Int Econ Ch1

Front 1

Four Events
1. Trade Blocs, Bananas and Beef (EU, NAFTA, trade block, WTO, Bannana war

Back 1

i. EU-European Union-started in 1950’s, by 1992 second highest gross domestic product in world
ii. NAFTA-North American Free Trade Agreement-started in 1987
iii. By 1994 every nation of significant size had joined a trade bloc, e.g., APEC, Asia-Pacific Economic Cooperation.
iv. The WTO-World Trade Organization-started to reduce trade barriers in 1993-1994
v. Banana war- US and Europe economic war started with bananas which led to trade barriers and tariffs and then started a beef war.

Front 2

Four Events
2. how financial crises can spread around the globe (asian tigers)

Back 2

i. Asian Tigers-Japan, South Korea, Taiwan, Hong Kong, Singapore, Thailand, and China- 1997 Thai Baht was over-invested, investors didn’t receive returns got nervous and dumped all Thai assets scared investors and the rest of the countries soon fell. 1998 Russia economy took hit. 1999 Brazil experienced same thing.

Front 3

Four Events
2. how financial crises can spread around the globe (5 diagnoses for the asian bubble)

Back 3

1. The crisis was the countries own fault, they need to reform.
2. We need international bailouts like the IMF Worldbank etc.
3. Need International capital control, government restraint on borrowing and lending
4. We need international debt relief, the countries need to be able to write off their debts
5. We need to have the governments tighten their budgets

Front 4

Four Events
3. The Euro vs. the Dollar (including definition of dollarization

Back 4

i. 1999 11 countries in the European Union—Austria, Belgium, Finland, France. Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain (Britain, Denmark, Greece, and Sweden were debating whether to join belatedly)—decided on abandoning monetary sovereignty and creating a single currency the Euro. It was anticipated to stimulate trade.
ii. Dollarization-a principle where struggling countries decide to implement the dollar as the effective currency as a means of stabilization.

Front 5

Four Events
4. The Immigration Fight: Who Is My Neighbor?

Back 5

i. 1994 California implemented Proposition 187, stripping illegal immigrants of healthcare, education and other services. President Clinton restored many rights in 1996-1997.
ii. 1993 Germany revoked free haven status for political refugees, France, Austria and Belgium followed suit attempting to slow immigration.

Front 6

Economics and the Nation State—no one is in charge of the whole world economy

Back 6

a. Different Moneys—price ratios change and fluctuate
b. Different Fiscal Policies—e.g. Banks set up in Bahamas which are less regulated, shipping set up in Panama or Liberia, less regulated.
c. Factor Mobility—factors do move internationally in response to opportunities for economic gain. Capital is most mobile.