International Trade and The Breton Woods Institutions - Hale

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Transcript International Trade and The Breton Woods Institutions - Hale

Globalization: International Trade
and The Bretton Woods
Institutions
CGW4U
What is International Trade?
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The exchange of goods and services across
international borders
In most countries, it represents a significant
share of GDP
While international trade has been present
throughout much of history (ex: Silk Road),
its economic, social, and political importance
have been on the rise in recent centuries,
mainly because of industrialization,
advanced transportation, globalization,
multinational corporations, and outsourcing
Advantages of Trade
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Meeting our Needs
Job Creation
Attracting Investment
New Technology and Materials
Diverse Products and Services
Disadvantages of Trade
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Support of Non-Democratic Systems
Cultural Identity Issues
Social Welfare Issues
Environmental Issues
Political Issues
Encouraging/Discouraging Trade
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Free Trade
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Limited barriers (ie tariffs, quotas, environmental
regulations, etc.)
Greater flow of goods, less control
Preferred by wealthier nations
Protectionism
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Many barriers
Economy more domestic
Greater control
Doesn’t work well for nations that need
goods/resources from others
Encouraging Global Trade
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A key force in the liberalization of global
trade is the Bretton Woods Institutions
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Origins are in a 1944 meeting in Bretton Woods,
New Hampshire by delegates from the WWII
allies
Mandate is to ensure global economic growth
Today, consists of:
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The WTO (World Trade Organization)
The World Bank
The IMF (International Monetary Fund)
The IMF and World Bank
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We’ll come back to the WTO later, but
for now let’s focus on the IMF and
World Bank
The IMF and World Bank
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Two distinct bodies, but very similar
They administer loans to governments
and impose structural adjustment
programs as a condition of borrowing
In theory, both the loans and the
structural adjustments are designed to
help the country’s economy
Structural Adjustments
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Reduce government spending
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Privatization
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Cuts in spending on education, healthcare, infrastructure,
social programs
Previously state-run institutions and assets are sold off to
private corporations to be run as for-profit ventures
Trade Liberalization
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Reduced trade barriers to allow the freer flow of goods in
and out of the country
Reduced or removed regulations and standards that may
hinder business
Case Studies
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Let’s examine some examples of
IMF/World Bank loans and Structural
Adjustments in action