Chapter 8: Global Trade and Financing Flashcards
Great Depression
The global economic collapse that ensued following the Wall Street stock market crash in October 1929. Economic shock waves rippled around a world already densely interconnected by webs of trade and foreign direct investment.
western liberal dreams
A closely-knit world system of vigorously prosperous democracies, enjoying security from military aggression, permitting the free movement of goods, money, and enterprise among themselves, and promoting the rapid development and integration of those nations whom liberal progress has left behind.
world trade organization (WTO)
- negotiation forum
- agricultural policies
Bretton Woods system and institutions
A system of economic and financial accords that created the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade/World Trade Organization following World War II. It is named after the hamlet in northern New Hampshire where leaders from forty-four countries met in 1944.
1. IMF
2. World Bank Group
3. World Trade Organization
World Bank Group
A collection of five agencies, the first established in 1945, with head offices in Washington, DC. The WBG promotes development in medium- and low-income countries with project loans, structural-adjustment programs, and various advisory services.
Special Drawing Rights
Members of the International Monetary Fund (IMF) have the right to borrow this asset from the organization up to the amount that the country has invested in the IMF. The SDR is based on the value of a “basket” of the world’s leading currencies: British pound, euro, Japanese yen, and US dollar.
Includes…
1.The International Bank for Reconstruction and Development
2. The International Development Association
3. The International Finance Corporation
4. The Multilateral Investment Guarantee Agency
5. The International Centre for Settlement of Investment Disputes
regional banks
These multilateral financial institutions provide low-interest loans and grants for a variety of programs, including infrastructure development, health, education, and environmental and natural resource management. There are four major regional development banks:
* African Development Bank
* Asian Development Bank
* European Bank for Reconstruction and Development
* Inter-American Development Bank
Soft Loan
low interest rates and a long period for repayment
Hard Loan
higher interest rates and are usually asset based
lowest common denominator
cheap labor, fewer rules and regulations, low-cost commodities, and safe and stable areas in which to invest or build their production facilities.
global poverty
According to the United Nations, poverty is a denial of choices and opportunities, a violation of human dignity. It means lack of basic capacity provided by material possessions or money to participate effectively in society.
New International Economic Order
The document called for actions such as indexing the prices of commodities by linking them to the costs of manufactured goods, increasing the amount of official development assistance, and lowering tariffs on manufactured goods from developing countries.
Free Market
A market ruled by the forces of supply and demand, where all buying and selling is not constrained by government regulations or interventions.
IMF
- surveillance of financial health of countries
- technical assistance
- lending small loans
- financial advisor
- uses Special Drawing Rights
economic liberalism
a system of natural liberty in which government intervention is minimal and individuals are encouraged to invent, develop businesses, and meet their basic human needs.
