Bretton Woods Institutions and WTO Overview

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Questions and Answers

What is a significant financial disparity highlighted in the agricultural sector?

Underdeveloped countries receive abundant agricultural subsidies.

Rich countries provide significant funding while underdeveloped countries have restrictions. (correct)

Agricultural support is equally distributed among all countries.

Rich countries pay minimal amounts for agricultural support.

What is one of the key challenges faced by underdeveloped countries in the context of economic globalization?

Unlimited financial resources for agricultural development.

Prohibition on protecting their agricultural sectors. (correct)

Encouragement from rich countries to adopt globalization.

Ability to compete with agricultural exports from developed nations.

How do agricultural support payments by rich nations affect global trade dynamics?

They enhance the agricultural industry in underdeveloped countries.

They create fair competition among all countries.

They incentivize underdeveloped countries to invest in agriculture.

They distort global trade by favoring developed nations' products. (correct)

Which of the following statements regarding economic globalization is least likely to be true?

All countries benefit equally from economic globalization. Signup and view all the answers

What impact do agricultural subsidy restrictions have on underdeveloped countries?

They prevent underdeveloped countries from expanding their agricultural market. Signup and view all the answers

What was a primary concern that led to the creation of the Bretton Woods Institutions?

Maintaining America's export interests Signup and view all the answers

Which of the following correctly differentiates the World Bank from the IMF?

The World Bank provides loans for development projects, whereas the IMF provides financial assistance to stabilize economies. Signup and view all the answers

What contributes to widening the economic gap between the Global South and the Global North?

Tax havens and transfer pricing Signup and view all the answers

What term is used to describe a company that is registered in a tax haven to avoid taxes in its home country?

Shell company Signup and view all the answers

Which statement best describes the core objective of the Bretton Woods Institutions?

To ensure free trade and economic stability after World War II Signup and view all the answers

How did the fear of protectionism influence the establishment of the Bretton Woods Institutions?

It motivated the need for a free trade framework to prevent obstacles to exports. Signup and view all the answers

What kind of economic practices did nations traditionally follow before the formation of the Bretton Woods Institutions?

Protectionist policies that limited international trade Signup and view all the answers

What is one significant outcome expected from understanding the differences between the World Bank and the IMF?

Understanding their roles in shaping neoliberal policies Signup and view all the answers

What was the primary purpose of the International Monetary Fund (IMF) when it was created?

To administer the international monetary system Signup and view all the answers

What condition did Lichauco observe for loan recipients from the IMF and World Bank?

They must maintain free foreign exchange and import policies Signup and view all the answers

What was the successor organization to the General Agreement on Tariffs and Trade (GATT)?

World Trade Organization (WTO) Signup and view all the answers

What role does the WTO play in regard to trade practices?

It acts as a judge on transgressions in trade liberalization Signup and view all the answers

According to Ibon Databank and Research Center, what remained high in developed countries a decade after the founding of the WTO?

Agricultural subsidies Signup and view all the answers

Which of the following entities was primarily responsible for the elimination of tariffs, as mentioned in the content?

General Agreement on Tariffs and Trade (GATT) Signup and view all the answers

What consequence was observed globally as a result of tariff cuts and the elimination of quantitative restrictions?

A dramatic increase in dumping by agribusiness TNCs Signup and view all the answers

What is one of the chief benefits of liberalization according to Madeley?

It primarily advantages transnational corporations (TNCs) Signup and view all the answers

Study Notes

The Brettonwoods Institutions

The Brettonwoods Institutions (IMF-WB) were created after World War II to stabilize the global economy and prevent protectionist policies, which were prevalent before the war.
The USA, fearing post-war economic instability, spearheaded their creation to ensure a free trade environment, particularly for American exports.
The IMF was designed to manage the international monetary system, while the World Bank (initially the International Bank for Reconstruction and Development) focused on financing the reconstruction of post-war Europe.
Both institutions sought to provide financial capital to nations, imposing conditions like maintaining free foreign exchange and import policies.
The elimination of tariffs was entrusted to the General Agreement on Tariffs and Trade (GATT), later renamed the World Trade Organization (WTO).

The World Trade Organization (WTO)

The WTO, established in 1995, inherited GATT's mandate of fostering and enforcing multilateral trade agreements.
It acts as a forum for trade liberalization and a judge for violations, holding significant power through its dispute settlement mechanism.
The WTO's policies benefit transnational corporations (TNCs) through liberalization, enabling them to operate with fewer restrictions.
Despite the WTO's focus on trade liberalization, developed countries maintain high agricultural subsidies, while underdeveloped countries face limitations on protecting their agricultural sectors.
This uneven playing field facilitates dumping of commodities by agribusiness TNCs, exacerbating the economic gap between developed and developing nations.

Tax Havens, Shell Companies, and Transfer Pricing

Tax Havens: Countries with low or no taxes, used by corporations to evade taxes in their home countries, reducing government revenue and hindering development efforts.
Shell Companies: Legally registered companies withminimal operations, used for tax avoidance and money laundering, contributing to financial inequality.
Transfer Pricing: Adjusting prices for goods and services exchanged between subsidiaries of a multinational corporation to minimize taxes, shifting profits to low-tax jurisdictions and draining revenue from developing countries.
These practices contribute to the economic disparity between the Global South and the Global North, further exacerbating existing inequalities.

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Description

This quiz explores the historical context and significance of the Bretton Woods Institutions, specifically the IMF and World Bank, as well as the later establishment of the World Trade Organization. It delves into their roles in stabilizing the global economy and promoting free trade post-World War II.