ECONOMIC GLOBALIZATION

ECONOMIC GLOBALIZATION
It defines the movements of goods, capitals and services across borders.

TARIFFS TRADE BARRIERS

GENERAL AGREEMENT ON TARIFF
AND TRADE (GATT)
GENERAL AGREEMENT ON TARIFF AND TRADE
(GATT)

Creation of GATT
was the outcome of the failure of negotiating governments to create
the International Trade Organization (ITO).
signed by 23 nations in Geneva on 30 October 1947, and took effect
on 1 January 1948.
9 rounds (128 members)
GENERAL AGREEMENT ON TARIFF AND TRADE
(GATT)

Creation of GATT
GENERAL AGREEMENT ON TARIFF AND TRADE
(GATT)

is an international trade treaty designed to boost

countries' economic recovery following WWII whose
primary purpose was to increase international trade by
eliminating or reducing various tariffs, quotas and subsidies
while maintaining meaningful regulations.
WORLD TRADE ORGANIZATION
WORLD TRADE ORGANIZATION (WTO)

It is the only global international organization dealing with the

rules of trade between nations. At its heart are the WTO
agreements, negotiated and signed by the bulk of the world’s
trading nations and ratified in their parliaments.
WORLD TRADE ORGANIZATION (WTO)

Goals
• The most basic is a commitment to openness, meaning reducing tariffs as well as
limiting quotas, import bans, distorting subsidies, and other barriers to trade.
• The WTO also seeks transparency and predictability in trade-related regulations
and promotes international standards to give citizens, companies, and investors
stability
• And the WTO is also committed, in principle, to giving less-developed countries
greater flexibility and accommodations to help them adjust to new rules.
BRETTON WOODS SYSTEM
 BRETTON WOODS SYSTEM

Established a new global monetary system. It replaced the gold

standard with the U.S. dollar as the global currency.

After the agreement was signed, America was the only country
with the ability to print dollars.

The agreement created the World Bank and the International

Monetary Fund. These U.S.-backed organizations would monitor
the new system.
BRETTON WOODS SYSTEM AGREEMENT

Was created in a 1944 conference of all of the World War II

Allied nations. in Bretton Woods, New Hampshire

Under the agreement, countries promised that their central banks

would maintain fixed exchange rates between their currencies and
the dollar.
BRETTON WOODS SYSTEM CONCEPT
FALL OF THE BRETTON WOODS SYSTEM

Was dissolved between 1968 and 1973

Due to the costs of the Vietnam War and nations trading dollars for
gold and the overvaluation of the US dollar led to the concerns
over the exchange rate of their tie to the price of gold.

The link between gold and the dollar is severed

Flexible exchange rates allow for countries to adjust to increased

prices
INTERNATIONAL MONETARY FUND
ABOUT THE INTERNATIONAL MONETARY FUND

ESTABLISHED ON JULY 1944 AT UNITED NATIONS BRETTON WOODS

CONFERENCE IN NEW HEMPSHIRE, UNITED STATES

OVERSEE A SYSTEM OF FIXED EXCHANGE RATES AND ENCOURAGE MEMBERS

TO ELIMINATE RESTRICTION ON TRADE AND CURRENCY EXCHANGE.

SUPPORTING DEVELOPING COUNTRIES AFFLICTED WITH DEBTS CRISIS AND, IN

DUE CRISIS. THEY ALSO ENSURE THAT NATIONAL OR REGIONAL CRISIS DO NOT
DEVELOPED INTO GLOBAL CRISIS.
ABOUT THE INTERNATIONAL MONETARY FUND
THEY ARE ALSO TASKED TO PROVIDE SHORT-TREM LOANS TO COUNTRIES
STRUGGLING TO PAY THEIR DEBTS.

THEY ALSO PROVIDE “PRECAUTIONARY LOANS” AS A SORT OF PREVENTABLE

MEASURE BEFORE THINGS GET WORST.

RECEIVER OF PRECAUTIONARY LOANS

INCLUDES:

MEXICO COLOMBIA

CHILE
ABOUT THE INTERNATIONAL MONETARY FUND
IMF BIGGEST
FUN FACT ABOUT IMF
BORROWERS

ARGENTINA IMF IS A SPECIALIZED AGENCY

OF THE UNITED NATIONS, BUT
EGYPT HAS ITS OWN CHARTER,
GOVERNING ITS STRUCTURE
UKRAINE AND FINANCE.
ITS HIGHEST DECISION
PAKISTAN MAKING BODY IS THE BOARD
OF GOVERNORS
 PRIMARY PURPOSE
FACILITATE THE EXPANSION
PROMOTES INTERNATIONAL
1 4 AND BALANCE GROWTH OF
MONETARY COOPERATION
INTERNATIONAL TRADE
ASSIST IN THE
ESTABLISHMENT OF A
2 TO REDUCE POVERTY 5
MULTILATERAL SYSTEM OF
PAYMENTS
MAKE RESOURCES AVAILABLE
PROMOTE EXCHANGE TO MEMBERS EXPERIENCING
3 6
STABILITY BALANCE-OF-PAYMENTS
DIFFICULTIES
 IMF PRIMARY METHODS

1
MONITORING OR MONITORS THE ECONOMIC AND FINANCIAL
SURVIELANCE POLICIES OF ITS 189 MEMBERS

PROVIDES TECHNICAL ASSISTANCE,

2
CAPACITY TRAINING AND POLICY ADVICE THROUGH
BUILDING ITS CAPACITY BUILDING PROGRAMS

PROVIDES LOANS TO ITS MEMBER

3 LENDING AND FINANCE COUNTRIES THAT ARE EXPERIENCING
ASSISTANCE
ECONOMIC DISTRESS
 IMF RESOURCES
ITS PRIMARY SOURCE OF FINANCE IS ITS MEMBER
COUNTRIES QUOTAS

A MEMBERS’ QUOTAS BROADLY REFLECTS ITS SIZE

AND POSITION IN THE WORLD ECONOMY

AND THE IMF REGULARLY CONDUCTS GENERAL

REVIEW
OF ITS MEMBER COUNTRIES QUOTAS.
 JOINING THE IMF
MEMBERS PLEDGED TO
MEMBERS ARE MUST REFRAIN PURSUE
REQUIRED TO ECONOMIC
FROM POLICIES THAT
SHARE RESTRICTING ENCOURAGE
INFORMATION
THE EMPLOYMENT
ON FINANCIAL,
EXCHANGE OF AND
FISCAL, INTERNATIONAL
ECONOMIC AND DOMESTIC
TRADE THAT WILL
EXCHANGE MONEY FOR BENEFIT THE
POLICIES FOREIGN WORLD
MONEY ECONOMIC TRADE
WORLD BANK
 ABOUT THE WORLD BANK

An international organization dedicated to providing financing, advice and

research to developing nations to aid their economic advancement.

Created out of the Bretton Woods agreement, as a result of many European

and Asian countries needing financing to fund reconstruction efforts

Acts as an organization that attempts to fight poverty by offering

developmental assistance to middle- and poor-income countries
THE GOALS AND BENEFITS OF WORLD BANK

THE GOALS
First is to end extreme poverty by decreasing the amount of
people living on less than $1.90 a day to below 3% of the world
population

Second is to increase overall prosperity by increasing the

income growth in the bottom 40% of the world's population
THE GOALS AND BENEFITS OF WORLD BANK

THE BENEFITS

The World Bank provides qualifying individuals and governments

with low-interest loans, zero-interest credits and grants

The World Bank also shares information with world governments

through policy advice, research and analysis and technical
assistance.
WASHINGTON CONSENSUS
 WASHINGTON CONSENSUS

• It was coined by a British Economist, John Williamson in 1989 to help

developing countries face economic crisis.
• It is a set of economic policy recommendations for that started between the
agreement of International Monetary Fund (IMF), World Bank, and U.S.
Department of the Treasury.
• Essentially, the Washington consensus advocates, free trade, floating
exchange rates, free markets and macroeconomic stability.