Ch. 8 Chapter Notes

Multinational Corporations

Multinational Corporations

________ play a key role as engines of economic growth, providing international finance and items to trade.

US spending spree

The ________ was accompanied by the importation of cheap goods from China which caused an unsustainable trade imbalance with China and the oil- exporting countries.

Bretton Woods Conference

At the ________ in July 1944, world leaders agreed to create 3 institutions to facilitate worldwide economic coordination and development.

Financial loss

The ________ was as twice as great as the recession caused by the 2008, 2009 crisis.

Alexander Hamiliton

________ argued that such policies limit the competition domestic industries face from foreign producers, and using protectionist policies would protect the growth of the ner nations manufacturers.

Germany

________) the value of exported goods, services and investment income is greater than the value of imported goods, services, and investment income.

Automobile manufacturers

________ were required to include 75 % of their parts from a USMCA country to avoid having tariffs imposed and more parts were to be made by workers earning at least $ 16 an hour- provisions designed to boost auto production in the U.S. 2.

automatic patent

The removal of an extension of the length of time for copyright protection and ________ extensions caused the U.S. to leave but will rejoin CTPP if stronger labor and environmental provisions are renegotiated.

regional agreements

Bilateral and ________ are not becoming a stepping stone to global trade arrangements but rather an approach used when global negotiations have broken down.

Mercantilist government

________ encouraged exports over imports and industrialization over agriculture, protected domestic production against competition from imports, and intervened in trade to promote employment.

Non governmental organizations

________ (NGOs) are some of the major critics of WTO activities.

Soviet Union

The end of colonialization following the end of WWII led not only to geopolitical competition between the U.S. and the ________ but also to the emergence of newly independent states that were poor and lacking the material resources and expertise to deliver economic goods to their citizens.

Heckscher Ohlin Theory

The ________: Posits that countries will export goods that use the most intensive endowments of the state.

UN

The ________ has undertaken the tasks of setting and monitoring a broad set of development goals that emphasize not just GNI per capita but also other indicators of human development like education and health.

Mercosur

________ wished to reach an agreement with the EU to eliminate tariffs, open up of government procurement to companies, and more stable rules for trade and investment.

Organizations

________ are the major determinant of a states policy, which states providing market rules and a level playing field.

NDB

The ________ was founded by Brazil, Russia, India, China, and South Africa referred to as the BRICS.

AIIB

The ________ supports loans to stimulate long- term growth through massive investment in diverse infrastructure related to energy, transportation, and water.

Britain

________ facilitated trade by lowering its own tariffs, opening its markets, policing the sea, and encouraging investment abroad.

Microcredit

________ does offer clients freedom in how the funds are used, even though it does not transform their lives.

Grameen Foundation

Using a variety of funds, the ________ gives microloans, savings accounts, and other financial services, programs have been incubated in India, Indonesia, the Philippines, and Ethiopia, among others.

IFC

The ________ provides loans to promote the growth of private enterprises in developing countries.

USMCA

The ________ was initiated by Trump and made changes in 5 areas.

1986

In ________, the Uruguay Round began, convering new items such as telecommunications, financial services, insurance, intellectual property rights (copyrights, patents, trademarks) and agriculture.

Petroleum

________ is a key commodity necessary for economic growth in the industrial era and a major driver of economic success for the oil- exporting countries that depend on revenue for foreign exchange.

Economic Nationalism

________ has seen a resurgence in the 21st century.

2001

In ________, the UN sponsored Millennium Summit set forth 8 goals designed to reduce proverty by 2015 and promote sustainable human development in direct response to globalization.

MDG

The ________ goals included poverty reduction, better education, improved health, environmental sustainability and global partnerships and these goals had specific targets, time frames and performance indicators.

Exchange Rates

________: The price of money depends on, and the price of one currency in relation to another.

Nontariff Barriers

________: the restrictions on international trade designed to protect health, safety, or national security.

1980s

The ________ saw a shift toward reliance on private- sector participation to meet the task of restructuring economies and reconstructing states torn apart by ethnic conflict.

MNCs

________ engage in activities such as investing in foreign countries, importing and exporting goods and services, negotiating licenses in foreign markets, and opening facilities abroad.

General Agreement

________ on Tariffs and Trade (GATT): Founded by treaty as the Bretton Woods institution responsible for negotiating a liberal international trade regime that included the principles of nondiscrimination in trade and most facored nation status; reformed as the World Trade Organization.

Austrialia

CPTPP: Japan, ________, New Zealand and 11 other states signed the Comprehensive and Progressive Trans- Pacific Partnership.

Adam Smith

________ believed that human beings act in rational ways to maximize their self- interest.

IMF

________ was supposed to provide short- term loans for member states confronting temporary balance of payments deficits but it was expanded to include policy advice on macroeconomic issues and economic restructuring.

Tariff policies

________ may be used to protect the domestic economy, the consumer, new industries, and even national security.

Losses

________ may result from expropriation, government currency restrictions, or civil war or ethnic conflict.

SDG

The ________ includes 17 goals such as ending poverty and hunger, ensuring healthy lives in safe and inclusive cities, and developing reliable and sustainable modern energy supplies.

Alexander Hamilton

________ advocated protectionism.

national security

The EU adopted the CAP because of agricultural supplies and foodstuffs are vital for ________.

stigma of conditionality

Monitoring loans is also done more quietly to reduce the ________.

NGOs

Involving ________ in development was one approach for improving the accountability and effectiveness of both multilateral and bilateral donor programs.

Asian financial crisis

The ________ of the 1990s is an example of the possible outcomes of the globalization of finance.

NAFTA

________ also caused the negative outcome of the slide in real manufacturing wages due to the movement of lower skilled jobs to China; the failure to develop backward linkages in its main export sectors; and the relative stagnation of Mexican wages with poverty remaining about the the same level.

intellectual property

The WTO incorporated the general areas of the GATTs jurisduction and expanded jurisdiction in services and ________.

European Monetary Union

The ________ set forth in the Maastrict Treat in 1992, called for the establishment of a single currency, the euro; it became the unit of exchange for business in 1998 and for consumers in 2002.

IDA

The ________ provides capital to the poorest countries usually in the form of interest free loans.

International Monetary Fund

________ (IMF): Institution to guarantee exchange- rate stability; today its purpose is to act as a lender of last resort to keep debtor countries from collapsing.

Bretton Woods institutions

The ________ did not include actual surveillance and temporary fixes for richer countries or the economically strong United States.

Economic Liberalism

Ideas based on Adam Smith that when individuals pursue their own self-interest, efficiency for everyone is achieved; markets function best when governments interfere the least

Mercantilism

Economic theory that international commerce should increase a states wealth, especially gold; state power is enhanced by a favorable balance of trade

Protectionism

policies designed to restrict imports from other countries

Economic Nationalism

Modern version of core mercantilist ideas that economic policies should be subservient to the national interest

Economic Radicalism

Beliefs drawn from Marxist and neo-Marxist writing that poor labor conditions, colonial expansion, and divisions between the rich and poor are blamed on international capitalism

Beggar Thy Neighbor Policies

Policies designed to solve a states own economic problems at the expense of others

Currency Devaluation

Reducing the price of your currency to make your exports more competitive in other countries and imports from those countries more expensive in your own

Macroeconomic Policies

Government policies designed to address macroeconomic conditions, including fiscal and monetary policies

Fiscal Policies

affect a governments budget, including the level of government spending and the tax rates

Monetary Policies

Policies affecting national interest rates or exchange rates designed to affect employment and inflation rates

Microeconomic Policies

Policies on regulation, subsidies, competition, and antitrust actions

Exchange Rates

The price of money depends on, and the price of one currency in relation to another

Tariffs

The taxes on goods and services crossing borders

Nontariff Barriers

the restrictions on international trade designed to protect health, safety, or national security

Current Accounts

Measure the net border flows between countries of goods, services, governmental transfers, and income on capital investments

Capital Accounts

Measure the flows of capital between countries, including foreign direct investment and portfolio investment in and out

Balance of Payments

A countrys current and capital account balances

MNC/Multinational Corporations

Corporations that span state borders either through their actual presence in several countries or through investment in and trade with other corporations within them

World Bank

A global lending agency focused on financing projects in developing countries; formally known as the International Bank for Reconstruction and Development established as one of the key Bretoon Woods institutions to deal with reconstruction and development after WWII

AIIB

Asian Infrastructure Investment Bank

NDB

New Development Bank

BRICS

An informal group of emerging economic powers, including Brazil, Russia, India, China and South Africa

International Monetary Fund (IMF)

Institution to guarantee exchange-rate stability; today its purpose is to act as a lender of last resort to keep debtor countries from collapsing

Group of 7 (G7)

Group of the traditional economic (U.S., Great Britain, France, Japan, Germany, Italy, Canada) who meet annually to address economic problems; when Russia joins, the G8 discussions turn to political issues

Bank policies that have been rigidly developed without considering local conditions and local knowledge end up disproportionately affecting the disadvantaged sectors of the population

the unskilled, women, and the weak

General Agreement on Tariffs and Trade (GATT)

Founded by treaty as the Bretton Woods institution responsible for negotiating a liberal international trade regime that included the principles of nondiscrimination in trade and most facored nation status; reformed as the World Trade Organization

1/4 liberal principles for the GATT

Support of trade liberalization, because trade is the engines for growth and economic development

2/4 liberal principles for the GATT

the most favored nation principle

3/4 liberal principles for the GATT

Preferential access in developed markets to products from the less developed countries to stimulate economic development

4/4 liberal principles for the GATT

support for national treatment of foreign enterprices

Most Favored Nation Principle

Nondiscrimination in trade whereby states agree to give the same treatment to all other GATT members as they gie to their best (most-favored) trading partner

National Treatment

Treating foregin enterprises in the same way that domestic firms are treated

Exemptions

safeguards to accomodate any domestic or balance of payments difficulties that might result from existing trade agreements

Trade Policy Review Mechanism (TPRM)

conducts periodic surveillance of the trade practices of member states

Dispute Settlement Body

An authoritative panel to hear and settle trade disputes

Trade Related Aspects of Intellectual Property Rights (TRIPS)

protects intellectual property such as patents, trademarks, creative material, and software

Foreign Direct Investment (FDI)

constuction of factories and investment in the facilities for extraction of natural resources by MNCs and through portfolio investment

Portfolio Investment

Investment in another countrys stocks or bonds, either short or long term, without taking direct control of those investments

Sovereign Wealth Funds

State controlled investment funds composed of financial assets, including stocks, bonds, precious metal, property, or other financial instruments formed in capital surplus countries such as China and in the major petroleum exporters such as Kuwait, United Arab Emirates, Norway, Russia, and Canada

Derivatives

Financial instruments often derived from an asset (mortages, loans, foreign exchange, interest rates) which parties agree to exchange over time; a way of buying and selling risk in international financial markets

Offshore Financial Centers

States or jurisdictions with few regulation on banking and financial transactions ofthen with low taxation; used by individuals and international banks to transfer funds

GDP

Gross domestic product

The three interrelated components of the managed international monetary system are

reserve currencies, central banks, and international banks

Comparative Advantage

The ability of a country to make and export a good relatively more efficiently than other countries; the basis for the liberal economic principle that countries benefit from free trade among nations

The Heckscher-Ohlin Theory

Posits that countries will export goods that use the most intensive endowments of the state

CAP

Common Agricultural Policy

NAFTA

North American Free Trade Agreement

USMCA

U.S. Mexico Canada Agreement

Backward Linkages

Growth in one sector leads to growth in the industries that supply them

Common Market of the South

Mercosur