What this lesson teaches
I can compare how ASEAN, the WTO and the World Bank influence TNCs and states.
Syllabus 9173, Topic 1.2, 3. Relative Influence of Actors in Shaping the Global Economy. Can multilateral institutions influence economic activities?
Make a guess
A government wants a new port and power station to attract investors. Which institution is more likely to help pay for them?
- ASEAN, which owns the ports in the region.
- Any TNC, which must build what governments ask.
- The World Bank.
- The WTO.
Show the answer
The World Bank.
The World Bank gives development finance and advice. Funding infrastructure can make a country more attractive to investors.
The WTO sets agreed trade rules, while the World Bank supports development with money and advice, so they influence TNCs in different ways.
The World Trade Organization (WTO) is where member governments negotiate trade rules. These make access to markets more predictable and limit unfair treatment. Firms then adjust where they invest, buy and sell.
WTO disputes are between governments, not lawsuits by companies. One member can challenge another's trade measure. The system only works if members cooperate and follow rulings. Rules are not enforced automatically or instantly.
The World Bank gives development finance, such as loans and grants, plus advice and technical help. Funding roads, power, education or better institutions can make a country more attractive to investors. Loan conditions and advice can shape government policies.
Finance has trade-offs. Loans must be repaid. Projects can spread benefits unevenly or harm people and nature. Neither the WTO nor the World Bank controls every TNC decision. Recipient governments and communities also shape the results, as markets, states, workers and firms keep interacting.
- WTO
- Forum for negotiating trade rules; disputes between governments.
- World Bank
- Development loans, grants and advice.
- Different tools
- Trade rules versus finance for capacity.
Step by step
Name the institution
Trade rules, or development finance?
Trace its influence
How does it change a government or firm decision?
Judge the conditions
Implementation, costs and who benefits.
Real examples to use
WTO dispute settlement
Since December 2019, the WTO's Appellate Body has been unable to hear appeals because the USA blocked new judges. This weakened its dispute system.
Worked example: Two routes to change
In a made-up economy, clearer import rules help a factory plan its parts orders. Separately, a World Bank-funded power project reduces blackouts. Both can attract investment, but in different ways. Neither guarantees local people benefit.
Watch out for this
The World Bank and WTO are the same because both are international.
They have different roles and tools. Name the specific mechanism.
Check your understanding
Which explanation correctly links an institution to a TNC's decision?
- The WTO lends money to build power stations that attract firms.
- A World Bank loan removes the need to check social and environmental effects.
- A World Bank-funded project makes a place more reliable for firms.
Show the answer
A World Bank-funded project makes a place more reliable for firms.
Yes. Finance builds capacity that firms value.
Check your understanding
Why has the WTO's dispute system been weakened since December 2019?
- The WTO was dissolved in 2019 and replaced by trade blocs.
- The Appellate Body cannot hear appeals: the USA blocked new judges.
- Members stopped trading with each other during the dispute.
Show the answer
The Appellate Body cannot hear appeals: the USA blocked new judges.
A losing state can appeal into a void and avoid complying.