Global Political Economy Midterm Exam
Openness Index Meaning correct answers Trade as a percentage of GDP
Measures level of integration
Does not reveal a country's trade policies or define its barriers to trade; it merely
indicates how open that economy is to global trade
China is more open than US
Integration (Shallow vs. Deep) correct answers Shallow Integration:
Reduction of tariffs and elimination of quotas (easier to trade)
Lowering trade barriers
Deep Integration:
Negotiations over domestic policies that impact international trade
Include trade agreements
More difficult to accomplish as it involves domestic policy changes that align a country
with rules that are created abroad
Measure by openness index
Openness Index Calculation correct answers Index of Openness = (Exports +
Imports)/GDP
RTAs correct answers Regional Trade Agreements
Agreements among 2 or more countries, each offering others preferential access to its
markets
Provide varying degrees of access and varying degrees of deep integration
Ex. NAFTA, MERCOSUR, EU
FDI correct answers Foreign Direct Investment
When a firm invests directly in production or other facilities, over which it has effective
control, in a foreign country
Real estate, tangible facilities, such as hospitals, hotels, factories, etc.
Not a paper or portfolio investment
, FDIs are long-term and thus not as volatile, which is highly desired
Having FDIs is a sign of confidence in a given economy
What is a determinant of the amount of investment in a country? correct answers
Savings
The more savings a country has, the more money people would have for investing
Gini Co-Efficient correct answers Measures income distribution of a nation's
residents/measures income inequality
The higher the number, the less equal
The lower the number, the closer to perfect equality
0 means complete equality, 1 means one person has all the wealth
Regime correct answers Set of rules, cultural or social norms, etc. that regulate the
operation of a government, institutions, etc.
IMF correct answers International Monetary Fund
One of the original Bretton Woods organizations
Helps member countries that suffer from instability/balance of payments
Provides technical expertise
The lender of last resort - will bail out if needed (conditionality)
Gets money from each country (contributions are based on percentage of global GDP;
US is #1 contributor)
World Bank correct answers A Bretton Woods Institution, originally responsible for
providing financial and technical assistance to war torn economies of Europe
Now shifting focus to helping developing countries
Ex. built a hydroelectric dam in Zambia
WTO correct answers Regulates trade and gives guidance for other countries to
impose tariffs
Sets rules (can't impose penalties, fines sanctions)
Openness Index Meaning correct answers Trade as a percentage of GDP
Measures level of integration
Does not reveal a country's trade policies or define its barriers to trade; it merely
indicates how open that economy is to global trade
China is more open than US
Integration (Shallow vs. Deep) correct answers Shallow Integration:
Reduction of tariffs and elimination of quotas (easier to trade)
Lowering trade barriers
Deep Integration:
Negotiations over domestic policies that impact international trade
Include trade agreements
More difficult to accomplish as it involves domestic policy changes that align a country
with rules that are created abroad
Measure by openness index
Openness Index Calculation correct answers Index of Openness = (Exports +
Imports)/GDP
RTAs correct answers Regional Trade Agreements
Agreements among 2 or more countries, each offering others preferential access to its
markets
Provide varying degrees of access and varying degrees of deep integration
Ex. NAFTA, MERCOSUR, EU
FDI correct answers Foreign Direct Investment
When a firm invests directly in production or other facilities, over which it has effective
control, in a foreign country
Real estate, tangible facilities, such as hospitals, hotels, factories, etc.
Not a paper or portfolio investment
, FDIs are long-term and thus not as volatile, which is highly desired
Having FDIs is a sign of confidence in a given economy
What is a determinant of the amount of investment in a country? correct answers
Savings
The more savings a country has, the more money people would have for investing
Gini Co-Efficient correct answers Measures income distribution of a nation's
residents/measures income inequality
The higher the number, the less equal
The lower the number, the closer to perfect equality
0 means complete equality, 1 means one person has all the wealth
Regime correct answers Set of rules, cultural or social norms, etc. that regulate the
operation of a government, institutions, etc.
IMF correct answers International Monetary Fund
One of the original Bretton Woods organizations
Helps member countries that suffer from instability/balance of payments
Provides technical expertise
The lender of last resort - will bail out if needed (conditionality)
Gets money from each country (contributions are based on percentage of global GDP;
US is #1 contributor)
World Bank correct answers A Bretton Woods Institution, originally responsible for
providing financial and technical assistance to war torn economies of Europe
Now shifting focus to helping developing countries
Ex. built a hydroelectric dam in Zambia
WTO correct answers Regulates trade and gives guidance for other countries to
impose tariffs
Sets rules (can't impose penalties, fines sanctions)
