International Institutions and regional integration

Question 1

Great depression

Answer 1

• Roots in the failure of the world economy to mount a sustained economic recovery after WW1
• 1929- stock market collapsed
• 1930- increased protectionism - US congress passed the Smoot-Hawley tariff - enormous wall of tariff barriers
• US exports tumbled
• Great depression

Question 2

Bretton Woods

Answer 2

• 1944, 44 countries met
• Countries agreed to peg their currency against the US dollar
• agreed not to engage in competitive devaluations for trade purposes and defend their currencies
• Created IMF and World Bank

Question 3

Internation Monetary Fund IMF

Answer 3

-multi literal organisation promoting international monetary cooperation and promoting temporary assistance to countries with balance of payment problems
3 prime activities
- monitor global economy
- provide technical assistance to developing countries
- Lending to countries with financial difficulties
- Requires government to implement ‘belt-tightening’

Question 4

Nixon Ends Bretton Woods International Monetary System

Answer 4

• Collapse of the fixed exchange rate
• Floating exchange rate - new agenda
• Jamaica agreement revised IMF articles of Agreement to reflect the new reality of floating exchange rates

Question 5

The GATT

Answer 5

• Inter-Government treaty
• original objectives included; standard of living, employment, real incomes, full use of resources, expanding production
• was to be followed by the ITO

Question 6

Uruguay Round 1986-94

Answer 6

• increased countries to 128
• widening of remit
• creation of WTO

Question 7

World Trade Organisation

Answer 7

• Has emerged as an effective advocate and facilitator of future trade deals
  
  • WTOs policing and enforcement mechanisms
  • Magnet for various group protesting free trade

Question 8

World Bank

Answer 8

• Initial mission was to help finance building Europe’s economy by providing low interest loans
• Goals: vital source of financial assistance to developing countries

Question 9

Criticisms of IMF/World Bank

Answer 9

• Neo-liberal approach; conditionality, Structural adjustment programmes
• Dominated by industrialised companies
• Ethics of projects

Question 10

UN’s sustainable development goals

Answer 10

• Environment
• Sustainable industrialisation
• Responsible consumption
• Means of implementation

Question 11

Regional Integration

Answer 11

EU
ASEAN
NAFTA

Question 12

Levels of economic integration

Answer 12

• trading bloc: preferential economic arrangement among a group of countries
• may take various forms: free trade area, customs union, common market, economic union, political union

Question 13

Political arguments for integration

Answer 13

Interdependence between nations
Increases political cooperation
Reduces likelihood of conflict
Enhances world political clout

Question 14

Economic arguments for integration

Answer 14

Specialisation 
Encourages FDI
EOS 
Competition 
GATT exemptions

Question 15

Problems for integration

Answer 15

Gains not universal
Regional economic balances
loss of sovereignty
Blocs may be defensive

Question 16

The single market

Answer 16

Free movement of goods, capital, people and services within the union 
Principles of harmonisation 
-mutual recognition 
-harmonised sector 
-subsidiarity

Question 17

The EURO

Answer 17

\+
Reduces conversion costs 
Facilitate direct price comparisons 
reduction of exchange rate risk 
Impose monetary policy 

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Unable to implement independent monetary policies
Limits of fiscal policy
Shared responsibility to support weaker countries