Quiz 2: Managing Globalization
Know the meaning and significance of the following terms
IMF, World Bank, and WTO:
organizations responsible for international finances (International Monetary Fund, World Bank, and
the World Trade Organization); also lends money for private loans, bailout developing countries from defaulting on loans, set rules for
international trade, etc.
WTO is not an institution, but more of a forum for trade negotiations, for administering WTO trade
agreements, for resolving trade disputes, monitor national and foreign trade policies and provides technical assistance and training for
increasing economic interdependence of national economies across the world through a rapid increase in
cross-border movement of goods, service, technology and capital
Conditionality (of IMF loans):
conditionality’s are typically employed by the IMF, the World Bank, or a donor country when a
country is in debt to private creditors, the IMF essentially will try to bail them out.
May provide short-term, lower interest loans to the
country so they will be able to pay the creditor back; only give if they agree to the conditional terms.
Conditionalities may involve
relatively uncontroversial requirements to enhance aid effectiveness, such as anti-corruption measures, but they may involve highly
controversial ones, such as austerity or privatization of key public services, which may provoke strong political opposition in recipient
originally coined in 1989 by Williamson to describe a set of ten specific economic policy prescriptions that
he considered should constitute that ‘standard’ reform package promoted for crisis-wracked developing countries by IMF, World
Bank, US Treasury, etc
Imagined a unilateral process of trade reform, by which countries other than the US would lower their non-tariff and tariff
barriers to imports
sudden release of price and currency controls, withdrawal of state subsidies and immediate trade liberalization
within a country.
Also may include large scale privatization of preciously public owned-assets.
This happens too quickly and the
people are usually not prepared for it (ex: Russia, when they’re rapid liberalization led to high inflation, money leaving the country,
process of government programs becoming more applicable and efficient in the private sector of the market, thus
becoming privately owned (ex: waste management)
large emigration of individuals with technical skills or knowledge, normally due to conflict, lack of opportunity,
political instability or health risks.
Brain gain is when there is a large immigration of technically qualified persons.
This can usually
be stopped by providing these individuals with career opportunities
goal was to eliminate barriers of trade and investment between the US, Canada and Mexico.
Brought the immediate
elimination of tariffs on more than one half of US imports from Mexico and more than one third of US exports.
Infant industry and infant economy arguments for protectionism: