International Organisations

Question 1

Tariff

Answer 1

A tax imposed on imports

Question 2

Subsidy

Answer 2

Financial assistance to a business by government to make it competitive/ prevent collapse

Question 3

Quota

Answer 3

A limit on the quantity of a good a country allows into the country

Question 4

Protectionism

Answer 4

Policies to protect businesses + workers in a country by restricting/regulating trade with foreign nations

Question 5

Free-market economy

Answer 5

A market economy based on the supply + demand with little/no government control

Question 6

Free-trade

Answer 6

Policy where a government does not interfere with imports/exports by applying tariffs, subsidies or quota

Question 7

Privatisation

Answer 7

Transferring ownership of a public service/agency/property into private ownership run for profit

Question 8

Neoliberalism

Answer 8

A political philosophy of free markets, free trade, privatisation, and increasing the role of business in society (decreasing government influence)
* Throughout that by making trade easier, there will be more of it, meaning wealth and reduction of poverty

Question 9

Bretton Woods Institutions

Answer 9

• Formation of IMF and World Bank in 1914
• Aims were to help rebuild the shattered post-war economy + promote international economic corperation

Question 10

IMF

Answer 10

International Monetary Fund
* create a stable climate for interantional trade and it provides financial assistance to countries encountering difficulties with their balance of payments
* Based in Washington
* Channels loans from the richest to the poorest nations that apply for help
* Governements receiving loans must agree to run free-market economies- open to outside investment + ensures country can afford to pay loan
* TNCs can enter country more easily, promoting globalisation
* SAPs- (Structural Adjustment Programmes)- strict conditions imposed on countries recieving loans- governments may be required to make cuts on healthcare + education to reduce the role of government + open it up to private investment
* E.g Tanzania- water to towns in city capital were cut off when country privatised its water

Question 11

Criticisms of IMF

Answer 11

• Conditions of loans- giving loans to countries means IMF makes loans conditionals on implementation of cetain policies:
  1. Reducing government + borrowing- Higher taxes + less spending
  2. Allowing failing firms to go bankrupt
  3. SAPs, privatisation, deregulation, reducing corruption and bureancy
• Asia crisis 1997- e.g Indonesia, Malaysia, Thailand
  required to persue policies to reduce deficiet and strengthen exchange rates but policies caused a serious recession with very high levels of unemployment

Question 12

World Bank

Answer 12

Improve the capacity of countries to trade by lending money to war-ravaged + impoverished countries for reconstruction + development projects
* Established in 1944 to rebuild post world war II, Europe
* Seeks to shape the world economy
* Fights poverty by offering developmentak assistance to middle + low income countries
* Gives loans, offers advice + training in public + private sectors
* Aims to eliminate poverty by helping people help themselves
* Finance development of nations through loans to promote FDI and trade
* Requires SAPs

Question 13

Criticisms of World bank

Answer 13

World Banks SAP Bolivia 1990s
* 1994- World Bank refused $25 million loan to a local co-operative in Cochamba, Bolivia
* Instead insisted that British government hand over the running of local water supply to French multinational, Betchel giving the company total control over local water supply
* Locals were forbidden from collecting drinking water, had to pay the company or thirst
* Fees cost average residents more than cost of food

Question 14

World Trade Organisation

Answer 14

Global organisation made up of 164 member countries dealing with rules of trade between nations
* Goal- ensure that trade flows smoothly and predictably as possible
* Supervises international trade, promoting free trade + the ending of protectionism
* Trump threatened to withdraw from the WTO in August 2018, calling it a disaster
* If US withdrew, trillions of dollars in global trade would have been disrupted

Question 15

World Trade Organisation Criticisms

Answer 15

• WTO has come under lots of scrutiny
• Lacks success in getting its member countries to reach a global agreement on any aspects of trade
• Benefits developed countries more than developing countries
• Developing countries need some trade protection to be able to develop new industries to diversify economy
• Tariff protection
• Trade has often ignored environmental considerations e.g. allowing trade from other countries with the least environmental protection-Increasing/maximising GDP should be less important than global warming- WTO should do more to promote environmental considerations

Question 16

How does free-trade increase globalisation?

Answer 16

1. Governments take away barriers that make trade more difficult + costly
2. As costs are reduced, TNCs see a profit and invest in nations
3. TNCs will bring new ideas, products, cultures etc to a nation
4. Also the TNC will generate wealth
5. This wealth + development will increase the standard of living and demand for foreign products
6. As an economy has more TNCs they become interconnected and interdependent on eachother