Exam 1: Carter's Notes

Question 1

What is Adam Smith the founder of?

Answer 1

Free Markets

Question 2

More exposure to international markets means ________

Answer 2

More government growth

Question 3

Markets are not ______

Answer 3

self-creating, self-regulating, self-stabilizing, or self-legitimizing

Question 4

What did Germany’s marriage or iron and rye do?

Answer 4

Created high import tariffs

Question 5

What did the gold standard do?

Answer 5

Allowed money to flow freely between countries

Question 6

Is free trade the natural order? Than why do it?

Answer 6

It is not, but it has long term benefits. Even if trade creates complications, the best way to deal with those is through other policies and not trade restrictions

Question 7

What are some cases against free trade?

Answer 7

Protectionism is like ignoring technological innovations

Question 8

What are some arguments for free trade?

Answer 8

1. Even if some people lose out, it should be possible to compensate them, and still have everyone come out ahead
2. The case for free trade goes beyond economies, it is a moral one that has to do with people’s freedom of choice
3. Anti-trade views are prevalent enough already; we must present the other side
4. The caveats will be hijacted by protectionists who will use them for their own purposes
5. The nuances will confuse people

Question 9

Did the GATT have good enforcement powers?

Answer 9

NO!

Question 10

What happened in 1997 at the IMF meeting?

Answer 10

Developing countries were dismantling the controls they maintained over cross-border lending and borrowing.

Almost impossible to make foreign investments

Question 11

What did IMF rules not cover?

Answer 11

IMF rules did not cover policies that regulated payments for international financial or capital transactions

Question 12

What did East Asia do to fight the recession?

Answer 12

East Asia borrowed short-term in international financial markets to finance domestic investments

Question 13

What was Bretton Wood’s Achilles Heel?

Answer 13

it didn’t define what will play the role of international money
It was US dollar, but US dollar was pinned to gold
Doubt of US dollar
Limited by amount of Gold

Question 14

As world trade and finance expanded, the “policy space: that existing controls afforded ________

Answer 14

shrank and external constraints began to play a larger role

Question 15

What is a fox?

Answer 15

A variegated take on the world

Question 16

What is a hedgehod?

Answer 16

One central idea

Question 17

What is the proximate cause of poverty according to Rodrik?

Answer 17

Low productivity

Question 18

What are some other underlying causes of poverty according to Rodrik?

Answer 18

Lack of credit
Lack of tech access
Lack of knowledge/skills
Small market size
Exploitive elites

Question 19

What does economic growth require?

Answer 19

Economic growth requires a pragmatic government willing to do whatever it takes to energize the private sector

Question 20

What happened to trade in North America?

Answer 20

The state went from being a handmaiden of economic growth to the principal obstacle blocking it

Question 21

Countries that are open to international trade are ______

Answer 21

2% faster growing

Question 22

What are the seven principles for a New Globalization?

Answer 22

1. Markets must be deeply embedded in systems of governance
2. Democratic governance and political communities are organized largely within nation states, and are likely to remain so for the immediate future.
3. There is no “one way” to prosperity
4. Countries have the right to protect their own social arrangements, regulations, and institutions
5. Countries do not have the right to impose their institutions on others
6. The purpose of international economic arrangements must be to lay down the traffic rules for managing the interface among national institutions
7. Non-democratic countries cannot count on the same rights and privileges in the international economic order as democracies.

Question 23

What is a temporary work visa scheme?

Answer 23

Rich countries allow poor countries to send people to gain experience that can be taken back to their countries