Political Economy of Globalization exam with correct answers 2024
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Course
Political Economy of Globalization Midter
Institution
Political Economy Of Globalization Midter
Joseph Stiglitz's base argument correct answers Anti-IMF.
These institutions are supposed to help countries resolve problems and intervene in domestic economies to help countries overcome short term probelms, he argues that countries are given the opposite mandate. he is arguing that the IMF now ...
Joseph Stiglitz's base argument correct answers Anti-IMF.
These institutions are supposed to help countries resolve problems and intervene in
domestic economies to help countries overcome short term probelms, he argues that
countries are given the opposite mandate. he is arguing that the IMF now mandates
policies that causes countries to liberalize, privatize, ect, and they actually work in the
opposite way and backfire.
If a country applies to the IMF for a loan, teh IMF does not give the money away for
free. Loans are always attached to conditions. IMF will withhold these loans until it's
assured that these conditions/policiy prescriptions are put in place.
Stiglitz's criticism of the IMF's SAPs (Structural Adjustment Policies) correct answers
Stiglitz criticizes the IMF for giving out the exact same policy prescriptions
PRIVATIZATION: A lot of times the IMF insists that government owned enterprises be
sold off to the highest bidder. For instance: the government is in business of owning
steel mills and sell them to private bidders. Prob;em is privatization was to be pursued
rapidly and as a result it did not bring the benefits that were promised. Morocco village
chicks example. He proposes that Privatization needs to bne part of a more
comprehensive program, which entials creating jobs in tandem with the inevitable job
destruction that privatization often entails.
Fiscal Austerity: The IMF claims, alto of these crises are caused by countries over
borrowing and ending up with a debt problem. One of the first things that the IMF insists
is that these countries reign in their public spending. Countries chop programs that help
the needy and the poor. 1st programs to go: food stamps, wellfare, social security. And
can lead to high unemplopyment and the shredding of the social contract.
Liberalization: The Removal of government interference in financial markets, capital
markets, and of barriers of trade. If you remove these barriers you're going to increase
the economic efficiency of these sectors and attract a lot of capital. Problem is that a lot
of times these liberalization policies end up with high interest rates which can make
unemployment problems worse. These policies are highly UNPOPULAR in the
developing world.
Stiglitz's Moral Hazard Argument Against IMF correct answers Lenders and Investors
are going to continue making investments because they know the IMF will reimburse
them. They know there's an insurance policy out there that is the IMF\. A lot of times the
IMF find themselves on the receiving end.
Rogoff's arguments correct answers PRO-IMF.
The Austerity Myth--Publicly popular programs are the first to go, governments from
developing countries don't come to the IMF when the sun is shining, they come because
, they have already run into deep financial insecurities, they come to the IMF because
they've done something wrong, the IMF is willing to intervene when no private creditor in
the world would dare make loans under these circumstances. the IMF then makes loans
to these countries at rates these countries would only dream of. In the short run these
IMF loans will allow a distressed nation to tighten it's belt less than it would have
to.Countries wold be in much worse shape without IMF.
Moral Hazard problem: Investors would often lose money, they are not an insurance
policy for investors. During the Russian debt default investors lost about 100 billion
dollars it's not true that they serve as an insurance policy for those willing to make risky
investments
Fiscal Follies: charge that the IMF forces countries to increase their interest rates when
decreased interest rates would encourage spending. Fiscal stimulants is a great policy
but developing countries have trouble borrowing. They cannot borrow even if they would
like to. Increased interest rates is going to re-attract investment. By increasing interest
rates in these countries they hope they will re-attract investment. IMF also argue that
when investors default on their debt they are going to insists on higher interest rates,
not lower
Capital Control Freaks: Removing all barriers will cause trouble, China and India did not
catch the Asian flu and indeed had closed regulated capitol markets, but neither did
Australia or New Zealand which had opposite markets: open markets.
Case Study for IMF: Mexican Peso Crisis correct answers ...
Case Study for IMF: Asian Financial Crisis (1997-98) correct answers ...
LDCs = 85% of population and how much of wealth? correct answers 20%
Economic Growth Strategy correct answers Inject capital into countries (ex. Marshal
Plan in Western Europe). Help the countries thrive by improving economic factors in
order to increase FDI.
In the 1970s, it was realized that this was not working, countries were worse than
before WWII
Basic Needs Strategy correct answers In order to development, countries need the
basic building blocks, like clean water, food, shelter, schools, roads, clinics, etc. With
this, development could take place.
With this strategy, development did take off in some places.
The Underdevelopment Cycle correct answers Vicious circle of factors that contribute
to trapping these countries in undderdevelopment and poverty.
o Dual Economies- The Poverty 'Trap' --Sachs correct answers Small number of elite
who hold power Small number of elit who hold power and are corrupt who country the
majority of the countries wealth; they enjoy a consumer economy.
Large number of the population living in subsistence lifestyle.
Three basic problems:
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