Economic institutions

economic-dictionary

Economic institutions are the set of entities that are formed over time and that are aimed at regulating and establishing laws with the aim of improving certain aspects of the economy.

Since its origin, the human being, for its survival, has had to continually search for adequate ways to satisfy its needs. In the search for satisfaction of their needs, they have been developing a series of activities that are constantly repeated, as a way of guaranteeing their survival. One of the consequences of this evolution has been economic institutions.

Thus, economic institutions are aimed at facilitating through regulations, proposals and advice, the economic functioning of a country. This economic operation can be in different matters. For example, there are institutions that are specialists in international trade, others in monetary policy or other aspects such as fiscal policy.

Types of economic institutions

We can classify economic institutions according to their purposes or functions and according to their jurisdiction. Thus, taking into consideration its jurisdiction we can talk about:

  • Public economic institutions.
  • Private economic institutions.

Public economic institutions are those in which a sovereign authority intervenes with greater power than the rest. Meanwhile, private economic institutions are those that are controlled and directed or managed by individuals of a particular order.

Main economic institutions

Next, we are going to cite some of the main economic institutions that have already been created over time:

  • World Bank (BC): It is an institution dependent on the United Nations. It provides economic and financial support to developing countries.
  • International Monetary Fund (IMF): This institution seeks to reduce or eliminate poverty, economic growth and development, maintain the financial stability of the countries, among other objectives that they themselves define.
  • Economic Commission for Latin America and the Caribbean (ECLAC): This institution's main purpose is to contribute to the growth and development of all the countries that comprise it. In addition, it seeks to broaden relations between countries.
  • European Central Bank (ECB): It is the central bank of the member countries of the European Union. Its main function is to maintain prices in order to ensure the purchasing power of the euro.
  • Organization for cooperation and development (OECD): It is an international organization that aims to promote policies to improve the social and economic well-being of all the peoples of the world, cooperating to respond to economic, social, environmental and good governance challenges. .
  • Federal Reserve (FED): It is the central bank of the United States. Its main function is to maintain prices and promote full employment.
  • World Trade Organization (WTO): It is an international organization whose primary objective is to promote that trade between countries flows as freely as possible.
  • World Tourism Organization (UNWTO): It is a worldwide organization whose objective is to promote tourism and ensure its proper development.

Functions of an economic institution

Among the functions of an economic institution, it should be noted that they can be many and varied among themselves.

In other words, not all institutions are in charge of carrying out the same functions. However, we have collected some of the most common and they all have in common.

  • Promotion of economic growth and well-being.
  • Promotion of the economic development of the countries.
  • Preparation of reports and work to monitor economic evolution.
  • Study of the different economies that make up the planet.
  • Preparation of activities and events related to the matters dealt with by the institution.
  • Financial aid to the countries that make up said organization.
  • Design and development of guidelines for the behavior of the countries.
  • Management and control of possible imbalances between countries.
  • Promotion of economic equality and the reduction of inequalities on the planet.
  • Eradicate poverty and social unrest on the planet.

Example of an economic institution

Among the examples of an economic institution, we could highlight the role of the International Monetary Fund (IMF).

According to the organization itself, its functions include the following:

  • Promote international monetary cooperation.
  • Facilitate the expansion and balanced growth of international trade.
  • Promote exchange rate stability.
  • Help establish a multilateral payment system.
  • Make (with adequate guarantees) resources available to member countries that experience imbalances in their balance of payments.

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