Chapter 1 Flashcards
What is Globalization?
Globalization can be described as the increasing interdependence of the national economies of both advanced and developing countries. Such economic integration occurs when countries open themselves to expanding flows of trade, capital, labour and ideas with the rest of the world.
What are the benefits of Globalization?
Faster growth Better living standards Easier access to capital and technology Higher productivity Lower prices
What are challenges of Globalization?
Transitional problems
Social impact
Cultural impact
How does an open world
economy promote growth?
Openness promotes economic efficiency by
allowing countries to specialize in what they
do best rather than produce everything on
their own. In an open world economy, countries
tend to export what they produce efficiently
and to import what they produce relatively less
efficiently.
What is Tariff?
A tax imposed on imported goods and services. Tariffs are used to restrict trade, as they increase the price of imported goods and services, making them more expensive to consumers.
What is Washington Consensus?
Formed by IMF, World Bank and US Treasury
What is Neoliberalism?
reducing barriers to trade; privatising government enterprises; reducing barriers to foreign investment; and deregulating financial and foreign exchange markets.
What is Structural Adjustment?
In the 1980s, market reform policies were imposed on countries suffering severe economic crises. They were the price these countries had to pay for getting emergency loans from the International Monetary Fund and the World Bank.
What is Conditionalities
Conditionalities is the use of conditions attached to the provision of benefits such as a loan, debt relief or bilateral aid. These conditions are typically imposed by international financial institutions or regional organizations and are intended to improve economic conditions within the recipient country.
What is Privatization?
is the process of transferring an enterprise or industry from the public sector to the private sector. The public sector is the part of the economic system that is run by government agencies.
What is deregulation?
is the process of removing or reducing state regulations, typically in the economic sphere. It is the undoing or repeal of governmental regulation of the economy.
What is Economic Liberalization?
is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities; the doctrine is associated with classical liberalism.
The ten points of the Washington consensus
Fiscal discipline (governments cutting spending to run balanced budgets or surpluses)
Redirection of public spending away from subsidies for industry, to provision of infrastructure and education
Introduction of consumption taxes and reduction of tax rates on higher incomes
Interest rates that were determined by the market, not government
Deregulated (or market-driven) exchange rates for the currency
Liberalisation of trade by reducing tariffs and eliminating quotas and other non-tariff barriers to trade
Deregulation of foreign direct investment
Privatisation of state enterprises
Deregulation in general – eliminating or reducing government regulations that prevented new businesses entering a market
Strengthening of property rights
