BBA 3rd Year International Economic Institutions Short Question Answer Notes Study Material Notes Semester wise Notes 3 Mock papers for self-assessment solved papers examination papers Notes.
(Short Answer Questions),
Q.1. Explain WTO. Give its objectives.
Ans. World Trade Organisation (WTO): The World Trade Organisation was established on 1st January 1995. It is the embodiment of the UN results and the successor to GATT. WTO has 159 members. India is one of the founder members. The headquarters of WTO is located at Geneva in Switzerland. The Ministerial Conference consisting of the representatives of all the member nations is the highest authority of WTO. It meets almost every three years and is empowered to take decisions on all matters under the multilateral trade agreements. The day-to-day work is entrusted to the General Council. Objectives of WTO: The following are the objectives of WTO:
1. Raise the standards of living.
2. Ensure full employment.
3. Expand trade in goods and services.
4. Optimise use of world’s resources.
5. Achieve sustainable development.
Q.2. What are the main differences between GATT and WTO?
Ans. Difference between GATT and WTO
|1.||It is an abbreviation for general Agreement on Tar-iffs and Rrade.||It is an abbreviation for World Trade Organisation.|
|2.||It was in operation since 1948.||It was instituted in the year 1995.|
|3.||It had more than 80 countries as parties.||It has 159 member countries all around the world.|
|4.||It was an asset of rules and a multilateral agreement.||It is a permanent institution.|
|5.||It had contracting parties.||It has members.|
|6.||It was applied on provisional basis.||Its activities are full and permanent.|
|7. its rules are applicable to trade in merchandise goods.||Its rules are applicable to tade in merchandise goods.||Its rules are applicable to trade in goods, as well as services and intellectual property.|
|8.||It was less powerful.||It is more powerful.|
|9.||Its dispute settlement system was slow and less ef-ficient.||Its dispute settlement system is faster and more ef-ficient.|
0.3. What are the benefits of WTO to India? Also give its isadvantages. Or
Describe the advantages and disadvantages of World Trade Organisation in reference to Indian economy. (2014)
Ans. Benefits of WTO to India : As a founder member of WTO, India can be benefited in the given ways:
1. Boost to Exports: India’s exports are likely to be boosted due to reduction of tariffs on the products of exports interest to India. Prospects of agricultural exports will improve due to reduction in domestic subsidies and barriers to trade.
2. Policy Assistance: As a member of the WTO, India can get assistance from the international trade centre in formulating and implementing export promotion programmes.
3. Trade Links: India has the advantage of having trade links with all other member countries. It is saved from the trouble of entering into multiple bilateral trade agreements with so many countries. India has market access to all nations. WTO is expected to facilitate the growth of multilateral trade.
4. Settlement of Disputes: WTO provides a forum for trade negotiations and settlement of disputes among member countries. Elaborate rules and procedures have been laid down for this purpose. The agreements are legally binding on member countries.
5. Special Concessions : There are several concessions and exemptions for the developing countries especially the least developed nations. There are provisions extending special and differential treatment to such countries. WTO has also helped for promotion of trade in services.
6. Promotion of Competition : Quantitative restrictions and non-tariff barriers are to be removed under the regime of WTO. Import restrictions are allowed when a country faces balance of payments difficulties.
Disadvantages of WTO to India : The following are the disadvantages of WTO to India :
1. Non-Export Push: India’s exports may not increase considerably. The flow of goods and services across the world depends more on infrastructure, political environment, quality and technology than on trade barriers. Removal of trade barriers is not guaranteed for an increase in exports.
2. Prominence to Developed Nations : WTO focuses more on the interest of the developed countries. TRIMS undermines strategy of self-reliant growth based on local services and technology. Global finance is still moving primarily towards the developed countries. Most of the developing countries are left high and dry. TRIMS favours the multinational corporations.
3. Price Rise : WTO agreements are likely to cause a steep hike in the prices of drugs and agricultural inputs.
4. Danger to Service Sector : Service sector in India is less developed than in developed countries. Inclusion of trade in services would be detrimental to India’s interests.
Q.4. What is the benefit of EU to India?
Ans. European Union is the major trading partner of India. In the recent years, it has also proved to be an important source of foreign investment and aid to India. According to the survey report of the IIFT (Indian Institute of Foreign Trade), 15 product groups in India’s exportable to the EU have relatively elastic demand. India can capture a significant part of the European market by little bit of planning and commitments. The study reveals that attractive business opportunities will emerge in the fields of computer software. The other product groups that will benefit are food-stuffs, fats, oils, plastics, pulp and wood articles, textiles, chemicals, metals and vegetable products.
Q.5. What is European Economic Community (EEC)? Explain.
Ans. European Economic Community (EEC) organisation was established (1958) by a treaty signed in 1957 by Belgium, France, Italy, Luxembourg, the Netherlands and West Germany (now Germany). It was known informally as the Common Market. The EEC was the most significant of
the three treaty organisations that were consolidated in 1967 to form the European Community (EC, known since the ratification (1993) of the Maastricht treaty as the European Union). The EEC had as its aim the eventual economic union of its member nations, ultimately leading to political union. It worked for the free movement of labour and capital, the abolition of trusts and cartels and the development of joint and reciprocal policies on labour, social welfare, agriculture, transport and foreign trade.
in 1958, Britain proposed that the Common Market be expanded into a transatlantic free. trade area. After the proposal was vetoed by France, Britain engineered the formation (1960) of the European Free Trade Association (EFTA) and was joined by other European nations that did not belong to the common market. Beginning in 1973, EFTA and the EEC negotiated a series of agreements that would insure uniformity between the two organisations in many areas of economic policy and by 1995, all but four of EFTA’s members had transferred their membership from EFTA to the European Union.
Q.6. What is NAFTA? Explain.
Ans. The North America Free Trade Agreement (NAFTA) came into being on January 1, 1994 The most affluent nations of the world, i.e. USA and Canada along with Mexico (a developing country) joined together to form a trade bloc. A free agreement was signed by USA and Canada in 1989, this was extended to Mexico in 1994. NAFTA is expected to eliminate all tariffs and trade barriers among these countries by 2009. However, internal tariffs on a large number of products categories were removed.
NAFTA has a population of 490 million and hence it covers one of the most significant areas in globe.
Q.7. Discuss the role and objectives of ASEAN.
Ans. Association of South East Asian Nations (ASEAN) was formed by the Bangkok Declaration, 1967 by the five countries, namely Indonesia, Malaysia, the Philippines, Singapore and Thailand with a view to accelerate economic progress of these countries. Brunei joined the ASEAN on 8 January 1984 followed by Vietnam on 28 July 1995, Laos and Myanmar on 23 July 1997 and Combodia on 30 April 1999.
The ASEAN region has population of about 500 million, a total area of 4.5 million square kilometres, a combined gross domestic product of US$ 737 billion and a total trade of US$ 720 billion.
Objectives of ASEAN
The ASEAN declaration states that the aims and purposes of the association are as under:
1. To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of south-east asian nations.
2. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations charter. In 1995, the ASEAN heads of states and government re-affirmed that cooperative peace and shared prosperity shall be the fundamental goal of ASEAN.
Q.8. What are the basic services of IMF?
Ans. Besides supervising the international monetary system and providing financial support to member countries, the IMF assists its members by :
1. Providing technical assistance in certain areas of its competence.
2. Running an educational institute in Washington and offering training courses abroad.
3. Without a global monitoring agency the modern system of payments in foreign currency simply can’t work. So the herculean task to move the wheel of work has been assigned to IMF.
0.9. Write a short note on organisation of IMF.
Ans. The IMF has no control over national economic policies of its members. On the country, the chain of command runs from the governments of the member countries to the IMF. The highest authority is the Board of Governors, which consists of one governor (usually the minister of finance or the head of the central bank) of each member country. Additionally, there is an equal number of alternates (representative governors). The board of governors gathers only on the occasion of annual meetings. The IMF’s day-to-day work is managed by the executive board, which is formed of 24 members.
Executive directors meet at least three times a week to supervise the implementation of the IMF’s policies. The member countries with the highest quotas send one executive director to the board, who has as many votes as the quota regulation assigns to his country. The remaining directors are elected by the rest of the countries and they only have as many votes as they had in the election.
Q.10. What does the World Bank do?
Ans. The World Bank is the world’s largest source of development assistance, providing nearly $30 billion in loans annually, to its client countries. The Bank uses its financial resources, its highly trained staff and its extensive knowledge base to individually help each developing country. The main focus is on:
1. Helping the poorest people and the poorest countries but for all its clients.
2. The bank emphasises the need for investing in people, particularly through bąsic health and education.
3. Protecting the environment.
4. Supporting and encouraging private business development.
5. Strengthening the ability of the government to deliver quality services efficiently and transparently.
Q.11. Where does the World Bank get its money from?
Ans. The World Bank raises money for its development programs by tapping the world’s capital markets and in the case of IDA, through contributions from wealthier member governments. IBRD, which accounts for about three-fourths of the bank’s annual lending, raises almost all its money in financial markets. One of the world’s most prudent and conservatively managed financial institutions, the IBRD sells AAA-rated bonds and other debt securities to pension funds, insurance companies, corporations, other banks and individuals around the globe.
Q.12. Who runs the World Bank?
Ans. The World Bank is owned by more than 182 member countries whose views and interests are represented by a board of governors and a Washington based board of directors. Member countries are shareholders who carry ultimate decision-making power in the World Bank. Each member nation appoints a governor and an alternative governor to carry out these responsibilities. The governors, who are usually officials such as ministers of finance or planning, meet at the Bank’s annual meetings. They decide on key bank policy issues, admit or suspend country members, decide on changes in the authorised capital stock, determine the distribution of the IBRD’s net income endorse financial statements and budgets.
Q.13. What is meant by economic union? (2015)
Ans. Economic Union : The represents full integration of the economies of two or more member countries. In addition to eliminating internal trade barriers, adopting common external trade policies, and abolishing restrictions on the mobility of the factors of production among members, an economic union requires its members to coordinate their economic policies (monetary policies, fiscal policy, taxation, and social welfare programmes) so as to blend their economies into a single entity. Obviously, the formation of one economic union requires nations to surrender a large measure of their national sovereignty. Needless to say formation of an economic union is extremely difficult since member countries strongly desire to retain the power of nation-state, and attempts to undermine the authority of the state will encounter opposition.
An economic/monetary union represents the fifth level of integration among politically independent countries. In strict technical terms, a monetary union does not require the existence of a common market or a customs union, a free-trade area or a regional cooperation for development However, it is the logical next step after a common market, because it requires the next higher level of cooperation among member nations.