Chapter 2 - Lesson 2: Market Integration Flashcards
What are the roles of international financial institutions?
- Macroeconomic and microeconomic policy
- Financial restructuring
- Corporate governance
- Preventing Crises by Controlling Capital Flows
- The importance and limitation of information
- The “intermediate targets” of international financial regulation
- The Role of the World Bank
Roles of international financial institutions
The goal of policies is to restore market confidence.
Macroeconomic and microeconomic policy
Roles of international financial institutions
Normally we assume that an exchange rate devaluation will make exporting more attractive. Addressing the problems in the (Micro) financial sector, and trying to remedy the shortfalls in credit, may be as important a determinant of (Macro) exports as the exchange rate.
Macroeconomic and microeconomic policy
Roles of international financial institutions
Normally we assume that an exchange rate devaluation will make exporting more attractive. Addressing the problems in the (—–) financial sector, and trying to remedy the shortfalls in credit, may be as important a determinant of (—–) exports as the exchange rate.
- micro
- macro
Roles of international financial institutions
The challenges of restructuring the banking system are:
1. there is less technical, legal, and institutional capacity for task
2. the fraction of the banking system. There are fewer healthy banks to take over the weak banks.
3. The banking systems may be more complex, with a mixture of state and private banks.
Financial Restructuring
Roles of international financial institutions
A key issue in strengthening the financial sector is to do so in ways that enable it to more effectively fulfill its role in promoting economic growth.
* One can obtain complete security by having narrow banks and forbidding them to make loans to new enterprises.
Financial Restructuring
Roles of international financial institutions
Governments should correct the tax, regulatory, and banking practices that encouraged the high debt-equity ratios.
* A good case can be made through introducing tax and regulatory policies to discourage high debt-equity ratios.
Corporate Governance
Roles of international financial institutions
Creating a robust policy regime that minimizes the long-term consequences of the inevitable fluctuations in economic activity, including preventing crises and setting up mechanisms for orderly workouts when they do occur.
Preventing Crises by Controlling Capital Flows
Roles of international financial institutions
In a world where private-to-private capital flows are increasingly important,
institutions need to recognize that monitoring and surveillance are going to
be especially challenging.
The importance and limitations of information
Roles of international financial institutions
In a market economy the dispersed information is aggregated through prices
and the incentives they create for behavior, without the need for any centralized collection of information or planning.
The importance and limitations of information
Roles of international financial institutions
It focuses on project lending and structural reforms that enhance long-run
development and poverty alleviation.
* Itself together with its partners has the responsibility for ensuring that the poor and vulnerable suffer as little as possible in the process of adjustment.
The Role of The World Bank
What are the periods of Global Corporations?
- Trade and Exchanges (17th Century)
- Colonialism and Imperialism (19th Century)
- American, Japanese, European Corporations (20th Century)
Identify the Period and the Company/Topic (Year Included)
the governor and a United Company of Merchants of England Trading to the East Indies. The company was formed for the exploitation of trade with India, East and Southeast Asia.
- Trade and exchanges (17th Century)
- East India Company (English East IndiaCompany - 1600 – 1708)
Identify the Period and the Company/Topic (Year Included)
- In the book financial capitalist by Rodelf Hilfredging (1910) discusses new phase of capitalism and explained holding companies and sister companies.
- Emphasizes Commercial capital was far more favorably inclined to an increase in the power of the state than was industrial capital.
- Colonialism and Imperialism (19th Century)
- The economic & political media used for first time “Imperialism” terminology for period of U.S. and Spanish war (1898)
Identify the Period and the Company/Topic (Year Included)
After the year 1970, all economic research shows that Germany and Japan raise up the economic process of globalization
- American, Japanese and European Corporations
- The international company’s birth from 1900 especially after Security and
- Exchange organization (SEC) was founded in 1933 and law of establishment investing companies in 1940 in United States.
What are the types of corporations?
- International Companies
- Global Companies
- Multinational Companies
- Transnational Companies
Types of corporations
Importers and exporters but no investment outside home country
International Companies
Types of corporations
Invested in and present in many companies. Market products and Services to each individual local market.
Global Companies
Types of corporations
They have investment in other countries, but do not have coordinated product offerings in each country. They are more focused on adapting
their products and services to each individual local market
Multinational Companies
Types of corporations
They are more complex organizations which have invested in foreign operations, have a central corporate facility but give decision making, research and development, and marketing powers to each individual market.
Transnational Companies
