with developed nations to exploit developing countries and severe punishment for non-compliant nations making this an unhelpful venture for developing countries. References Bayne, N & Woolcock, S (Eds.) 2011, The new economic diplomacy: decision-making and negotiation in international economic relations, New York, Ashgate Publishing, Ltd. Bown, C. P & Hoekman, B. M 2005, WTO dispute settlement and the missing developing country cases: engaging the private sector, Journal of International Economic Law, Vol. 8, No. 4, p. 861-890. Castells, M 2011, The rise of the network society: The information age: Economy, society, and culture (Vol. 1). Malden: John Wiley & Sons. Fukuda-Parr, S & Lopes, C (Eds.) 2013, Capacity for development: new solutions to old problems, New York, Routledge. 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