Chapter 5 Flashcards
What is the Beggar thy neighbour?
(Turn your…into a…by…that…to…on…).
Turn your neighbour into a beggar by domestic policies that ignore the harm done to domestic policies on foreign economies.
What will cause world trade to shrink?
Protectionism, such as tariffs or currency manipulation.
What do international governance help? (2).
(H.e. & H.m&c.).
- Helps eliminate “beggar thy neighbour” policies (trade protectionism).
- Help manage and control externalities (environment pollution).
Why is international cooperation so important?
It keeps the world economy open and functioning between states.
Good institution ensures good governance
What is the difference between International Regimes & International Organizations?
IR: PoP which sets p,n,r,d-mp.
IO: L&PB that…and…IR.
- International Regimes are a “piece of paper” which sets pricinples, norms, rules, and decision-making procedures (GATT, Kyoto Protocol).
- International Organizations are “legal and physical bodies” {they have a building/institution} that manage and implement international regimes (WTO).
What did Bretton Woods create? (2).
- International Monetary Funds (IMF).
- World Bank.
What does the IMF do? (5).
(Pimc&s.Ptfa.Mfes.Feg&hloe.Eoea.).
- Promote international monetary cooperation and stability.
- Monitor foreign exchange systems.
- Ensure orderly exchange arrangement.
- Foster economic growth and high level of unemployment.
- Provide temporary financial assistance to ease countries in economic downfall.
What are the IMF Conditionalities (1) and what do they ask (criteria) to the country that borrows money from them (2)?
Countries in need of financial help ask the IMF to borrow the IMF’s own currency (SDR or M.C.).
They need to repay the IMF only if the hard loan policy surpasses more than 25% of the Quota.
However, the countries that borrow from the IMF needs meet certain criteria implemented by the IMF, like:
- Devalue their currency (that country needs to produce a lot more to repay the loan).
- The government of the borrowing country has to increase taxes (the population losses their purchasing powers and have to pay higher taxes).
How is the quota calculated?
(WAGDP”%” + O”%” + EV”%” + IR”%”)
Weighted average of GDP (50%)
+
Openness (30%)
+
Economic Variability (15%)
+
International reserve (5%)
How is the World Bank compose?
The World Bank is composed of their own members who own the World Bank. Countries needs to pay a quota like the IMF to be a member.
What does the World Bank do? (5).
(G.F.F.P.I.).
- Grants loans to states (different from the IMF loans).
- Funds infrastructure projects.
- Funds capacity-building projects.
- Provides technical assistance.
- Implement a soft loan policy through the IDA. Unlike the IMF and hard loan policy.
What is the Bank for International Settlements (BIS) (2) and what does it do (2)?
- The BIS is the central bank of central banks (the boss of bosses).
- They are known as “lender of last resort”.
- They ensure international cooperation with monetary policy development.
- They ensures that central banks maintain reserve capital above international minimums to avoid over-indebtedness.
What is the objective of the WTO?
Help trade flow smoothly, freely, fairly and predictably.
How does the WTO assure their success in reaching their objective? (4).
(S.A.R.A.).
- Administering trade agreements.
- Acting as a forum for trade negotiations.
- Settling trade disputes.
- Reviewing national trade policies.
What is the structure of the WTO?
It is composed of 164 members (countries) and 25 observers (countries).
Decisions are made by all members and typically by consensus.
