Pols exam 2

What is the definition of "GDP Growth"? Note, definitions are found on the Maps, Country Profile, and Rank by Variable tabs by clicking on a variable name.

"The annual rate of change in nominal Gross Domestic Product (Constant Prices)"

What happened at the 1884-1885 Berlin Conference:

European countries divided up Africa without much regard for local peoples or existing ethnic divisions

The difference between foreign direct investment (FDI) and foreign portfolio investment (FPI) is that:

FDI is investing more in fixed assets (companies and real estate), as opposed stocks and bonds (which is portfolio investment)

The stimulus spending during the "Great Recession" in the United States was based on the ideas of:

John Maynard Keynes

IMF Structural Adjustment Programs (SAPs) have called for:

Privatization (sale to private owners) of state-owned enterprises (SOEs)

Mercantilist approaches to establish desired trade balances and trade profiles include:

Promoting exports and protecting the economy by restricting imports

When the European Union placed restrictions on the importation of U.S. beef containing growth hormones because of the EU's concern for public health, the U.S. government considered this policy a form of:

Protectionism, sparking a case before the WTO

One key reason international trade negotiations have stalled is because:

Remaining tariff barriers are in areas where poorer countries often have an advantage, such as the politically sensitive agriculture sector

Because of the new tariffs placed on imported steel, aluminum, and other products by the Trump administration, the video points to which specific product the Canadians and Europeans area targeting for retaliation?

Washing machines

Because Samsung and LG faced retaliatory tariffs placed on them by U.S. regulators:

they moved some production to China (and later Thailand, Vietnam, and the U.S.), which didn't face the tariffs placed on South Korea

In a socialist system: (select all that apply, there are one to four possible correct answers)

- The state owns and controls key means of production

As noted in the video, repeated studies have indicated that more generous people (select all that apply, there are one to four possible correct answers):

- feel more fulfilled - live longer

Common ways to measure poverty include (select all that apply, there are one to four possible correct answers):

- income - consumption

Since the 1980s, middle class families have primarily maintained consumption by (select all that apply, there are one to four possible correct answers):

- working longer hours - increasing their debt - having more two income families (with more women entering the workforce)

Whirlpool claims its foreign competitors engage in unfair competition. What are examples in the video of what "unfair competition" means (select all that apply, there are one to four possible correct answers)?

-Companies getting direct funding (subsidies) from the government -Companies selling their washing machines at prices lower than what they're charging for the same washing machines back home -Companies selling their washing machines at prices lower than their cost of production

LDCs have often been unable to take advantage of their "comparative advantages" in agricultural production because (select all that apply, there are one to four possible correct answers):

-Corrupt leaders in LDCs have stolen profits and/or siphoned off outside loans meant to strengthen comparative advantages -MDCs protect their own agricultural production from cheaper imports from LDCs

Arguments in favor of free trade often include each of the following: (select all that apply, there are one to four possible correct answers)

-Free trade produces overall economic growth and jobs in sectors where the country has a comparative advantage -Open trade fosters lower prices for consumers -Everyone benefits when countries produce and sell what they do most efficiently -Free trade promotes interdependence among countries and helps maintain international peace

President George W. Bush's decision to impose a temporary 30 percent tariff on imported steel in 2002 (select all that apply, there are one to four possible correct answers):

-Helped the steel industry by allowing U.S steel producers to gain a larger share of the local market -Was seen by some as a political move to help the president's reelection chances in key electoral states -Hurt the U.S. automakers, who had to pay higher prices for steel

For developing countries that mainly produce raw (often called primary) products, such as mining and agricultural goods: (select all that apply, there are one to four possible correct answers)

-Jobs are often low wage and low skilled -"Comparative advantage" is often based on just a few primary products -Persistently low export prices cannot generate the revenue for the expensive manufactured/high tech imports needed for development -Arguments for "comparative advantage" can be seen as developmental "dead ends"

With respect to the charge that LG and Samsung take advantage of unfair trade practices as far as washing machines are concerned: (select all that apply, there are one to four possible correct answers)

-LG and Samsung have argued they follow the rules 100%, and simply have better products than Whirlpool -U.S. regulators in the Obama and Trump administrations have repeatedly agreed that the companies are breaking international trade rules

Keynes biographer (Robert Skidelsky) sums up Keynes with three ideas, including (select all that apply, there are one to four possible correct answers):

-Markets are inherently volatile -Large scale unemployment can develop in volatile markets -Nothing can stop a downward spiral and growing unemployment is a depresses economy unless the government steps in with public spending to replace a lack of private spending

Consumers (select all that apply, there are one to four possible correct answers):

-Often do not know the conditions in which foreign goods are made -Have to grapple with whether to buy foreign goods that might have been made in sweatshops

Company costs can often be lower if (select all that apply, there are one to four possible correct answers):

-Pensions, healthcare, and paid vacation rules are eliminated -Minimum wage and workplace safety regulations are cut -Age and gender discrimination laws are removed, allowing them to terminate employees at will -Environmental regulations are weakened, allowing them to pollute more readily

What policy changes under Franklin Roosevelt contributed to declining poverty and inequality in the United States? (select all that apply, there are one to four possible correct answers):

-Progressive income taxes, taxing the wealthy at higher percentages than the poor - The establishment of Social Security and Medicare -The creation of the GI Bill after WWII -Laws setting minimum wages and overtime bonuses

Which two thinkers are most closely associated with setting the roots of classical liberalism?

Adam Smith and David Ricardo

Colonies (select all that apply, there are one to four possible correct answers):

-Saw the introduction of key European ideas, such as nationalism, individualism, and justice -Often saw the development of significant infrastructure that helped get commodities out of the areas -Were generally drained of commodities, human capital, and/or money -Were often restructured by the dominant country to produce one particular crop r mineral resource

Under colonialism (select all that apply, there are one to four possible correct answers):

-Vast revenues and resources typically flow out of the colonies, with relatively little capital flowing back in -Colonies provide cheap labor and resources, and serve as markets for the colonizers goods -A core dominant country generally controls the political and economic lives of foreign peoples

Non-tariff Barriers (NTBs) include (select all that apply, there are one to four possible correct answers):

-Voluntary Export Restraints -Health and safety standards -Administrative requirements, such as customs procedures

Order the following countries from the country that exports the highest volume to the country that exports the lowest volume by using "Aggregate Exports (Bil USD)" on Rank by Variable.

1 china 2 india 3 russia 4 brazil 5 south africa

States use different types of trade strategies to try to improve economic outcomes, some are more "classic liberal," believing that freer trade will eventually benefit all economies, while others pursue more protectionist policies to try to guide the market and help local producers and populations. Recreate the bar chart of "Barriers to Trade" above and list the countries from more open (scoring highest) to more protected (scoring lowest).

1- singapore 2 - chile 3- ireland 4- usa 5- china

How many sub-dimensions are there within the "Business Transactions" framework?

10

Developing countries that have pursued the protectionist "Import Substitution" strategy for development have used tariffs, business regulations and licenses, quotas, and bars on some imports to protect their markets while they seek to build domestic industries. India, for example, was known as the "License Raj" for all the procedures and licenses/permits required to do business, and we see the legacies of this "License Raj" today. Using the "Business Transactions" sub-dimension under "Operations," match the data point for India to the listed variable.

11.5- how many procedures to start a business (men or women)? 119- what is the country's rank on "dealing with construction permits" 53- how many days to register property 55.3 - what is the country's total tax rate? 45.9- how many days to get electricity?

"Public goods," ranging from clean air to infrastructure to public education, are goods equally available to everyone, and where the use by one person does not reduce the availability to another. They are often under produced in free markets, leading governments to take a role in their provision. What is the United States' RANK in "Basic Education Indicators" and "Higher Education and Training," respectively?

14th and 4th

Spain saw a major spike in its unemployment rate with the onset of the Great Recession in 2009 ("Total Unemployment Rate" is defined as "percentage of the civilian labor force that is without jobs"). Recreate the Advanced Bar chart of "Total Unemployment Rate" (raw data) below and match Spain's unemployment rate to the year.

2010 - 20% 2011- 20.1% 2012- 24.9% 2013- 25.1% 2014- 26.3% 2015- 22.5% 2016- 19.7% 2017- 19.6%

"Total Tax Rate (% profit)" is defined as "...the amount of taxes and mandatory contributions payable by the business in the second year of operation, expressed as a share of commercial profits." What is the U.S.'s Total Tax Rate (% profit)?

43.8%, ranked 93rd in the world

In the map above Venezuela stands out for its high inflation rate in 2016 ("Inflation" is defined as: "the annual percentage change in the price of goods and services"). What was Venezuela's inflation rate in 2016? Note, in 2017 Venezuela's inflation rate remained extremely high, but the figure was not available when the 2018 RCII was published.

545.9%

How many people were forcibly removed from Africa as slaves during the 300+ years of Triangular Trade:

9-15 million

The World Bank and the IMF are part of what post-World War II system?

Bretton Woods System

Generally, the United States does very well in the "Operations" macro-dimension, ranking 7th (scoring 933) in the 2018 RCII. However, there are individual variables where the country ranks somewhat lower. Recreate the drill down table above using the Country Profile tab to answer the following question: What is the variable blocked out in which the U.S. ranks 59th and scores a 779?

Business Cost of Crime and Violence

For people and countries to develop and prosper, they need:

Capital (goods, services, and money)

Recreate the longitudinal chart below to answer the following question: which country has gained the most in "Aggregate GDP" size since 2005?

China

This bar chart depicting "National Savings Rate (%GDP)" includes the China, Pakistan, South Korea, United States, and Venezuela. Recreate the chart and list the countries in order of highest "National Savings Rate (%GDP)" to lowest "National Savings Rate (%GDP)".

China south korea USA Pakistan Venezuela

The number of businesses registered to lobby in Washington has:

Coincided with intensified gerrymandering that protects incumbents

The map above shows that much of the "Global South" or "developing countries" score poorly on "Nature of Competitive Advantage." What is the definition of this variable? The RCII path to the variable is: OPERATIONS/Operational Landscape/Innovation and Sophistication/Business Sophistication/Nature of Competitive Advantage.

Competitiveness of the country's companies in international markets is primarily due to (1 = low-cost or local natural resources, 7 = unique products and processes)

The "animal spirits" are:

Confidence and optimism in the economy, which sparks economic growth

An example of an "export promotion" technique is:

Direct export subsidies, or paying local producers for their exports, helping them better compete with foreign firms

Losing a case through the WTO disputes settlement mechanism could lead a country to face:

Economic sanctions or a withdrawal of trade concessions by the winning state

Purchasing Power Parity:

Estimates the number of dollars needed to buy comparable goods in different countries, making comparisons more accurate

To stabilize currencies during the initial Post WWII era, countries:

Fixed (or pegged) the value of their currency to the U.S. dollar, which was fixed to the price of gold ($35 for 1oz. gold)

Those that caution against free trade generally argue:

Free trade leads to dislocations which can cost people their jobs

Classic liberal trade theory holds the view that:

Free trade without governmental interference will eventually benefit all economies in the international system by ensuring efficiency in the production and distribution of goods and services

Classic liberal trade theory holds the view that: (select all that apply, there are one to four possible correct answers)

Free trade without governmental interference will eventually benefit all economies in the international system by ensuring efficiency in the production and distribution of goods and services

Mercantilists (economic nationalists) believe:

Governments should regulate trade to advance national interests and power

Europe:

Guns and alcohol

The U.S.'s Smoot-Hawley Act:

Has been credited with triggering a spiral of restrictions on trade by other countries, helping spark the Great Depression

The North American Free Trade Agreement (NAFTA):

Has led to some lower skilled jobs shifting to Mexico, where wages are lower

The United States:

Has run significant trade deficits since the 1970s

Definitions are found on the "Maps," "Country Profile," and "Rank by Variable" tabs by clicking on a variable name. Using one of these tabs, drill into "Barriers to Trade" and click on "Prevalence of Non-Tariff Barriers" (here's the path: ECONOMICS/Market Access/Trade Profile/Barriers to Trade/Prevalence of Trade Barriers). Within the definition, what are listed as Non-Tariff Barriers (NTBs)?

Health and product standards, technical and labeling requirements, etc.

The primary role of IMF loans is to:

Help stabilize a country's economy when the country has severe budgetary imbalances

The work of Thomas Picketty documents that, with the exception of the mid-20th century:

Income from capital (wealth, ownership, inheritance, etc.) nearly always exceeds income from wages, increasing inequality

The World Bank is considered which type of actor?

International Governmental Organization (IGO)

Winston Churchill described the political control of the Soviet Union over Eastern Europe as the:

Iron Curtain

As noted in the introduction to this lesson, "contemporary liberalism" (often associate economically with the ideas of John Maynard Keynes):

Is tied to the idea that classical liberalism is volatile and prone to recessions and depressions, so states should try to manage capitalism and maintain "aggregate demand"

European colonial economic policies can be described as:

Mercantilist

According to Keynes (as discussed by his biographer Robert Skidelsky), volatile markets can punish:

Millions in society, for the mistakes of a few, causing social unrest

What is Keynes' approach to stimulating a depressed economy?

More Government spending to increase aggregate demand

France protects its television and movie industries from U.S. competition because:

Of a fear of cultural imperialism

Since the creation of the WTO in 1995:

Only one round of international trade negotiations has been initiated (the Doha Round), and it has gotten nowhere

The liberal world economic order sought by the United States and other Western countries after WWII was based on:

Open Markets, freer trade, and free flowing capital

Neo-liberal advocates of the "Washington Consensus" argue that:

Opening economies to free trade, cutting back state budgets (fiscal responsibility), and privatizing state-owned enterprises is the best strategy for the developing world

Using the definition for the "Logistics" sub-dimension (definitions are found on the Maps, Country Profile, and Rank By Variable tabs), determine what the "Logistics" data is based on.

Perceptive surveys of operators on the ground (global freight forwarders and express carriers)

Africa:

Slaves, gold, ivory

To get Samsung and LG to invest in their states:

South Carolina and Tennessee have offered significant investment incentives, similar to the advantages the firms received in South Korea

Mercantilism is: (select all that apply, there are one to four possible correct answers)

States controlling trade, often protecting home markets while seeking to sell products abroad, so as to gain as much profit and power as possible.

The idea of comparative advantage is that:

States should specialize in producing the goods which they produce best and trade for goods that other states produce best

The idea of comparative advantage is that: (select all that apply, there are one to four possible correct answers)

States should specialize in producing the goods which they produce best and trade for goods that other states produce best

Through _________________, the IMF and World Bank set a series of often stiff requirements when establishing an agreement with a borrowing country, pressing such steps as trade liberalization, fiscal responsibility, and privatization.

Structural Adjustment Programs

During the Cold War:

Superpower competition between the US and USSR led to proxy wars in many developing countries, helping bring real economic development to a standstill

The most traditional protectionist barriers to trade are:

Tariffs (taxes on imports), though they are no longer the main form of protectionism for most countries

European economic integration was initiated with the creation of:

The European Coal and Steel Community, which integrated an industry key to war-making potential

What international organization did John Maynard Keynes help create in the aftermath of the Great Depression:

The IMF

Which of the following is an example of a protectionist policy that had negative effects?

The Smoot-Hawley Act

Use the chart above of U.S. and China Currency Over/Under Valuation (raw data). In 2008-2009, with the onset of the Great Recession, which was true:

The U.S. currency was significantly overvalued, while the Chinese currency was significantly undervalued.

The decision to help Europe and Japan rebuild, such as with the Marshall Plan in Europe, showed that:

The U.S. needed rebounding markets for trade and investment

Floating exchange rates, which much of the world shifted to after 1971, differ from fixed exchange rates in that with floating exchange rates:

The market determines the price of the currency

As seen in the chart (Figure 11.1; note the chart is based on the number of people living on less than $1.90 a day):

The number and percentage of extremely poor people worldwide has declined since 1990

As a result of the trade conflict over washing machines:

The price of both foreign and domestically produced washers has gone up

In the United States:

The top 1% has 23% of the income, up from 9% in the mid-1970s, and similar to the level during the Great Depression

When countries raise taxes to give export subsidies to newly established exporting companies:

Their current citizens sacrifice so that future generations may benefit as "infant industries" seek to transform into powerful businesses

Why is trade policy "inevitably politicized"?

There are winners and losers with trade policies, and groups pressure governments to adopt policies beneficial to them

In response to the criticism that their work was undertaken at the "famously liberal" University of California Berkeley, the researchers point out:

They have run 30 different studies across thousands of people all over the United States, and the results are the same for liberals and conservatives alike

In the game of monopoly seen on the video:

Those that have the game rigged in their favor are less generous and somewhat ruder

The Bretton Woods institutions were created after WWII:

To promote stability in international economics and, hence, strengthen international peace

Proponents of free trade argue:

Trade increases overall employment, and can shift jobs to where a country has comparative advantages

The removal or reduction of tariffs or quotas on the trading of specific goods to stimulate freer trade is known as?

Trade liberalization

On the Country Profile tab, drill down into the RCII structure under Operations and click on the "Business Transactions" sub-dimension name. What is the source of the data as noted in the definitions box?

World Bank - Doing Business

The General Agreement on Tariffs and Trade (GATT) was the precursor to the:

World Trade Organization (WTO)

Since the 1980s, many "developing" countries have liberalized trade and investment, often because they have had to accept IMF Structural Adjustment Programs (SAPs) and open their economies. Many, however, still have considerable barriers. For example, "Business Impact of Rules on FDI" is defined as "in the country, rules governing foreign direct investment (1 = discourage foreign direct investment, 7 = encourage foreign direct investment)." What are the three biggest outliers in the histogram above, still strongly discouraging FDI?

Zimbabwe, Venezuela, Angola

Countries need capital to develop and prosper, and one way they get capital is through Foreign Direct Investment (foreign investing in fixed assets like businesses or real estate). Use the Rank by Variable tab/tile to recreate the above histogram of "FDI Inflows (Mil USD)." Match the letter to the country to see the top four countries receiving the most total FDI inflows.

a. Netherlands b. china c. UK d. USA

Americas:

primary products such as sugar and coffee