LAYABAN KYLA MAXINE S.

BSBM MM 1B

I. Direction: Answer the following questions:

1. What are the missions and roles of the following financial institutions in
Global economy: (5% each)
A. General Agreement on Tariffs and Trades (GATT)
 The General Agreement on Tariffs and Trade (GATT) is a legal
agreement between many countries, whose overall purpose was to
promote international trade by reducing or eliminating trade barriers such
as tariffs or quotas. According to its preamble, its purpose was the
"substantial reduction of tariffs and other trade barriers and the
elimination of preferences, on a reciprocal and mutually advantageous
basis."

B. World Trade Organization (WTO)

 The overall objective of the WTO is to help its members use trade as a
means to raise living standards, create jobs and improve people’s lives.
The WTO operates the global system of trade rules and helps developing
countries build their trade capacity. It also provides a forum for its
members to negotiate trade agreements and to resolve the trade
problems they face with each other.
C. International Monetary Fund (IMF)
 The IMF has three critical missions: furthering international monetary
cooperation, encouraging the expansion of trade and economic growth,
and discouraging policies that would harm prosperity. To fulfill these
missions, IMF member countries work collaboratively with each other
and with other international bodies.
D. Union
 The North-South Centre of the Council of Europe, also known as the
European Centre for Global Interconnectedness and Solidarity, was
founded in Lisbon in May 1990 with the goals of building solidarity,
encouraging North-South interaction, and increasing public awareness of
global interdependence. The North-South Center plays a dual political
role in advancing and disseminating the democratic and human rights
values that are essential to the Council of Europe's mission in
neighboring regions. It represents "the voice of the South" within the
Council of Europe. Through intercultural discussion and global education,
the North-South Centre seeks to empower civil society, particularly youth
and women, to take an active part in member states and neighboring
regions.
 B. Asia-Pacific Economic Cooperation (APEC)
 APEC ensures that goods, services, investment and people move easily
across borders. Members facilitate this trade through faster customs
procedures at borders; more favorable business climates behind the
border; and aligning regulations and standards across the region. For
example, APEC's initiatives to synchronize regulatory systems is a key
step to integrating the Asia-Pacific economy. A product can be more
easily exported with just one set of common standards across all
economies.

2. One of the form of market integration imposed by these financial

institutions is free trade agreement. 
a.Define free trade agreement (5%)
 A free trade agreement, or FTA, is a contract between two or more
countries that lowers trade barriers to make imports and exports easier.
In today's trade economy, most FTA's are implemented through a formal,
treaty-like agreement and include some regulatory measures. With this
agreement, goods and services can be exchanged across borders with
little to no restrictions, such as government tariffs, taxes, or prohibitions,
among participating countries. In reality, relatively few trade agreements
lead to totally unrestricted trade. FTAs have shown to be one of the most
efficient and effective ways to open markets to foreign goods and
services and to increase exports, notwithstanding their limitations. This is
because FTAs both lower trade barriers and safeguard domestic
business interests.

b.Will free trade agreement be favorable to countries like the Philippines?

State your reason (10%)

3. Define the following: (5%)
a. Capitalism
 In a capitalist economy, private people or companies own the capital
assets. The production of goods and services under capitalism is based
on supply and demand in the general market—known as a market
economy—rather than through central planning—known as a planned
economy or command economy. The purest form of capitalism is free
market or laissez-faire capitalism. At the same time, business owners
employ workers who only receive wages; labor does not own the means
of production but only uses them on behalf of the owners of capital.
Private individuals can act as they like here. They may choose where to
make investments, what to create or sell, and how much to pay for goods
and services. The free market functions without restrictions or limitations.
b. Surplus value
 Marxian economists claimed that surplus value may explain why
capitalism is unstable. Karl Marx believed that human labor was the
source of economic value, in accordance with David Ricardo's labor
theory of value. The capitalist typically only pays his employees enough
to cover their basic needs, which is less than the value that their labor
added to the items. However, according to Marxian theory, this
remuneration only represents a tiny fraction of the value of the worker's
labor, roughly equal to the worker's means of subsistence. Marx
maintained that the capitalist appropriates this surplus value, so
exploiting the laborer, in order to make a profit.

c. Monopoly Capitalism
 A market share concentration known as monopoly occurs when there is
little to no competition. When monopoly control is pervasive and obvious
in capitalism, even while the ideological deception of free markets and
competition is still upheld in public discourse, this phase of capitalism is
referred to as "monopoly capitalism." V. I. Lenin noted that imperialism's
economics, which are essential to understanding modern conflict and
politics, are driven by the financial sector profiting from colonization.
Banks have been involved in financial and monopoly capitalism, but
stockbrokers, who run trusts, and individual large-scale entrepreneurs
hold technical control (who control cartels). The core-periphery model of
political and economic power was developed as a result of the
identification of monopoly capitalism on a global scale.

d. Imperialism
 imperialism is the state policy, practice, or promotion of expanding power
and domination, particularly through direct territorial conquest or by
seizing control of neighboring regions' politics and economies.
Imperialism has frequently been viewed as morally repugnant because it
always involves the use of power, whether military, economic, or in some
other subtle way. The term is frequently used in international propaganda
to denounce and discredit an adversary's foreign policy.

e. Crisis of overproduction
 For Marx, capitalist crises are crises of “overproduction”: too many
commodities are produced than can be profitably sold, and too much
capital has been invested in industry, in the attempt to claim a share of
the available profits.

4. Explain: What is the importance of export capital in capitalism? (10%)

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