IMF Flashcards
• Regards “economic globalization” as a historical process representing the result of human innovation and technological progress
INTERNATIONAL MONETARY FUND (IMF)
Characterized by the increasing integration of economies around the world through the movement of goods, services, and capital across borders
INTERNATIONAL MONETARY FUND (IMF)
___(goods and services) as a percentage of world GDP increased from 42.1 % in 1980 to 62.1% in 2007
Value of trade
Increased trade also means that____ are moving all over the world at faster speeds
investments
(UNCTAD)
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
Amount of Foreign Direct Investments flowing across the World
• US$ 57 Billion in___
• US$ 1.76 Trillion in—-, that is more than 18times in 33years A dramatic increase in global trade in the span of just a few decades
1982; 2015
UNITED NATIONS CONFERENCE ON TRADE AND
DEVELOPMENT (UNCTAD)
Increased Speed and Frequency of Trading
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD)
Supercomputers execute millions of stock purchases and sales between different cities in a matter of seconds through a process called
high frequency trading
– a network of pathways in the ancient world that spanned from China to what is now the Middle East and to Europe
Silk Road
Called as such because one of the most profitable products traded through this network was silk, which was highly prized especially in the area that now the Middle East as well as in the West (today’s Europe)
Silk road
Used Silk Road from 130 BCE until 1453 when____ closed it; it reaches only international but not global because it has no ocean routes, reaching the American Continent
Ottoman Empire
Beginning of globalization
According to (2), it is when “all important populated continents began to exchange products continuously – both with each other directly and indirectly via other continents – and in values sufficient to generate crucial impacts on all trading partners”
Dennis O. Flynn
Arturo Giraldez
Globalization
• It can be traced back to 1571 with the establishment of the____ trade
galleon trade
– first time that the Americas were directly connected to Asian trading routes
Galleon trade
, part of Age of Mercantilism, from 16th century to 18th century, countries, primarily in Europe, competed with one another to sell more goods as a means to boost their countrv’s income (called monetarv reserves later on)
Galleon trade
Start of_____ (to defend regimes’, mainly monarchies, products from competitors who sold goods more cheaply, they imposed high tariffs, forbade colonies to trade with other nations, restricted trade routes, and subsidized its exports
Trade war
was thus also a system of global trade with multiple restrictions
Mercantilism
- emerged in 1867 when, following the lead of the United Kingdom, the United States and other European nations adopted the gold standard at an international monetarv conference in Paris
• Open trade system
Goal (OTS) -open trade system
to create a common system that would allow for more efficient trade and prevent the isolationism of the mercantilist era
The countries thus established a common basis for currency prices and a fixed exchange rate system - all based on the value of__
gold
- is a fixed monetary regime under which the government’s currency is fixed and may be freely converted into gold.
It can also refer to a freely competitive monetary system in which gold or bank receipts for gold act as the principal medium of exchange; or to a standard of international trade, wherein some or all countries fix their exchange rate based on the relative gold parity values between individual currencies.
Gold Standard
- is a monetary system that is not backed by gold or assets and tends to fluctuate in value due to supply and market expectations.
Its value is also determined by global demand and the level of foreign reserves.
• A floating currency
was the worst economic downturn in the history of the industrialized world, lasting from 1929 to 1939.
Great Depression
It began after the stock market crash of October 1929, which sent___ into a panic and wiped out millions of investors.
Wall Street
Great Depression
By___, when the Great Depression reached its lowest point, some__ million Americans were unemployed and nearly half the country’s banks had failed.
1933
15
is one whose value is not tied to a single commodity, such as gold or another currency.
• A floating currency
Instead, its value varies according on supply and demand in the foreign exchange market.
Floating currency
is an example of a floating currency. Its value fluctuates in relation to other currencies such as the Euro (EUR) and the Japanese Yen (JPY) according to market factors.
The United States Dollar (USD)
is a sort of currency with value because a government deems it legal tender.
Its value is not based on a tangible item like as gold or silver, but on faith in the government and its stability.
Fiat currency
is a fiat currency that is used by numerous European countries.
Its value is dictated by the Eurozone’s economic situation and the European Central Bank’s policies.
People accept it as payment since the governments of the Eurozone have proclaimed it legal currency.
The Euro (EUR)
- currencies that are not backed by precious metals and whose value is determined by their cost relative to other currencies.
• Fiat currency
This system allows governments to freely and actively manage their economies by increasing or decreasing the amount of money in circulation as they see fit.
Fiat currency
Most modern paper currencies are__\ currencies, including the U.S. dollar, the euro, and other major global currencies.
fiat
• A way to create a global economic system that would ensure a longer-lasting global peace
• World leaders believed that one of the ways to achieve this goal was to set up a network of global financial institutions that would promote economic interdependence and prosperity
THE BRETTON WOODS SYSTEM
British economist_______
Economic crises occur not when a country does not have enough money, but when money is not being spent and, thereby, not moving. When economies slow down, government have to invigorate markets with infusions of capital
John Maynard Keynes
The active role of governments in managing spending served as the anchor for what would be called a system of global_____
Keynesianism
was responsible for funding postwar reconstruction project.
A critical institution at a time when many of the world’s cities had been destroved by the war
World Bank
was to be the global lender of last resort to prevent individual countries from spiraling into credit crises.
If economic growth in a country slowed down because there was not enough money to stimulate the economy, the ____ would step in.
International Monetary Fund (IMF)
To further global economic integration _______was created in 1947, which main purpose was to reduce tariffs and other hindrances to free trade.
General Agreement on
Tariffs and Trade (GATT)
World Politics has four key attributes:
- There are countries or states that are independent and govern themselves.
- These countries interact with each other through diplomacy
- There are international organisations, like the United Nations (UN), that facilitate these interactions
- Beyond simply facilitating meetings between states, international organisations also take on lives of their own.
