ACTIVITY 1
1. The Bretton Woods System
At a 1994 conference of all World War II allied nations, the Bretton Woods Framework was
developed and named after the New Hampshire town where the agreements were drawn up. It
replaced the gold standard as the world currency with the U.S. dollar.
The Bretton Woods system/ arrangement is a completely agreed monetary order intended to
regulate monetary ties between independent states. The key features of the Bretton Woods
scheme were the requirement for each nation to follow a monetary policy that, by binding its
currency to gold, kept its foreign exchange rates within 1 percent. There was also a need to
resolve the lack of cooperation between other countries and to prevent currencies from being
competitively devalued. Under the deal, countries agreed to maintain fixed exchange rates
between their currencies and the dollar for their central banks. If the currency value of a nation
were too small compared to the dollar, the bank would buy its currency on the foreign
exchange markets.
2. General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO)
The General Agreement on Tariffs and Trade (GATT), signed by 23 countries on October 30,
1947, was a legal agreement that reduced barriers to foreign trade by removing or reducing
quotas, tariffs, and subsidies while retaining essential rules. The GATT, through the restoration
and liberalization of foreign trade, was intended to improve economic growth after World War
II. Rules were developed to put an end to or limit the most expensive and undesirable aspects
of the pre-war protectionist era, namely quantitative barriers to trade, such as trade
restrictions and quotas. The agreement also provided for a mechanism for the arbitration of
trade disputes between nations, and the arrangement allowed for a number of multilateral
tariff barrier reduction negotiations.
The World Trade Organization (WTO) was founded in 1995 and is an international agency that
regulates the rules of global trade between nations. It replaced the General Agreement on
Tariffs and Trade (GATT) of 1947, created in the aftermath of the Second World War. The WTO
is focused on agreements which are signed by the majority of trading nations in the world. The
organization's key role is to help manufacturers of products and services, exporters, and
importers secure and control their enterprises. The WTO has 164 member states as of 2019,
with Liberia and Afghanistan being the most recent members, entering in July 2016, and 23
observer countries.
3. The International Monetary Fund (IMF) and the World Bank
At an international conference held in Bretton Woods, New Hampshire, United States, in July
1944, the International Monetary Fund and the World Bank were both established. The
purpose of the conference was to build an economic partnership and development process that
would contribute to a more stable and productive global economy.
The International Monetary Fund (IMF), In order to help countries create and sustain strong
economies, the IMF facilitates international monetary cooperation and offers policy advice and
capacity creation support. The IMF also offers medium-term loans and supports countries in
developing economic programs to resolve balance of payments concerns when it is not possible
to secure adequate funds to meet net foreign payments. IMF loans are short and medium term
and are largely financed by the pool of quota contributions given by its members provide. IMF
workers are mainly economists with extensive macroeconomic and financial policy expertise.
The World Bank, providing technical and financial support to help countries reform those
industries or undertake specific programs, such as building schools and health centers,
providing water and energy, combating diseases, and protecting the environment, the World
Bank supports long-term economic growth and poverty reduction. World Bank aid is typically
long-term and is financed both by donations from member countries and through the issuing of
bonds. The employees of the World Bank are also experts in unique topics, industries, or
techniques.
4. Organization for Economic Co-operation and Development (OECD)
On Dec. 14, 1960, 18 European nations, plus the United States and Canada, formed the OECD. It
has evolved to include representatives from South America and the Asia-Pacific region over
time. It concerns most of the highly developed economies in the world.
The Organization for Economic Co-operation and Development (OECD) is a group of 37
member countries participating in economic and social policy debate and development.
Usually, OECD members are democratic countries supportive of free-market economies. Its
stated aim is to form policies for better lives and promote stability, equality, opportunity and
well-being. They seek to develop international standards based on evidence and find solutions
to a number of social, economic and environmental challenges. They provide a unique platform
and information center for data and analysis, exchange of views, best practice sharing, and
advice on public policies and international standard-setting, from enhancing economic growth
and job development to supporting strong education and combating international tax evasion.
The company has its headquarters in Paris, France, at the Chateau de la Muette.
5. The Organization of the Petroleum Exporting Countries (OPEC), & the European Union (EU)
The Organization of Petroleum Exporting Countries (OPEC) is a coalition of 14 of the most
powerful oil-exporting nations in the world. OPEC was established in 1960 to coordinate its
members' petroleum policies and to provide technical and economic assistance to the Member
States. In an attempt to set the price of oil on the world market, OPEC is a cartel aimed at
controlling the supply of oil in order to prevent fluctuations that could impact the economies of
both the producing and consuming nations. Iran, Iraq, Kuwait, Saudi Arabia and Venezuela (the
five founders), plus the United Arab Emirates, Libya, Algeria, Nigeria and five other countries
are among the countries in relation to OPEC.
The European Union (EU) is a community of 27 nations. The euro is used by nineteen of these
countries as their official currency. The EU arose out of a desire to create a single European
political body in order to put an end to the centuries of war between European nations that
resulted in the Second World War and decimated most of the continent. In 1993, 12 countries
set up the European Single Market to guarantee the four so-called freedoms: movement of
goods, services, citizens and money.
ACTIVITY 2
1. What are the effects of the information revolution in today’s global market?
I think revolution of information is a time of transition that may prove to be important
to people's lives. Computer technology is at the center of this transition, Computers are special
machines; they help expand the capacity of the brain and man power. Computerized robots
have been replacing blue-collar workers and I think white collar workers will soon be replaced
as well. Since the mid-20th century, exponential growth in the manufacturing, distribution and
sales of information and communication technology (ICT) and other electronics has led to the
development of economies around the world. In addition, the way people conduct, connect,
work, communicate, play, learn, and live has been dramatically changed by ICTs and even the
efficiency of many processes has been improved by these innovations, and most organizations
and businesses are so dependent on these processes that they cannot work properly without
them. Furthermore, increased in rivalry in global market because of the information revolution,
this rivalry can be connected to the cost and price of goods and services, target market,
technological adaptation, fast production by businesses, etc. If a business produces at a lower
cost and sells cheaper, it will raise its market share.
2. What are the effects of multinational corporations in the Philippines economy?
In general, I think the presence of multinational corporations has a beneficial effect on
the economy of the Philippines. Most significantly, when the unemployment rate is relatively
high, they provide jobs that are very valuable and needed to a developing country like our
country, Philippines. Secondly, they train employees and introduce management knowledge
and new strategic plans and ideas to the country. As long as the government has laws in place
to prevent them from rigging the market because of their dominance, I think more foreign
multinationals should be welcomed by the Philippines.
3. Analyze socialism and capitalism in relation with the Philippine society. Which of
these economic systems would work in our country?
I think the Philippines should have a mixed economic system of socialism and capitalism
because even though the people are free to open any businesses they want, we still have to pay
taxes which will be allocated to different program and development of our country. Also, there
will be businesses that can be owned privately and there are some that are bounded by the
government. Moreover, our country is open to foreign trade and is controlled by private
enterprises, but the government controls certain economic sectors, such as taxation,
agriculture, health care, social security systems, etc. In my view, a mixed structure is the best
for our country because it promotes change and progress in the Philippines if it becomes an
obstacle to the progress, laws maybe passed to prevent this anyway.
ACTIVITY 3
1. Analyze the “Global” nature of multinational corporations?
In at least one country, other than its home country, a multinational corporation ( MNC)
has facilities and other properties. Generally, a multinational organization has offices and/or
warehouses in numerous countries and a centralized head office where global management is
organized. These corporations tend to have budgets that surpass those of several small nations,
also known as multinational, stateless, or transnational corporate organizations. A
multinational corporation that receives at least a quarter of its income outside its home country
is a multinational corporation, or multinational enterprise. In developed nations, several
multinational corporations are centered. Multinational proponents say that in nations that
otherwise would not have access to such opportunities or products, they build high-paying
employment and technologically advanced goods.
2. Do you think the positive effects of multinational corporations outweigh the negative
effects? Why or why not?
Yes, I think the positive effects of multinational corporations outweigh its negative
effects, because even though Multinational companies often have monopoly power which
enables them to make an excess profit, they still establish wealth and employment across the
globe. For emerging economies, multinationals' inward investment produces much needed
foreign currency. They also generate jobs and contribute to raising standards of what is
possible. Multinational companies participate in direct foreign investment. This helps generate
capital flows to economies that are poorer / developing. Although salaries may be low by the
developed world’s standards, there are better jobs than alternatives and help increase wages in
the developing world gradually. By western standards, MNCs which pay low salaries, but this is
arguably better than not having a job at all. Some multinationals have also responded to
complaints about workplace conditions and tried to strengthen them already.