Does International Financial Institution Expand the Growth of Developing Countries?

14 Pages Posted: 2 Dec 2018

See all articles by Suman Acharya

Suman Acharya

Sai Nath University; Nepal Rastra Bank

Date Written: November 8, 2018


International financial institutions are established under international law for providing grant or loans and technical assistance for social and economic development of the country and region. Those institutions can be universal, regional and local. IMF and WB are the universal financial institutions whereas ADB, CDB, CAF, AIIB etc are the regional financial institutions. Similarly, local institution may also be established. The Bretton Woods Conference established IMF, WB, and GATT. Its initiation to establish ITO was failed. Washington Consensus, as proposed by Williamson, recommended donor country and institutions to reform fiscal policy discipline, redirection of public spending for pro poor basis, tax reform, positive interest rate, competitive exchange rate, trade liberalization etc. IMF operates with Board of Governors, executive Board, Managing Director and staffs which works for the balance of external sector of the country. It also grants concessional and non concessional credit to the member country in the time of economic crisis and emergency situations. World Bank group consists of IBRD, IFC, IDA, ICSID and MIGA, which provides long-run capital to member countries for economic reconstruction and development, promotes capital investment and implements development projects. ADB provides both hard loans and soft loans; hard loan is targeted to middle income countries and soft loan is targeted to poor countries with low interest rates. ADB operates with Board of Governors, Board of Directors and Management. The Asian Infrastructure Investment Bank is newly established international financial institution in 2016 with the initiation of China. It has aimed to support the building of infrastructure in the Asia-Pacific region. These institutions ultimately contribute for economic diplomacy and international cooperation because no region and a country is self dependent to fulfill their necessity in the globalized society. However, there are many voices against the performance of this institution by claiming these institutions are the forum of developed countries. Yet, we cannot disregard the contribution made by them in international peace and financial architectures and for the growth of developing and least developed countries. In the national and international financial crisis, they are developing the policy and standard to cope the problems with. In fact, these institutions support for the acceleration of growth of developing countries.


Suggested Citation

Acharya, Suman, Does International Financial Institution Expand the Growth of Developing Countries? (November 8, 2018). Available at SSRN: or

Suman Acharya (Contact Author)

Sai Nath University ( email )

Ranchi, Jharkhand

Nepal Rastra Bank ( email )


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