CHAPTER 4 - Global Economy

Market, command, mixed

Three Economic Systems in the World

Market Economy

type of Economic System. Decision making of private individuals. Economy under the will and interest of the individuals. Economic freedom to purchase and sell products, services, and properties

Market Economy

type of Economic System. This condition is not planned by a single person or group that has the ability to manipulate or direct the economy solely. It promotes competition among business and firms.

Market Economy

type of Economic System implemented in Hongkong, New Zealand, Australia, and Switzerland

Command Economy

type of Economic System. A central economic planning body handles the entire decision making. The quality and quantity of goods and services produced is based on the decision of the government. Production quantity is dictated, consumer behavior is directed, and market operation is controlled by a single authority

Command Economy

type of Economic System. Its objective is to mobilize resources for the common good of the public and for the interest of the nation. Private individuals have no say in the economic operation

Command Economy

type of Economic System implemented in North Korea, Cuba, Russia, China

Mixed Economy

type of Economic System. Market-driven economies. Combination of market and command economies. Some sectors are under the directions of the private individuals while other aspects of the economy are left within the guidance of the government.

Mixed Economy

type of Economic System. State can take over the ownership and operation of a private company for the purpose of maintaining the interest of the nation.

Mixed Economy

type of Economic System implemented in Philippines, United States, United Kingdom, France

International Trade

Is the process and the system when goods, commodities, services cross national economy, and boundaries in exchange for money or goods of another country

Descriptive Theory

It describes the pattern of trade under the idea of laissez faire, a French term which means "leave alone"

Descriptive Theory

It refers to the notion that individuals are best economic agents to solve the problems through invisible hand rather than government policies.

Prescriptive Theory

It prescribes whether government, an important economic institution, should interfere and restrict with the movement of goods and services.

Economic Liberals, Mercantilists, Structuralist

Three Perspective of International Trade

Economic Liberals

Perspective of International Trade. For David Ricardo, his influential work, Law of Comparative Advantage explains that free trade efficiency is attainable if two countries can produce more goods and trade products separately

Economic Liberals

Perspective of International Trade. The advantage of this theory in international trade is deriving principle of specialization and division of labor of Adam Smith

Mercantilists

Perspective of International Trade. Mercantilism is an economic theory emerged from about 1500- 1800. This period was the emerging eras of nation states and the formation of more central governments.

Mercantilism

____________ flourished due to the following reasons: Higher export than import. Export less high valued product and import less high valued product. The benefits of colonial powers

Structuralist

Perspective of International Trade. The Modern World System (MWS) theory developed by Immanuel Wallerstein, explain the contact of economies between core, semiperipheral, and peripheral countries in the world.

Structuralist

Perspective of International Trade. The core states have the absolute advantage over the other through unequal exchange and extraction of raw materials from the periphery and semi-periphery. This system as part on the structure of the global capitalism, involves exploitation, and transformation in some ways

Multinational Corporation

For several years, the term MCNs was used to refer to a firm operating in different countries around the world.

Transnational Corporation

This refers to business organizations and firms that compete in regional or global markets. It operates in countries and makes investments in research, technology, facilities, distribution, and production.

Free Trade Area

(FTA) is a trading bloc which involves the reduction of internal tariffs to zero of member economies while retaining different external tariffs.

Free Trade Area

This policy aims to promote free flow of goods and services as well as to increase the volume of trade within the region

Unfair Trade

is the conduct of trade by a business firm or government that violates and breaks the international trade agreements that are unjustifiable and discriminatory

WTO

In 1995, General Agreement on Tariffs and Trade (GATT) of the American government was replaced and succeeded by ___ with 151 members as of 2008 and accounts for 90% of the world's trade'

WTO

It is based in Geneva, Switzerland and leads by a director general selected by consensus among its members.

World Bank

Officially called the International Bank for Reconstruction and Development (IBRD), or _____ ____ is an international agency with 189 member countries operating in 130 countries worldwide.

World Bank

Formed by Bretton Woods agreement in 1944 to finance the reconstruction of war-torn countries brought by the devastation of World War II

International Development Association

one of the associated agencies of world bank. (IDA) This agency focuses on poor and third world economies in the world by providing financial assistance and load program.

International Finance Corporation

one of the associated agencies of world bank. (IFC).

Multilateral Investment Guarantee Agency

one of the associated agencies of world bank. (MIGA).

International Settlement Centre of Investment Disputes

one of the associated agencies of world bank. (ISCID).

International Monetary Fund

(IMF)

IMF

was created as the flagship institution of Bretton Woods agreement with 189-member countries.

IMF

is keen in monitoring foreign monetary transactions as it has a direct effect on country's financial climate.

IMF

Its mandated to ensure the stability of the international monetary system including exchange rates and international payments.

IMF

It reflects on the amount owed by the country 20 from another country as well as indicates the economic operation like what it produces, consumes, and buys with its money

European Union

EU

EU

Member-economies in Europe.

European Economic Country

Founded in 1985, ________ ________ _______ (EEC) was formed by six countries: Belgium, Germany, France, Italy, Luxembourg, and Netherlands. Since then, other European countries joined the regional bloc making it as Europe's most influential and powerful body

EU

is guided by its core values, considered as integral part in the way of life of its citizens. It believes on the following value orientation: (1) Human dignity, (2) freedom, (3) democracy, (4) equality, (5) rule of law, and (6) human rights.

Association of Southeast Asian Nations

(ASEAN)

ASEAN

was founded on August 1967 in Bangkok Thailand with Indonesia, Malaysia, Philippines, Singapore, and Thailand as its founding fathers. Brunei Darussalam, Vietnam, Myanmar, and Cambodia joined the organization making up today the 10 member-countries. The Political-Security Community, Economic Community, and Socio-Cultural Community are the three main pillars of _____.