KEY WORDS - Adjustment: policies aimed to improve economical situation in the country usually by cutting governmental expenditures, by privatizing company. - Bretton Woods system: set up of rules institution and procedures to negotiate international monetary international often ww2. - Political Base: A) concentration of power in a small members of state, B) existence of a cluster of important interest share by those states, C) presents of a dominated power willing or able to assume a leading road. - Members set up the IMF and World bank to manage exchange rate, issue international liquidity, and debt balance of payments crises. - Interdependence: is a phenomena of dependencies of countries each other. this requires coordination of national economy policies and discipline information of domestic policies. Interdependence has led to common government of developed countries. - Globalization is a dense network of international flow of goods, services, capital information, ideas, and people that link most of the world after 1989. 3 fractions of IMF: - - Liquidity is the liability of currencies or high values substances to allow countries to engage to international exchange to settle their countries Adjustment Confidence is the perception on the path … and investors that the financial system is not dangerous of collapse. Parity: is the central value of given currency relative to the currency to which it s fixed or pegged. Convertibility: is an ability (upgrade) of currency that enable its holders to freely exchange it into another currency or into gold. Marshall plan: is a programmer of US to give loans as an aid to European countries functions: to present EU Denomie from collapse often ww2 and to play a key role and present formation of communism in western Europe. Bond of Int. settlement s(BIS) an organization among central bonds created to help monetary and financial stability. Federal Reserve: Central branch of USA G-10 Industrial countries forum for discussion and exchange inf, negotiation monetary reforms, mechanism to manage crises. General Agreements (GAB) to Borrow is a found created by G-10(11countries) to help 10 manage changes in exchange rate. Special Drawing Rights: artificial international reserve unit created by IMF in 1968 that can be used to settle account among central banks Eurocurrencies is currency held outside the countries of issues such as dollars(Eurodollars) deposit in banks outside in US mostly in Europe. August 15, 1971 the end of Bretton system (1945-1971) Nixon Shock: Dollar is no longer convertible in gold. 10% surcharge to import of USA. - Smith Oman Agreement: 10% devaluation of dollars, Gold +- 2.75% floating of exchange rate of parity, cancellation of 10% surcharge of USA import Committee of 20 to manage world monetary reserves, establish a commonly accepted currency to create new adjustment mechanism. Debt Crisis: happened with newly-industrialized countries G-7 major industrial powers Monetarism: is the theory about managing growth of the nation’s money supply. Supply-side economics: is a program in which there is a reduction in taxation, quote will stimulate saving, investment growth. New Agreements to Borrow: 25 countries after peso crisis Has the world economy entered era of de-globalization? Yes, the phase of globalization is over. We are moving towards nationalism, regionalism, ans individualism. Will China’s “one belt one road initiative” promote economic globalization? Yes, it will, because it’s the first large belt between east and west Why did the united-states have a serious twin deficit problem in the 1980s From 1980 to 1986, the federal budget deficit increased from 2.7 percent of GDP to 5 percent of GDP ($220 billion) and the current account deficit increased from 0 to 3.5 percent of GDP ($153 billion). The two were called the “twin deficits” because they increased about the same amount and they derived from some of the same economic fundamentals. Many policymakers and economists were concerned about both deficits, in part because each implied a growing debt burden and growing investment-service payments. The current account deficit was a particular concern, because investment-service payments go abroad Why did Britain and Italy leave the European monetary system in 1992? The beginning of the 1990s, due to High German interest rate, set by the Bundesbank to counteract inflationary effects related to excess expenditure on German reunification, caused significant stress across the whole of the ERM. The UK and Italy had additional difficulties with their double deflict, while the UK was also hurt by the rapid depreciation of the United States Dollar – a currency in which many British exports were priced – that summer. Issues of national prestige and the commitment to a doctrine that the fixing of exchange rates within the ERM was a pathway to a single European currency inhibited the adjustment of exchange rates. In the wake of the rejection of the Maastricht Treaty by the Danish electorate in a referendum in the spring of 1992, and announcement that there would be a referendum in France as well, those ERM currencies that were trading close to the bottom of their ERM bands came under pressure from foreign exchange traders. In the months leading up to Black Wednesday, George Soros had been building a huge short position in pounds sterling that would become immensely profitable if the pound fell below the lower band of the ERM. Soros recognized the unfavorable position at which the United Kingdom joined the ERM, believing the rate at which the UK was brought into the Exchange Rate Mechanism was too high, their inflation was also much too high (triple the German rate), and British interest rates were hurting their asset prices. Soros made over £1 billion in profit by short selling sterling and hence On 13 September 1992 Italy decided to devalue Italian Lira by 7% (other currencies revalue of 3.5%: Lira devalues 3.5% and .On 16 September 1992 UK withdrew from ERM. and On 17 September 1992 Italy withdrew from ERM. May the situation of the US subprime mortgage crisis repeat in China? In my opinion it may not. There are three main reasons for this: One of which is that China's minimum down payment is keeping at 30% level, which provides a basic guarantee. The second, banks are not as developed as the United States’, they act more sensibly with tighter lending scrutiny and stricter control over risk. And the third, Chinese buyers are more responsible than American buyers; usually Chinese buyers buy a home when they have some wealth and when they know that they would be able to pay for mortgage. These entire mean that China’s banking sector is very safe. What was the cause of Japan’s bubble economy burst in the 1990? The bubble was caused by the excessive loan growth quotas dictated on the banks by Japan's central bank, the Bank of Japan, through a policy mechanism known as the "window guidance. As economist Paul Krugman explained, "Japan's banks lent more, with less regard for quality of the borrower, than anyone else's. In doing so they helped inflate the bubble economy to grotesque proportions." Why did small countries, like Greece, break into a debt crisis when government debt/GDP is very high (>100%), while big high-indebt countries, like the United States (>100%) and Japan (>250%), are not worried about a debt crisis? How did Greece and the EU get into this mess in the first place? The seeds were sown back in 2001 when Greece adopted the euro as its currency. Greece had been an EU member since 1981 but couldn't enter the eurozone. Its budget deficit had been too high for the eurozone's Maastricht Criteria. All went well for the first several years. Like other eurozone countries, Greece benefited from the power of the euro. It lowered interest rates and brought in investment capital and loans. France and Germany were also spending above the limit at the time. They'd be hypocritical to sanction Greece until they imposed their own austerity measures first. There was uncertainty on exactly what sanctions to apply. They could expel Greece, but that would be disruptive and weaken the euro. The EU wanted to strengthen the power of the euro in international currency markets. A strong euro would convince other EU countries, like the United Kingdom, Denmark, and Sweden, to adopt the euro. As a result, Greek debt continued to rise until the crisis erupted in 2009. “US and Japan’s experience confirms that a debt crisis is difficult to imagine in a country that issues debt in its own currency, has a flexible exchange rate, and controls its central bank,” Which country benefits most from globalization? Industrialized and developed countries benefit more from globalization Why did the era of economic globalization begin from 1989? With the collapse of the Soviet Union in 1989 and the end of the Cold War in 1991, the world became more interconnected. This is because the communist bloc countries, which had previously been intentionally isolated from the capitalist West, began to integrate into the global market economy. Trade and investment increased, while barriers to migration and to cultural exchange were lowered. Technological advances, including mobile phones and especially the internet, have contributed to globalization by connecting people all over the globe. The World Wide Web links billions of people and devices, providing innumerable opportunities for the exchange of goods, services, cultural products, knowledge, and ideas. CLASS QUESTIONS Chapter 01 International Economic Relations F15401022 TESFAYE, EDEN GETU International Economic System Interdependence Economics; Who (which country) benefits most from the economic globalization? Why? F15401041 BAKHADDA， OMAR The Bretton Woods System Liberal Capitalism; Why did the era of economic globalization begin from 1989? F15401051 KARA, MAHSUM Interdependent System Anti-Globalization Movement; As the big data era comes, will the planned economy system return in the future? Why? W15401005 YEHUALASHET FIREW BEKELE Economic Globalization System Global Economic Governance Has the world economy entered the era of de-globalization? Why? W15401006 AMANUEL LESANU TAMIRE Hegemonic Stability Theory Deregulation Will China's ‘One Belt and One Road Initiative’ promote economic globalization? Why? Chapter 02 International Economic Relations W15401008 RIDWAN ABDULLAHI International Bank for Reconstruction and Development Supply-side economics Why did the United States have a serious twin deficit problem in the 1980s? W15401012 BEKHRUZ ABROROV European Payment Union Plaza Agreement Why did small countries, like Greece, break into a debt crisis when government debt/GDP ratio is very high (>100%), while big high-indebt countries, like the United States (>100%) and Japan (>250%), are not worried about a debt crisis? W15401013 MUHAMMED RASHIQ Special Drawing Rights Framework of US-Japan new economic partnership Why did Britain and Italy leave the European monetary system in 1992? F16401006 UTOCHKINA, OXANA The Eurodollar Market Financial "Big Bang" Will the story of America's subprime mortgage crisis be repeated in China? F16401009 ILISA NYAKWEZI, LAURA JULIETTE Smithsonian agreement Sovereign wealth funds What was the cause of Japan's bubble economy burst in the 1990? Chapter 03 International Economic Relations F16401015 KOESMO, ANTONIO PRATAMA Smoot-Hawley Tariff Act 1930 Unfair Trade Practice In the era of economic globalization, the World Trade Organization (WTO) was established under the leadership of the United States. Why does the United States want to leave the World Trade Organization now? F16401016 SARI, VANIA NOVITA International Trade Organization USMCA Agreement In 1973, Britain decided to join the European Community based on the results of the referendum, and in 2016, Britain decided to leave the European Union based on the referendum, too. Why is Britain so inconsistent? F16401017 GOZALI, BARLYANZA Most Favored Nation Code on Government Procurement Many countries over the world have adopted or are adopting industrial policies to promote the rapid development of certain industries in their own countries. But why do other countries often object to these industrial policies? F16401018 KUSNADI, CHRISTIAN MARTIN Dispute Settlement Mechanism WIPO Why are major agreements, among developed countries, or between developed and developing countries, delayed in the elimination of agricultural subsidies? F16401026 JEFERY, FERDIAN Reciprocity NAFTA Affiliate Agreement on Environmental and Labor Practices Why is there no great breakthrough in the Doha Development Agenda negotiations and therefore the risk of failure? Chapter 04 international economic relations F16401028 JO, SAMUEL JORDAN FDI K-K model Why did the 1995 negotiation of the 'Multilateral Agreements on Investment' fail? F16401042 MUGISA, ATENYI SALOMON MNC Strategic Alliance Tariffs Jumping Hypothesis Why does the United States restrict other countries' investment in its high-tech enterprises on the grounds of threat to national security? F16401044 WIBOWO, ANDHIKA Global 500 Foreign Investment Review Agency Japan is a big outbound investor, but the amount of foreign direct investment it absorbs is very limited. Why does this asymmetry occur? F16401045 TANDIJO, FELISIA Private Equity The Exon-Florio Amendment In the 20th century, international direct investment mainly occurred among developed countries, but in 2017, the volume of foreign direct investment attracted by developing countries and transition countries accounted for about half of the total amount of foreign direct investment inflow. Why does this happen? F16401046 SULAIMAN, JULIUS Leveraged Buy-Out, LBO DTT What are the negative impacts of the investment and operation activities of transnational corporations on home country and host country, respectively? Chapter V of International Economic Relations: Financial flows to developing countries F16401054 MURINDABYUMA, IZERE HONORE Official Development Assistance The (James) Baker Plan Why did the strategic linkage of development assistance to third world countries with their foreign policies in the United States and the Soviet Union ultimately fail during 1950s-1970s? F16401055 BOBONA, KALOMBELOMBE AIME International Finance Corporation Emerging Market Why did the US rush to help Latin America out of its debt crisis in the 1980s? F16401058 BAYANMUNKH, MUNKHTUGULDUR Group of Seventy-Seven (G-77) Dollarization What were the common causes of many currency crises in the 1990s? F16401059 BONGERIZE, ENGALA ESTHER International Fund for Agricultural Development, IFAD UN Millennium Development Goal Is the official development assistance bound to have a positive impact on the economic development of recipient countries? F16401061 GUYANTO, BENEDICTA GRACE Capital Flight The Fourth World Why didn't China fall into the financial crisis in the 1990s? Chapter 06 International Economic Relations: Trade and Development Strategies F16401079 BAGUMA, CHWA JOVITH Import Substitution Industrialization Developmental State Why have most developing countries not joined the international trading system under the Bretton Woods system represented by the general agreement on tariffs and trade? F16401095 HASSAN IBRAHIM DUALE, AHLAM Raul Prebisch Multi-Fiber Arrangement, MFA What achievements have been made by developing countries in the struggle to establish a new international economic order during 1970s-1980s? F16401114 MUSHI, YUSUF HASSAN United Nations Conference on Trade and Development, UNCTAD The Uruguay Round What problems have arisen in the implementation of the export-oriented growth strategy? F16401146 BIDARI, NEWAL ADEM Generalized System of Preferences, GSP Cairns Group Why do the spaghetti bowl effect caused by multiple overlapping bilateral and multilateral regional trade agreements have a negative impact on economic globalization? F16401151 LEKUYE BRENDA ADAAN Lome Convention BRICS Why did the import of developed countries from China increase significantly between 1983 and 2003? The Seventh Chapter on International Economic Relations F16401153 MWAISAKA EVANCE VENANCE Gravity Equation Model Export Processing Zones What are the main political factors influencing the location choice of FDI? F16401154 SOMAGA, GELILA SHWASHER Cross-border M&As BIT What aspects did the 1970s criticism of the role of multinational corporations in economic development focus on? F16401158 CHAKILA, NHAMBI ANDREW Spill-over Effect Trade-related Investment Measures, TRIMs How do multinationals intervene in home and/or host country politics? F16401165 NUR, SABAH AHMED HANDULE Calvo Doctrine Global Value Chain What are the main aspects of the pragmatic policies adopted by the southern countries on the northern TNCS since the 1980s? F16401166 SANTOSO, YONATHAN MIGA Outsourcing What impact has the rise of the international production network had on the capitalists and the working class in the northern countries? International Economic Relations Chapter 08 F16401190 BOVORO CHRISTIAN Seven Sisters Oil-for-Food Program What impact might the implementation of the United Nations Framework Convention on Climate Change (UNFCCC) have on future oil markets? F16401193 MASAWE JACQUELINE JOHN Economic Sanctions Caspian Pipeline Consortium What impact did the oil have on the U.S. invasion in Iraq in 2003? F16414068 MOHAMED AZUMEER Organization of Petroleum Exporting Countries, OPEC GazProm How does China advance its oil security strategy through foreign policy? F15401057 AHMED, GABER ABOBAKR OTHMAN Colonel Muammar al-Qaddafi The Great Game in Caspian Sea Why did world oil prices reach $140/barrel in the summer of 2008? F17412004 DAMARIO，FAUZANO ANDARU Organization of Arab Petroleum Exporting Countries, OAPEC Switch Producer Why was Saudi Arabia reluctant to remain OPEC's leadership in the late 1980s? F17412021 ANGELITA, MICHELLE International Energy Agency Seller's Market How does the Caspian Sea's oil resources affect the great games among the world's major powers? Alina The 1978 Revolution in Iran Group Theory Why hasn't the cartel of other exporters of raw materials or agricultural products been as successful as OPEC?