EQ1: 3.2 Flashcards
3 international organisations
- International Monetary Fund
- World Bank
- World Trade Organisation
Key players making decisions about the world economy
What is free trade?
Trade taking place completely free of restrictions
What is protectionism?
Barriers to protect a country’s own industries from competition
What is Foreign Direct Investment (FDI)?
Investment in business from another investor in another country where the investor then owns more than 10%
As an organisation what are IMF’s aims?
To maintain international financial stability, stabilise currencies
How does it work?
Lends money for development purposes, forces countries to privatise government to increase size of private sector in return for loans
But what are their criticisms?
Forced poorer countries to sell off assets to wealthy TNCs, Greek debt crisis after 2008 - forced to cut back on its government expenditure - known as austerity
As an organisation what are World Bank’s aims?
Finance economic development, humanitarian emergency
How does it work?
Uses bank deposits - by world’s healthier countries - provides loans for developing countries that agree to certain conditions - repayment & economic growth
Any criticisms?
First loan - France for post-war destruction
As an organisation what are WTO’s aims?
Trade liberalisation - want to remove all barriers for world’s poorer regions
How does it work?
Encourages all trade between countries free of tariffs, quotas or restrictions
But what are their criticisms?
By 2016 - 162 member states
What are tariffs?
known as barriers
What are Quotas?
set amounts which could not be exceeded
What is a trade bloc?
Group of countries which make agreements to reduce barriers to trade e.g by removing tariffs (taxes on important goods)
How do National Governments play a role in gloablisation?
By trade blocs as it increases trade between members who can work together as a larger organisation to trade with non-members
Give an example of a trade bloc
EU - 27 members, in Europe - North of map, sustainable development & aims to offer citizens security - without internal borders but there’s a lack of transparency with countries outside the EU the & lack of movement for people
Give another example of a trade bloc
ASEAN - 11 members, in South of East Asia - developed & emerging countries, benefits - free trade, free movement of labours & capital, peace & stability - no nuclear weapons, criticisms - certain government corruptions, & demographic changes
Name some benefits of trade blocs
- reduce competition - easier to get goods for country
- become each others exports - so there’s reliability
Name some criticisms of trade blocs
- free movement for labour - immigrants can move around countries in that trade bloc - issues with money
- safety standards ignored - producing cheap goods
Name some economic policies
Free market liberalisation
Privatisation
Encouraging business start-ups
Describe free market liberalisation
removal of government regulations to encourage economic development - less strict
e.g Margret Thatcher in the 80s - trickle down approach - ‘rich get richer, poorer will get richer’ - not true
What is privatisation?
transfer of assets from the public (government) sector to the private sector - to raise more money
An example of National governments playing a role in globalisation was by SEZ - name one & explain it
China’s ‘Open Door’ policy - 1978 - it happened to allow China to embrace globalisation - as it was a poor & switched off country to other countries - they had no global connection politically
With China’s ‘Open Door’ policy, what were they actions they did to ensure this happened?
- TNC’s became involved through SEZ
- Farmers were allowed to trade - allowing poorer areas to grow
- 1 child policy - to control famine
What are SEZ (special economic zones)?
industrial area - favourable conditions created to attract TNCs e.g China’s ‘Open Door’ policy, low tax rates, exemption from tariffs + export duties
What are subsidies & give an example?
Grants given by governments to increase the profitability of key industries e.g Margret Thatcher - businesses survive on subsidies but didn’t support them with competition, e.g coal mining
FDI - Give positives and negatives of TNCs investing with poorer countries
Positives - helps a country grow - literacy rate, health etc
Negatives - environmental issues, local businesses excluded, larger gap between urban and rural areas
What are the 4 MAIN flows?
Commodities
People
Migrants
Capital (money)
