International trade ( Economic ) Essay Example | Topics and Well Written Essays - 500 words

International trade ( Economic ) - Essay Example In the perception of many in the developing world, the IMF has played major roles in helping countries overcome financial problems such as those that occurred in Mexico, Brazil, Argentina and Mexico, and Turkey. The problem with Turkey sticks out like a sore thumb: the country has had it eighteenth program with the IMF but its problem persists. In 1997, the IMF thrust itself into prominence when it intervened in the Asian Financial Crisis as countries such as Malaysia, Singapore, the Philippines – and more particularly, South Korea, Thailand, and Indonesia -- saw the value of their currencies plummet to unprecedented lows. The timely assistance provided by the world financial body helped these countries tide over the crisis but the process was fraught with painful adjustments and even triggered harsh criticism of IMF policy measures in these countries as to their appropriateness, given the peculiar domestic macroeconomic conditions. South Korea obtained a $55 billion credit from the IMF with certain attached conditions. South Korea was to open its economy and banking system to foreign investors and eliminate trade-related subsidies and import licensing, thereby making it vulnerable to foreign competition . The IMF also required the country to maintain a low inflation rate of 5 per cent. This was inconsistent with th e fact that the fall in the value of the Korean won and subsequent rise in import prices would create pressures on domestic prices. The unpleasant consequence of this was that the high interest rates made all the more difficult for South Korean companies to service their debts, thus the IMF was criticized for exacerbating the crisis these companies were facing instead of abating them. By applying cut-and-dried solutions to problems in countries with unique problems, the IMF opened itself to criticism of lack of