Sub Topic 1 - Role of International Organisations

Question 1

Define ‘PROTECTION’ in terms of trade

Answer 1

Any type of government action that has the effect of giving domestic producers an artificial advantage over foreign competitors, including tariffs, import quotas and subsidies.

Question 2

Define ‘AUSTERITY MEASURES’

Answer 2

Strict economic policies used by governments to manage public debt.

Question 3

There are 2 main types of austerity measures:

Answer 3

Higher taxes (revenue generation) to fund government spending revenue generation
Lower government spending

Question 4

Name the five international organisations, and the dates they were established, and the amount of member countries

Answer 4

World trade Organisation (1995) - 164 members - 25 Observers
International Monetary Fund (1944) - 191 members
The World Bank (1994) - 189 members
The United Nations (1942) - 193 Members
Organisation for Economic Cooperation & Development (1961) →- 38 Members

Question 5

What is the overall simple job of the World Trade Organisation

Answer 5

1. To implement and enhance global trade agreements
2. Resolve trade disputes between countries
3. Provides a forum for negotiating trade agreements to reduce trade barriers
4. Ensures an even playing field for all, thus stimulating overall economic growth

Question 6

Why might one country need the WTO to help settle a dispute

Answer 6

If a country feels that their trading partners are being unfair or not following WTO obligations and is suffering harm or economic decline or lack of resources as a result.

Question 7

Give one statistic about the World Trade Organisation?

Answer 7

Since its formation the WTO has overseen a halving in average tariff rates among member countries, and has had some success in negotiating further agreements to free up world trade.

Question 8

What is the overall simple job of the International Monetary Fund?

Answer 8

1. Maintain international financial stability, particularly in FOREX
2. Long-term: supports free trade of G&S, movement of finance and capital throughout world markets.
3. Helping countries which are currently in trouble and cannot get money by other means - loans
4. Surveillance; monitoring of economic developments, and providing policy advice, aimed at crisis-prevention and financial stability, particularly in relation to forex + lending in external stability crises.
5. In situations where a financial crisis occurs in an economy, the IMF plays a critical role in minimising the crisis in the short-term, often developing ‘rescue packages’ to help stabilise an economy.

Question 9

How does the IMF remain financially stable when giving out leans?

Answer 9

Forces countries to implement austerity measures prior to lending money.

The IMF often requires countries to change their economic policies and open up their markets before they receive financial assistance; the policies that the IMF require countries to adopt are generally known as structural adjustment policies, which include reducing the size of government, privatising government businesses, deregulating markets and balancing government budgets.

Question 10

What is the main role of the world bank?

Answer 10

Primarily concerned with helping poorer countries with their economic development; it is one of the world’s largest sources of funding and knowledge for developing countries, with a commitment to reducing poverty, increasing shared prosperity, promoting sustainable development and addressing climate change.

Question 11

What are the two goals of the world bank?

Answer 11

1. Reducing the rate of extreme poverty to less than 3% of the world’s population by 2030.
2. Reducing inequality by fostering income growth for the world’s bottom 40%.

Question 12

How is the world bank funded and what does it do with these funds?

Answer 12

Funded by contributions from member countries and from its own borrowings in global financial markets; it makes loans to developing countries, at rates that are below standard commercial rates ( Subsidised ), to fund infrastructure projects.

Question 13

What is the main role of the united nations

Answer 13

Broader than any other organisation, covering :
- the global economy
- international security
- the environment
- poverty and development
- international law and global health issues
- it also sets goals for, calculates and publishes the HDI.
- international agreements to enforce human rights

Question 14

What is a drawback of the united nations power?

Answer 14

It doesn’t have any direct decision-making power as it relies on the support of its member states and the budgets for the different arms of the United Nations are small compared to national governments in many advanced economies.

Question 15

How does the UN effect trade?

Answer 15

Supporting greater linkages between economies and promoting globalisation; a range of different UN agencies have developed international standards that make it easier for trade and investment flows to occur between nations

Question 16

What are the main roles for Organisation for Economic Cooperation & Development

Answer 16

Committed to democracy and open markets; it sources statistical and qualitative information from member governments and uses this information to advise governments on how to foster prosperity.

The main role played by the OECD is to conduct public research on a wide range of economic policy issues and to coordinate economic cooperation among member nations, such as towards the development of common policy agendas.

Question 17

What is the primary goal for the Organisation of Economic Cooperation and development

Answer 17

The primary goal is to promote “policies to achieve the highest sustainable economic growth and employment, and a rising standard of living in member countries while maintaining fiscal stability, thus contributing to the development of the world economy.”