TASK: The Impact of the Global Monetary & Financial Environment on Emerging Markets
The International Monetary Fund (IMF) is tasked with helping poor countries overcome economic crises by providing loans and policy advice.
During the global financial crisis, many countries suffered corporate bankruptcies, collapsing economies, and political turmoil. These effects particularly hurt Ukraine, which requested massive loans and other financial assistance from the IMF. Note, however, that taxpayers in advanced economies generally foot the bill for IMF activities, which often run to billions of dollars.
Critics argue the IMF rescues countries that fail to put in place robust regulatory systems and responsible fiscal and monetary policies. The critics assert that economic prosperity is best determined by market forces and free enterprise. They claim that reviving poor countries is too costly and discourages responsible behaviour because if local officials know they can count on bailouts from wealthy countries, they are less likely to enact policies that ensure stable economic growth.
1. You are an International Business student, working as an intern with the Financial Department at the IMF. You have been asked to write a report on the issues that the IMF will need to take into account to determine whether or not the IMF should consider providing financial assistance, or bailing out, the Ukraine.
2. Your report should include the following:
a. Executive summary (a one-page summary of what this report is about).
b. Introduction including background information of the global debt crisis and its general effect on poor developing countries.
c. A global overview (what is the current situation in respect of developing countries around the world?).
d. Analysis (how does the global financial system seek to assist poor developing countries, and how effective is it in doing so? What are the ethical issues raised by the global financial crisis? How has it helped economic development in poor countries? Do what extent to do consider financial self-interest or inadequate government regulation has contributed to the financial crisis?).
e. Dynamics (for example, how will developing countries such as Ukraine evolve in the next 5 to 10 years? To what extent will the IMF be expected to continue in its role in addressing financial and monetary crises around the world?).
f. Conclusion and Recommendations.
g. You should use the five step Ethical Framework as set out in Chapter 4, “International Business, The New Realties, 4th edition, Cavusgil et al”, AS PART OF your report.