The International Monetary Fund (IMF) and the World Bank have different missions and assume different functions. According to Masters (2013), “the IMF is officially charged with managing the global regime of exchange rates and international payments that allows nations to do business with one another.” The organization facilitates trade and international business, and creates a global climate that fosters international and global financial activity. The key concept behind the IMF is being a credit union, which empowers countries to access its financial resources and use them to address their macroeconomic imperfections (Masters, 2013).
Like the IMF, the World Bank is an organization that supports and facilitates the implementation of social projects. Masters (2013) suggests that the World Bank differs from the IMF in that it acts as a lending institution for the countries that want to address their social, rather than economic, issues. At the end, both organizations provide the financial resources that the countries need to improve their economic and social wellbeing. Like the IMF, the World Bank has a pool of common resources that can be accessed and used by countries to improve their living standards. However, while the IMF focuses on managing and stabilizing exchange rates and improving monetary policies within countries, the World Bank is more about fostering social improvement in a long-term perspective (Masters, 2013).
The International Monetary Fund and the World Bank fulfill different functions. At the heart of the IMF’s activity are the following tasks: surveillance, technical assistance, and lending (Masters, 2013). Interestingly, “lending” is the last of the three functions fulfilled by the IMF. Thus, the organization’s focus is not on lending but on monitoring how states manage their economic resources and providing consultations and advice to rectify countries’ macroeconomic processes (Masters, 2013). The problem is that the IMF is often conceptualized as a provider of financial resources to countries. This conceptualization creates many conflicts, particularly when countries realize that they will have to meet a set of strict economic and policy requirements to be eligible for IMF’s financial assistance.
In contrast, the World Bank provides the poorest countries with the money needed to improve their socioeconomic conditions. While the IMF is struggling to stabilize countries’ economic systems and promote growth, the World Bank is struggling to end poverty and promote social equity worldwide (Chandra, 2013). It is the World Bank that targets the poorest countries across the world, unlike the IMF, which supports better-off countries that experience temporary economic difficulties. The World Bank gives hope to the countries at the bottom of the global social hierarchy. The IMF comes in, where countries have a well-developed economic system and need external support to leverage their macroeconomic advantages to the fullest.
Both the IMF and the World Bank strive to end poverty, promote global prosperity, and provide equitable solutions to the economic and social problems facing countries. Both organizations rely on the philosophic premise that globalization, market exchange, trade, and international business activity will create optimal conditions for raising average incomes and improving the social and economic conditions of life around the globe (Scott, 2001). However, the truth is that countries that seek assistance from the IMF and the World Bank fail to acknowledge the deficiencies of this globalization orthodoxy. As Rodrik (2001) and Scott (2001) suggest, openness is not the best way for countries to address their socioeconomic concerns.
Multilateral organizations create conflicts and fail to promote cooperation because they may have difficult times prioritizing among the global economic needs and countries that may or may not need their assistance. How do the two organizations choose countries that need their help? It is difficult to find any reasonable answer to this question. Organizations such as the IMF and the World Bank reinforce the message of globalization as the best and most desirable process for all states. As such, conflicts will persist, until globalization and elimination of trade borders are being praised for their potential to end the economic crisis.