Chapter 2: International Institutions

Class Notes: these count for 1% of your total grade

1. List the primary international institutions and their main goals

Institutions can be formal or informal.
 Formal institutions are written, often embodied in laws, codes, constitutions.
 Informal are customs or tradition such as manners and etiquette
2. List the different rounds of GATT/WTO and identify one major goal of each round
 The Uruguay Round: It created the World Trade Organization
 The Doha Round: It proposed a Doha Development Agenda and focused on trade issues
of importance to developing countries
3. What does it mean to confer most favored nation status?
Nondiscrimination prohibits different tariffs or rules for different countries.
4. Why are international capital flows greater today than a century ago?
 Many more financial instruments available: Provide a greater ability to place financial
capital into markets and firms
 Role of foreign exchange transactions: More countries use floating exchange rates
making spot markets and futures trading more important
 Costs of foreign transactions has fallen significantly (transaction costs): Global networks
have given rise to greater availability of information and reduced time to complete a
transaction.
5. Definitions
 IMF conditionality: Requirement for the borrowing member
to carry out economic reforms in exchange for a loan
 National treatment: Imports must be given similar treatment
on the domestic market as domestically produced goods
 Nondiscrimination: Enshrined in the concept of most
favored nation (MFN); a prohibition against discrimination
 Nonexcludable: The normal price mechanism does not work as a way
of regulating access to them
 Nonrival (or nondiminishable): They are not diminished or reduced by consumption
6. What are the five types of regional trade agreements?
 Partial agreement
Free trade area
 Customs union
Common market
Economic union
7. List the criticisms of international institutions
 Sovereignty and Transparency
 Ideology
 Implementation and adjustment costs