world 2019

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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.[6] 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?
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