United Nations’ significance to today’s global economy & international business system
The subject of this paper is how the United Nations can improve the current global economic system, for that we have to understand the structure of the United Nations, its role, and global economy. In the first part, it focuses on the United Nations. In the second part, the focus will be on the global economy and in the third part; the paper discusses how the United Nations is important to the global economy and how it can influence it. Analysis and conclusion will determine the scope of significance and project role of UN in the near future.
United Nations
The United Nations, which was formed after World War II with the objective of resolving a range of issues through discussion and diplomacy, strives to bring countries together to address various kinds of challenges which humanity faces. By the time the role and capacity of the organization have increased and expanded respectively. For Instance, United Nations were formed with the objective to avoid catastrophes such as World War II; however, with the time, it developed institutions, which could address and resolve economic and social challenges too (Borg, 2015).
The United Nations Economic and Social Council, which is one of the six principal organs of the United Nations, is obliged to coordinate various UN agencies, which are working to affect Social and Economic conditions in different parts of the world.
The principal objective of the Economic and Social Council (ECOSOC), is to initiate debate regarding various economic challenges and provide data, which could be helpful in dealing with these challenges. In addition to that, the United Nations provides a platform to various countries to take initiatives in order to bring about economic change, which is linked to social and political change (improvements) (Lundan & Dunning, 2008).
Global Economy
The rise of the Global Economy is linked to the adoption of the Ricardian Economic Model, which is based on the concept of free trade and competitive advantage. The global economy has linked world economies with one another, and it has given freedom to organizations to operate in different economies (FDI inflows and FDI Outflows).
As the organizations are not able to operate in different economies, the movement of capital and technology is also reality, which positively influences economies. For instance, because of the opening of the economy, China has gained a lot. It industrial Infrastructure has evolved, and technology has transferred, from Industrialized Economies to China’s light industry. The direct consequence of the opening up of the economy is an increase in investment and high employment level. The spill-over effect, both vertical and horizontal, has increased innovation, increased the quality of products, low prices, better management, optimal use of resources, development of human resources, economic and political stability (Borg, 2015).
To understand the structure of Global Economy, it is imperative to study the size of the trade and World FDI. Both these variables will assist in understanding how truly global this global economy is and how the United Nations can play a role in improving the system (World Bank, 2017).
The World Bank. (2017 October 29). Foreign direct investment, net inflow. Retrieved from https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD
It is quite apparent that World Foreign Direct Investment Inflows have augmented radically recently. It depicts the various economies of the world that have opened up and devised such policies that attract foreign investment. Studies also reveal that Foreign Direct Investment inflows directly affect the quality and size of the economy, which is why FDI inflows are considered the catalyst of economic change. However, it is quite apparent that FDI inflows and outflows are unregulated, and it is the companies/firms/organizations which decide in which markets or industries to invest.
Trade is another crucial component, which directly affects the economy of a country. The more balanced trade of a country, the more stable its economic system. It is also imperative to acknowledge that a stable economy has a positive impact on social evolution, which augments the significance of a stable economy (Borg, 2015).
Though there are various benefits of Global Economy, it is also true that because of the emergence of the global economy, many challenges have surfaced. For instance, the role of multinationals in the Global Economy has grown dramatically. Also, Companies are investing in particular countries, in certain sectors of the economy, which is why the dividends, of such investments, only benefit large corporations, and the size of the spillover effect is small. Studies also reveal that foreign investments and trade benefiting particular countries and most of the world economies are not truly benefitting from this new International Business Order (Lundan & Dunning, 2008).
How United Nations Can Improve Current Economic Order/System
As mentioned earlier, the United Nations has an institution, ECOSOC, and specialized agencies to impact significantly on the Global Economy. By employing various instruments and tools, United Nations’ specialized agencies, such as the International Monetary Fund and World Bank, can bring about change at both national and regional scales. Also, the data (about the health of the economic and political system), retrieved by various agencies of the United Nations, can aid countries and companies in improving economic-political conditions and systems around the world (Lundan & Dunning, 2008).
Through International Fund for Agricultural Development
It is a specialized agency of the United Nations with the objective of reducing poverty in rural regions of developing countries. The development of Agriculture sector has enormous implications, for not only Agriculture sector but also an industrial sector, which is closely linked to agriculture sector in emerging economies. As the agency uses a country-based approach, it has developed various instruments and tools to improve agriculture sector, while keeping in consideration economic realities (IFAD, 2017).
However, the challenge is regarding the number of projects and in very few countries. As per statistics, the International Fund for Agricultural Development (IFAD) is working only in a handful of countries and the numbers of ongoing projects are few.
Through International Monetary Fund
One of the most potent specialized agencies, which could directly affect the International Economic System or Global Economy, is the International Monetary Fund. The core objective of the IMF is economic stability and prosperity of the member state. During economic upheavals, the IMF provides funds and mechanisms, to both developed and developing countries, to address an economic challenge. The emphasis, of the IMF, is on Austerity policy, and it discourages the use of the Fiscal instrument in realizing economic objectives.
One of the challenges regarding the IMF and its assistance is that the funds come in stringent conditions. For instance, Austerity policy has to be adopted to realize economic conditions. Sometimes, this leads to the total implosion of the framework of cooperation between the IMF and its client (IMF, 2017).
Though World Bank
The World Bank is another institution, in the system of the United Nations. Its role is very similar to that of the International Monetary Fund; however, it differs as it focuses on long-term development. In addition to financial support, it also provides technical support, in the form of investment in power projects and infrastructure development. It is a potent instrument to improve the International Business System, which is being affected by its inherent contradictions (Borg, 2015).
Through Data and Experience
United Nations or its specialized agencies have enormous data and expertise, which can be used in attaining short and long-term objectives about the world economy. It can use data to improve governance in developing and developed countries. Also, its specialized agencies can help developing countries in devising more political-economic policies, which ensure political stability and economic prosperity. A more balanced International Economic system, which is not titled, can ensure long-term development and the continuity of current global economic arrangement, which benefits outnumber challenges associated with it (World Bank, 2017).
Through its Influence
The United Nations can influence other countries to agree on a global economic agenda, which is designed to improve global economic conditions. Studies suggest that for sustainable world economic growth for the survivability of the current system, it imperative that system must be fair and must produce opportunities for all members. All systems have inherent contradictions, and through mutual effort, these contradictions can be addressed. The United Nations, as an institution and major global body, can rally member countries to realize this objective. However, it would take time and enormous effort, as it not simple to convince major countries, which are the beneficiary of this system (Lundan & Dunning, 2008).
Analysis
From the discourse, it is apparent that the role of the United Nations and its Specialized Agencies has grown over the years. Also, it is also quite evident that with the passage of time, its specialized agencies have developed such mechanisms and instruments, which can affect positively and significantly International Economic Order or Global Economy. For instance, it can use the International Monetary Fund and World Bank to improve economic systems of developing countries, so that they could benefit from the prevailing global economic system. Also, the United Nations can influence Developed countries to understand that collective economic progress is essential for sustainable growth of world economy.
Conclusion
It is concluded that by employing different instruments, the United Nations can attain the objective of improving the World Economy, and make Global Economy a fairer system, yielding opportunities for all its members. However, this will take a pro-active role and considerable time. However, from the discourse, it is quite apparent that the United Nations can significantly impact Global Economy and improve it produce desired results.
References
Borg, A. (201, December 23). 6 factors shaping the global economy in 2016. Retrieved from World Economic Forum: https://www.weforum.org/agenda/2015/12/6-factors-shaping-the-global-economy-in-2016/
IFAD. (2017, October 1). Investing in rural people. Retrieved from IFAD: https://www.ifad.org/home
IMF. (2017, October 10). The IMF and the World Bank. Retrieved from IMF: http://www.imf.org/en/About/Factsheets/Sheets/2016/07/27/15/31/IMF-World-Bank
Lundan, S. M., & Dunning, J. H. (2008). Multinational Enterprises and the Global Economy. Edward Elgar Publishing.
World Bank. (2017, October 23). Foreign direct investment, net inflows (BoP, current US$). Retrieved from World Bank: https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD
+447462439809