Sociology – Paper 4 – Globalisation: Key debates, concepts and perspectives | e-Consult

International institutions influence national policies through both coercive and consensual mechanisms:

1. Rule‑making and enforcement (WTO): By establishing binding trade rules, the WTO limits the ability of governments to impose protectionist measures. For example, the United States’ “steel tariffs” in 2002 were challenged and overturned by the WTO dispute settlement system, compelling the US to revise its policy.
2. Conditional lending (IMF): The IMF provides financial assistance contingent on structural adjustment programmes. In the late 1990s, Greece’s bailout required austerity measures, pension reforms and tax increases, directly reshaping domestic economic policy.
3. Policy diffusion and best‑practice promotion: Both institutions disseminate policy models that member states adopt voluntarily. The IMF’s “Fiscal Compact” guidelines have been incorporated into the budgeting processes of several European countries.
4. Limitations and resistance: National governments can resist or renegotiate terms, as seen when India refused to fully liberalise its agricultural sector despite WTO pressure, citing food security concerns.

Thus, while the WTO and IMF exert significant influence over national policy, the extent of their impact varies according to domestic political will, economic necessity and the capacity to mobilise alternative coalitions.