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Global Business Environment > WTO, IMF AND THE WORLD BANK IN GLOBAL GOVERNANCE > Flashcards

WTO, IMF AND THE WORLD BANK IN GLOBAL GOVERNANCE Flashcards

1
Q

Why is international governance needed?

A

International Governance is needed:

  • To eliminate “Beggar thy neighbour” policies (e.g., trade protectionism)
  • To manage and control externalities (e.g., environmental pollution
  • To regulate, police and manage other problems (e.g., overfishing in the seas and oceans; greenhouse gases and the depletion of the ozone layer?

International cooperation between states is important to keep the world economy open and functioning.

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2
Q

What kind of international institutions are there?

A
  • International regimes: Principles, norms, rules, and decision- making procedures around which actor expectations converge in a given issue area (e.g., GATT, Kyoto Protocol)
  • International organisations: Legal and physical bodies that manage and implement international regimes (e.g., WTO)
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3
Q

What are the main international economic institutions today?

A

Finance:
- International Monetary Fund (IMF)
- Bank for International Settlements (BIS)

Trade:
- General Agreement on Tariffs & Trade
- World Trade Organization (WTO)

Aid and Development:
- World Bank
- United Nations Development Program (UNDP)
- Regional development banks

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4
Q

why were all the institutions created in the mid-1940s?

A

bretton woods

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5
Q

what was the goal of bretton woods?

A

to create a postwar economic environment to promote worldwide peace and prosperity

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6
Q

what happened in bretton woods?

A

When 44 countries met in Bretton Woods, New Hampshire in 1944, they created the Bretton Woods era.

Created at the end of WWII:

  • International Monetary Fund
  • International Bank for Reconstruction and Development (Official name of the World Bank)

It created a system based on the gold standard.

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7
Q

when did the bretton woods end?

A

Bretton Woods system ended August 15, 1971.

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8
Q

what are the objectives of the IMF?

A

It was established to:

  • promote international monetary cooperation and stability, by monitoring foreign exchange systems, and ensuring orderly exchange arrangements;
  • to foster economic growth and high levels of employment;
  • and to provide temporary financial assistance to countries to help ease balance of payments adjustment.
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9
Q

when was imf established?

A

1944

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10
Q

how many countries are in the imf?

A

190

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11
Q

facts about imf

A
  • $1 trillion is amount available for lending
  • 34 current lending arrangements
  • 76 recipient countries of emergency pandemic financing
  • $303 million for technical advice, training and learning
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12
Q

how does the membership in the imf work?

A

Open to any country willing to agree to rules and regulations. Membership requires payment (deposit) of a quota.

Quota size reflects the global importance of the country’s economy and political considerations.

The quota:

  1. determines voting power
  2. serves as part of official reserves
  3. determines country’s borrowing power
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13
Q

what are the top 10 countries in the weighted voting system of the imf decision making?

A
  • United States (17.43%)
  • Japan (6.47%)
  • China (6.40%)
  • Germany (5.59%)
  • France (4.23%)
  • United Kingdom (4.23%)
  • Italy (3.16%)
  • India (2.75%)
  • Russian Federation (2.71%)
  • Brazil (2.32%)
  • Canada (2.31%)
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14
Q

what is the largest and smallest member of the IMF?

A

The largest member of the IMF is the United States, with a current quota of SDR 42.1 billion (about $65 billion), and the smallest member is Tuvalu, with a current quota of SDR 1. million (about $2.78 million).

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15
Q

when was the The International Bank for Reconstruction And Development (World Bank) created?

A

The International Bank for Reconstruction And Development (World Bank) was created in 1945 with the following goals

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16
Q

what are the goals of the International Bank for Reconstruction And Development (World Bank)?

A
  • goal 1: help finance reconstruction of european economies (accomplished in mid 1950s)
  • goal 2: build the economy of developing countries
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17
Q

how does the membership in the world bank work?

A

The World Bank is like a cooperative, made up of 189 member countries as of August 2023. These member countries, or shareholders, are represented by a Board of Governors, who are the ultimate policymakers at the World Bank.

Membership requires payment (deposit) of a quota. Quota size reflects global importance of country’s economy and political considerations.

The quota:

  1. determines voting power
  2. serves as part of official reserves
  3. determines country’s borrowing power
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18
Q

how much were the IBRD (World Bank) subscriptions in july 2024?

A

IBRD Subscriptions as of July 2024 - $267 billion

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19
Q

what are the top 10 countries in the weighted voting system of the world bank decision making?

A
  • United States 15.49%
  • Japan 7.08%
  • China 5.87%
  • Germany 4.21%
  • France 3.86%
  • United Kingdom 3.86%
  • India 3.03%
  • Russian Federation 2.82%
  • Saudi Arabia 2.74%
  • Italy 2.58%
  • Canada 2.51%
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20
Q

when whas the BIS (Bank For International Settlements) created and why?

A

Established in 1930, Basel, Switzerland to manage Germany’s war reparation payments imposed by the Treaty of Versailles.

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21
Q

what are the roles of the BIS today?

A
  • The central bank of central banks
  • Ensures international cooperation of central banks and assists with monetary policy development.
  • Ensures that central banks maintain reserve assets and capital/asset ratios above prescribed international minimums to avoid over-indebtedness.
  • Lender of last resort.
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22
Q

how was the beginning of the GATT?

A

The General Agreement on Tariffs and Trade (GATT) was developed as part of the Havana, Cuba conference in 1947 (ITO). It provided forum for trade ministers to discuss barriers to international trade

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23
Q

What was the role of the GATT (1947-1994)?

A

to promote a free and competitive international trading environment benefiting efficient producers, accomplished by sponsoring multilateral negotiations to reduce tariffs, quotas, and other nontariff barriers.

24
Q

how many gatt negotiation rounds were there?

A

8:
Geneva (1947)
Annecy (1949)
Torquay (1950-1951)
Geneva (1956)
Dillon (1960-1962)
Kennedy (1964-1967)
Tokyo (1973-1979)
Uruguay (1986-1994)

25
Q

what is the history of gatt’s effect on world trade in goods?

A

From 1958 until 2001, the volume of world trade increased steadily. In 1960-1970, the momentum of postwar trade liberalisation pushed average trade growth to 8.1% per year, stimulating production and unprecedented economic growth. In 1970-1994, trade polcies suffered intensified protectionist procedures. The Uruguay Round challenges were to stimulate growth and to reestablish GATT’s credibility.

26
Q

true or false: after the uruguay round, developed developin and transitioning countries lowered their tariff averages

A

true

27
Q

how has the average tariff rates over time behaved for developing and developed economies?

A

While developed countries’ averafe tariff rates decreased slowlysince the 80s (approximately 9% in 1983 to less than 2% in 2011), developing countries’ have been decreasing very fast (31% in 1983 to less than 4% in 2011)

28
Q

true or false: the difference between the average tariff rates has been decreasing over time between developed and developing countries.

A

true

29
Q

what is the relationship between tariffs, world GDP and the volume of world trade?

A

the world gdp has been increasing rapidly since the 2000s, the average tariff applied has been decreasing rapidly, world exports have been increasing since the 2000s

30
Q

what are the differences between the gatt and the wto?

A

GATT focused on promoting trade in goods;
WTO’s mandate includes:
- trade in goods
- trade in services
- international intellectual property protection
- trade-related investment

WTO’s enforcement powers are stronger
It was established Doha Round Negotiations (2001)

31
Q

what are the functions of the wto?

A

The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by:
- Administering trade agreements
- Acting as a forum for trade negotiations
- Settling trade disputes
- Reviewing national trade policies

32
Q

what is the structure of the wto?

A

The WTO has 165 members (since 21 August 2024 ), accounting for over 98% of world trade. A total of 24 countries are negotiating membership (observers). Decisions are made by all members and typically by consensus.

33
Q

what are the wto’s trading system principles?

A
  • Without Discrimination: members should not discriminate their trading partners (all are granted “most favored nation status”) nor discriminate between their own and foreign products, services, or nationals (who receive “national treatment”)
  • Freer: members lower trade barriers through negotiations
  • Predictable: members agree not to arbitrarily raise trade barriers (including tariffs and nontariff barriers) against companies, inventors, and governments
  • More Competitive: the WTO discourages “unfair” practices such as export subsidies and dumping products below cost to gain market share
  • Beneficial For Less Developed Countries: the WTO gives less developed nations more time to adjust, greater flexibility, and special privileges
34
Q

what are the international development organisations?

A

World Bank
United Nations Development Programme (UNDP)
Regional development banks

35
Q

How does the world bank strive for international development?

A
  • Grants loans to states (different from IMF loans)
  • Funds infrastructure projects
  • Funds capacity-building projects (e.g., microcredit institutions and female literacy)
  • Provides technical assistance
  • Unlike IMF and “hard loan policy” – soft loan policy through the IDA
36
Q

how does the United Nations Development Programme (UNDP) strive for international development?

A

Provides technical assistance

37
Q

what are the top fy23 top borrowers?

A

pakistan
bangladesh
tanzania
kenya
congo

38
Q

where the biggest sectors in FY23 IDA Lending?

A

infrastructure
social services
public administration

39
Q

in 2021, how much was the net official development assistance and official aid?

A

more than 200 USD billion

40
Q

in 2021, how much was the net official development assistance and official aid?

A

less than 10 USD billion

41
Q

in 2022, what were the top receivers of world bank official development assitance?

A

ukraine
syria
Egypt
Bangladesh
ethiopia

42
Q

what are the some of the criticisms to these institutions?

A
  • Exploitation of developing countries: Fosters global inequalities
  • Profits before the security and well-being of workers (Child labour and Job loss in developed countries)
  • Profits before the environment (Race to the bottom (RTB) or “downward harmonization”)
  • Democratic deficit (IOs are not elected)
  • Undermines national sovereignty (More difficult to provide welfare state and IOs have their own liberal agenda)

The WTO’s success in lowering trade barriers has attracted protests. Many believe the WTO ignores the impact of its policies on human rights, the environment, and the wages and job security of workers.

43
Q

what were the top IMF borrowers as of august 2024?

A

argentina
ukraine
egypt

44
Q

true or false: a lot of countries have higher average tariffs on agricultural imports

A

true

45
Q

what are the key lessons of this class?

A
  • International cooperation between states is key to a prosperous world economy
  • International institutions are needed in order for globalization to succeed
    • Stable and open financial system: G-20, IMF and BIS
    • Stable and open trading system: WTO (GATT, GATS, TRIPS, TRIMS, etc.)
    • Financial and technical support for socio-economic development: World Bank, UNDP, regional development banks
  • Otherwise, instability, protectionism, depression and poverty are likely to prevail in most of the world
  • International institutions can only work as well as member states want them to
46
Q

what are the key instruments of government intervention regarding trade?

A
  • tariff
  • nontariff trade barrier
  • quota
  • investment barriers
47
Q

what are the consequences of protectionism?

A
  • Reduced supply of goods to buyers.
  • Price inflation.
  • Reduced variety, fewer choices available to buyers.
  • Reduced industrial competitiveness.
  • Various adverse unintended consequences (e.g., While the home country dithers, other countries can race ahead).
48
Q

what is the general rationale for intervention?

A
  • Tariffs can generate substantial government revenue. This is a key rationale for protectionism in undeveloped economies.
  • Helps ensure the safety, security, and welfare of citizens. e.g., Most countries have basic regulations to protect the national food supply.
  • Helps the government pursue broad economic, political, and social objectives for the nation.
  • Can serve the interests of the nation’s firms and industries.
49
Q

what is the defensive rationale for government intervention?

A
  • Protection of the national economy - Weak or young economies sometimes need protection from foreign competitors. e.g., India imposed barriers to shield its huge agricultural sector, which employs millions.
  • Protection of an infant industry - A young industry may need protection, to give it a chance to grow and succeed. e.g., Japan long protected its car industry.
  • National security - The United States prohibits exports of plutonium and similar products to North Korea.
  • National culture and identity - Canada restricts foreign investment in its movie and TV industries.
50
Q

what is the offensive rationale for government intervention?

A
  • National strategic priorities - Protection helps ensure the development of industries that bolster the nation’s economy. Countries create better jobs and higher tax revenues when they support high value-adding industries, such as I T, automotive, pharmaceuticals, or financial services.
  • Increase employment - Protection helps preserve domestic jobs, at least in the short term. However, protected industries become less competitive over time, especially in global markets, leading to job loss in the long run.
51
Q

how does the enforcement of the wto work?

A
  • Country failing to live up to the agreement may have a complaint filed against it
  • WTO panel evaluates complaint
  • If found in violation, the country may be asked to eliminate the trade barrier
  • If country refuses, WTO will allow complaining country to impose comparable trade barriers on the offending country
  • Furthermore, the offending country is not allowed to counter-retaliate.
52
Q

how does the wto trade dispute settlement work?

A
  • Step # 1: Consultation (60 days)
  • Step # 2: Creation of panel to investigate violations of WTO rules (45 days, Panel makes recommendations to settle the dispute: end practice or compensation, Time frame: within 1 year)
  • Step #3: Appellate Body (Within 1 year and 3 months)
  • If recommendations are not implemented, then member states can request DSB
53
Q

what’s going on with the doha round??

A
  • Start date: November 2001
  • Current status: ongoing
  • Main challenges: conflicts of interests in agricultural sphere
  • Named after The Fourth Ministerial Conference in Doha, Qatar.
  • Top negotiations topics:
  • Agriculture, Non-agricultural market access (NAMA),
  • Services Rules (anti-dumping; subsidies and countervailing measures, including fisheries subsidies; and regional trade agreements.),
  • Intellectual property: geographical indications and biodiversity,
  • Trade and environment,
  • Trade facilitation,
  • Special and differential treatment, Dispute settlement, E- commerce, etc
54
Q

what kind international private governance is there?

A
  • International Chambers of Commerce:
    • Respect of contracts
    • Standards on the rights and obligations of contracting parties (e.g. International commercial terms (Inco terms)
    • International arbitration tribunals
    • Goal : maintain commercial links and ease international trade
  • International accounting standards: IASB
  • Product and services standards: ISO
    (defined as an NGO)
55
Q
A

Global Business Environment (21 decks)

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