International Political and Economic Organisations EQ1 Flashcards
What are tariffs?
-A tax placed on goods that are imported from other countries
-they restrict trade as they increase the price of an imported goods or service, making the item expensive to consumers
What are quotas?
A limit placed on the number of goods that are imported from other countries
What is an embargo?
A ban placed in certain foods imported from other countries
What are subsidies?
A sum of money granted by the government to help an industry or business keep the price of goods low
What is protectionism?
-The method is protecting a country’s domestic industries from foreign competition
-Tariffs, Quotas, embargo and subsidies are all known as barriers to trade as they discourage trade between countries and encourage protectionism
Why may governments use protectionist policies like tariffs or quotas?
-to protect domestic industry (the production of goods and services services within a country’s boarders)
- to help young industry (sectors of business that are in the early stages of development) to give them time to grow and become competitive against well established foreign firms
-to protect consumers
What are some key players in terms of of international political and economic organisations?
-The WTO
-The IMF
-The World Bank
What is the role of the WTO (world trade organisation)?
-serves as a forum for governments to negotiate trade agreements and settle disputes and seeks to reduce trade barriers through trade liberalism
-they aim to create a more prosperous and stable global economy
What’s an example of how the the WTO has helped a country?
-Vietnam’s WTO membership helped it secure new trade deals, such as the EU-Vietnam trade agreement in 2015, which eliminated import duties and quotas between the two regions.
-This deal boosted Vietnam’s exports of goods like electronics and footwear to the EU, while allowing the EU to export machinery and pharmaceuticals to
Vietnam.
-This deal helped increase trade between Vietnam and Europe, promoting globalisation by connecting emerging and developed economies.
-With lower labor costs than China, Vietnam became an even more attractive market, benefiting global consumers with lower prices
What is an example of how the WTO had costed a country?
-When Pakistan joined the WTO in 1995, it had to open its fishing grounds to foreign competition, allowing large trawlers from India and other countries to fish in its waters.
-Previously, Pakistan had a 200-mile exclusion zone (so only Pakistani fishing boats could fish there) protecting its local fishing industry
-After joining the WTO, foreign-owned trawlers dominated the catch, leaving Pakistan’s local fishing communities in poverty.
-A 2013 ActionAid report found that fish stocks were depleting rapidly, As a result, thousands of fishermen were forced to abandon their livelihoods, showing a negative consequence of trade liberalization under the WTO.
What is the role of the IMF (The International Monetary Fund)?
-is a financial institution that provides money for lending to member states to help stabilise their economies e.g. when they can’t pay for imports or meet debt obligations)
-By supporting nations with loans those nations are less likely to use protectionism so it ultimately tired to to make exchange rates and trade payments stable to encourage trade and stabilise currency
What is an example of how the IMF has helped a country?
-In 2010, Greece was in a financial crisis with high debt.
-The IMF, along with the European Central Bank and European Commission, gave Greece a $40 billion loan In exchange, Greece had to cut government spending and raise taxes.
-the financial support helped Greece avoid defaulting on its debts, maintain its position in the eurozone, and eventually return to modest economic growth.
What are some criticisms of the IMF?
-Critics argue that there a bias in IMF actions, as decisions may reflect the interests of the US (which hold veto power as the largest shareholder) and other members of the G7, rather than being equally beneficial to poorer, developing nations.
-This can lead to policies that impose harsh austerity measures on low-income countries, furthering inequality and limiting social welfare.
What is the role of the world bank?
-The World Bank offers loans and grants to low- and middle-income countries for projects that build infrastructure (e.g., roads, schools, hospitals), promote trade, and improve social services.
-This financial support helps these countries grow their economies and become more interconnected with global markets
What are trade blocs?
Trade Blocs are groups of countries that agree to reduce or eliminate trade barriers, such as tariffs and quotas, among themselves to increase economic cooperation and trade
