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International Political Economy
| Question | Answer |
|---|---|
| What is International Political Economy? | the study of the intersection of politics and economics |
| What is Mercantilism | Objective:increase the relative wealth and power of the state by creating a BALANCE OF PAYMENT surplus |
| What is Balance of payment | more money coming in than going out |
| what is the Method of mercantilism | tariffs and nontariff barriers (i.e. protectionism) |
| What is the objective of Commercial Liberalism | Objective: maximize economic gains throughout the entire economic system (i.e. market efficiency) |
| who was Adam Smith | Father of Microeconomics, wrote the Wealth of Nations |
| what is the Method of Commercial Liberalism | FREE MARKETS and the removal of barriers to trade (i.e. laissez faire) |
| what is Keynesianism | Government intervention needed to correct market inefficiencies, particularly during economic crises; same goal as commercial liberalism |
| who was John Maynard Keynes | Father of Macroeconomics |
| What institutions came from Bretton Woods (1944) | Institutions: World Bank, International Monetary Fund, Dollar Convertibility, International Trade Organization (ITO) |
| what does the World Bank do? (IGO) | Provide DEVELOPMENT LOANS to Global South countries |
| What does the World Bank help to finance? | Helps finance large CAPITAL PROJECTS in support of economic development |
| What country is the President of the World Bank always from? | president of the world bank is always a US citizen |
| what is the role of the board of governors in the world bank | Board of Governors: sets overall policy of the bank |
| How are voting rights determined in the world bank | voting rights based on each state's financial contributions |
| what is the Internatinal Monetary Fund (IMF) | Provides short term loans to members with FINANCIAL PROBLEMS |
| what is the IMF Quota | money paid into IMF by member states; amount based on each state's relative economic wealth; determines how much each state can borrow and its voting rights |
| what are Special Drawing Rights (SDRs) | IMF currency used only for financial transactions between member states; value tied to euro, dollar, yen, and pound sterling |
| the Managing Director of IMF is always from... | Always European |
| what became the worlds currency with dollar convertibility | After WW2, US dollar became world's currency;US dollar tied to gold at a FIXED EXCHANGE RATE ($35 per oz. of gold) |
| how are other currencies tied to the US dollar | All other currencies values tied to US dollar at relatively fixed rates |
| Who ended dollar convertibiltiy | richard nixon |
| what is Floating Exchange Rate | currency values set by the market |
| what is the Group of 20 G20 | Meeting of finance ministers and central bank governors from 19 countries and the EU |
| what is thePurpose of G20 | coordinate international economic policy; agreements are voluntary; has no permanent organization structure. Chair rotates b/w member states (currently france) |
| Free Trade: Internation trade Org. ITO | Havana Charter signed in 1948; Rejected by US Senate |
| waht is (GAAT) | General Agreement on Trade and Tariffs; signed by 23 countries in 1947 |
| what is the Objective of GAAT | encourage global trade by reducing tariffs |
| what is Most Favored Nation (MFN) | tariff preferences granted to 1 GAAT state, must be granted to all others exporting the same product |
| what are some weaknesses of GAAT | several types of goods exempted from GAAT rules (ex. textiles/clothing); did not cover services (ex. banking, insurance, delivery, telecommunications, tourism) |
| what are more weaknesses of GAAT | did not address intellectual property (Patents, copyrights); Difficulties reaching on nontariff barriers;lacked enforcement mechanism |
| what came out of the Uruguay Round (1986-94) | Marrakesh Agreement |
| what did the Marrakesh Agreement create? | created the World Trade Organization WTO |
| marrakesh agreement expanded trade rules to what? | expanded trade rules to cover textiles/clothing, services, intellectual property, nontariff barriers |
Created by:
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