Introduction to Globalization

Question 1

Identify the primary purposes of the General Agreement on Tariffs and Trade (GATT).

Answer 1

1. Liberalizing and encouraging trade by eliminating trade barriers
2. Harmonizing certain business-related laws
3. Reducing transportation and other costs of doing international business

Question 2

Describe the primary objective of the World Bank.

Answer 2

The primary objective of the World Bank is to promote general economic development world-wide, focusing on lending to developing countries for infrastructure, agricultural, educational, and similar projects.

Question 3

Describe the primary objective of the International Monetary Fund (IMF).

Answer 3

The primary objective of the IMF is to maintain order in the international monetary system, primarily by providing funds to economies in financial crisis, including:

1. Currency crisis - dramatic decreases in the value of a country’s currency
2. Banking crisis - dramatic levels of withdrawals from a country’s banks (a “run on banks”)
3. Financial debt crisis - country unable to satisfy its foreign debt obligations