Social Studies 10-1 Quiz 5

The main objective of the meetings at Bretton Woods, New Hampshire, was to:

• Establish an agreement whereby all 44 countries would use fixed exchange rates to determine the value of their currencies

• Establish the World Bank and International Monetary Fund (I.M.F.)

• Establish a system of rules, institutions and procedures for the global economy

• Establish the World Trade Organization (W.T.O.)

Major free market principles include:

• A minimal amount of government intervention in the affairs of businesses

• The elimination of artificial trade barriers such as tariffs, import quotas, and subsidies

• The payment of quotas to the I.M.F.

• Adherence to rulings from the W.T.O. concerning trade disputes

The I.M.F. is often criticized because:

• The conditions that if often attached to financial loans for developing countries are seen as unreasonable

• Voting power in this institution is governed by the share of quotas member countries pay to it.

• It uses a free market approach to dealing with economic problems in developing countries, even if such an approach is sometimes not suitable

• It overtly and unabashedly favours the interests of the developed world, at the expense of developing countries.

The "Race to the Bottom" phenomenon makes it likely that in the future:

• Multinationals will continue to increase their profits and the retail prices of their products will remain low.

• The working conditions and living standards of people in the developing world will continue to drop.

• Outsourcing or offshoring by multinationals will become even more common in the future.

• Resentment among people in developing countries, against those in developed countries, will rise.

• The lifestyle and relatively high standard of living enjoyed by people in developed countries will become increasingly dependent upon the economic misfortune of the developing world.

1. The softwood lumber dispute between Canada and the U.S:

• 1. demonstrated that signatories to economic or political agreements do not always uphold the terms of such agreement

• underlined the importance of the U.S. as a trading partner for Canada

• reinforced the arguments of those who opposed Canada’s signing of a free trade agreement with the U.S.

• highlighted the effectiveness of the W.T.O. in mediating and issuing rulings, concerning trade disputes between countries

The debate concerning the benefits and drawbacks of Canadian involvement in free trade with the U.S. and Mexico* indicate that:

• * previously known as the North American Free Trade Agreement (N.A.F.T.A.), now known as the U.S.M.C.A. (United States-Mexico-Canada Agreement)

• certain Canadians are more anti-American and anti-Mexican than others

• certain Canadians are more pro-American and pro-Mexican than others

• it is still a contentious or controversial issue in this country

• national unity in Canada is weak

In your own words, define ‘economic globalization.

1. Which of the four foundations of economic globalization do you feel has had the greatest influence on the development of modern economic globalization?  Explain.