Name: Danica D.

Aguilar Date: 09/23/2021

Activity 3

Test Your Understanding

Put a check ( /) mark if the statement is correct and cross (X) mark if wrong.

X 1. Command economy promotes competition among businesses and

firms.

X 2. Private individuals have economic freedom in a command system.

/ 3. Descriptive theory addresses the questions of which product to trade,

how much

product to offer and produce, and which country to trade in the

absence of

government restrictions.

X 4. Core states are the main source of raw materials and resources in the
production.

/ 5. Mercantilism was adopted to increase and sustain the colonial power

and its

authority to direct and control the economic activity of the colony.

X 6. Balance of payments occurs when a firm purchases or invest directly

in facilities

like factories, store, or warehouse to produce or market a product

in a foreign

country.

X 7. IMF is a dispute settlement body responsible for resolving trade

problems.
 X 8. WTO was formed to finance the reconstruction of war-torn countries
brought by

the devastation of World War II.

X 9. WB main function is to superve exchange rate system and providing

loan

programs to economies.

X 10. Pound is the official currency of EU.

Activity 4

Application

List down the roles and functions of the following:

1. World Trade Organization

 Implementation of latest GATT agreements

 A venue for trade negotiations
 A dispute settlement body responsible for resolving trade problems
 Review and assess national and international trade laws and policies
 Assist members and developing economies by providing technical
assistance and training programs.

2. World Bank
 Its function is limited only to poverty which has some similarities
with IMF.
 It concentrates to macro scale projects where micro and small projects
affecting the lives of communities are excluded and not given proper
attention.
 The organization fails to address the global problem of inequality.
 Rampant case of corruption in the organization.
 Employees and staff are overpaid; salaries are higher than a banker's
pay.
3. International Monetary Fund
  The International Monetary Fund aims to reducing global poverty,
encouraging international trade, and promoting financial stability and
economic growth.
 The IMF has three main functions: overseeing economic
development, lending, and capacity development.
 Through economic surveillance, the IMF monitors developments that
affect member economies as well as the global economy as a whole.
 The IMF lends to its member nations with balance of payment
problems so they can strengthen their economies.
 The group also provides assistance, policy advice, and training
through its various technical assistance programs.

4. European Union
 promote peace, its values and the well-being of its citizens
 offer freedom, security and justice without internal borders
 sustainable development based on balanced economic growth and
price stability, a highly competitive market economy with full
employment and social progress, and environmental protection
 combat social exclusion and discrimination
 promote scientific and technological progress
 enhance economic, social and territorial cohesion and solidarity
among EU countries
 respect its rich cultural and linguistic diversity
 Establish an economic and monetary union whose currency is the
euro.

5. Associations of Southeast Asian Nations

 Mutual respect for the interdependence, sovereignty, equality, territorial

integrity, and national identity of all nations;
 The right of every state to lead its national existence free from external
interference, subversion, or coercion;
 Non-interference in the internal affairs of one another
 Settlement of differences or disputes by peaceful manner;
 Renunciation of the threat or use of force; and
 Effective cooperation among themselves
Activity 5

Critical Thinking and Discussion Questions

1. What are the characteristics and features of market,

command and mixed economic systems? What system
works best for globalization?

Market economy is characterized by private ownership, freedom of choice, self-

interest, buying and selling platforms, competition, and limited government
intervention. While command economy characteristics where the government is in
control of the pricing of goods and services. The government makes all decisions
for finances in the country, such as hourly rate of pay for workers. The government
may even assign people the jobs. On the other hand, mixed economy
characteristics are first, it protects private property. Second, it allows the free
market and the laws of supply and demand to determine prices. Third, it is driven
by the motivation of the self-interest of individuals. The system work best for
globalization is mixed economy because a mixed economy permits private
participation in production, which in return allows healthy competition that can
result in profit. It also contributes to public ownership in manufacturing, which can
address social welfare needs.

2. How do domestic policies affect the nature of

international trade?

The impact of domestic policy regulations and standards on international trade has
been an important global policy issue during the past decade. Regulations and
standards, in principle, are designed to facilitate production, guarantee quality of
products, reduce transaction costs and enhance contestability in the market. For
example, pollution standards can contribute to a clean environment, health and
sanitary requirements can improve the health status in an economy, and
competition policy can enhance market contestability. However, standards and
technical regulations can produce serious distortions in commercial markets:
domestic regulatory systems may deter trade and limit market entry through
environmental, health or safety standards.
 3. Are transnational corporations harmful or not? How will
a win-win approach be applied to TNC and the
country/economy where it operates?

Transnational corporations are somehow harmful. The Coca-Cola Corporation is a

good example of a company causing environmental decline in India, It takes 2.72
liters of water to produce 1 liter of coca cola. Now this may sound like a
reasonable ratio for such a deliciously sweet beverage, but not if you happen to be
a farmer living close by to Coca Cola’s Kaladera plant in Rajasthan, North East
India. According to recent independent report, commissioned by coca cola, “[the
factory’s] presence in this area would continue to be one of the contributors to a
worsening water situation and a source of stress to the communities around,”
concluding that the company should find alternative water supplies, relocate or
shut down the plant. The result of coke’s presence in the water depleted region is
that local farmers who have lived in the area for decades now have inadequate
water supplies to keep their crops watered and there appears to be a clear link
between the coca cola Corporation moving into the region and the destruction of
the livelihood of the farmers living nearby. Coca Cola, which had an advertising
budget of $2.6 billion in 2006, is clearly in a position to compensate these farmers,
or relocate to a more water rich area, but chooses not to. Coca Cola’s priority
clearly lies in maintaining its sickly sweet image while generating famine and
poverty for those living in proximity to its factory. Another example of a company
causing environmental damage is Shell in Nigeria. Watch the brief clip from the
Video ‘Poison Fire’ and note down the scale of environmental damage caused by
Britain’s biggest company. In recent years, Transnational Company Agreements
(TCA) have become an increasing practice in multinational companies (MNCs).
This is the result of the internationalisation of industrial relations in which
European and International trade unions on the one hand, and some MNCs, on the
other hand, have found a common ground for action. Over the last decade, TCAs
drew the attention of EU Institutions and ILO too. Against this background, the
ETUC and Business Europe developed the joint project “Building on experiences:
a win-win approach to transnational industrial relations in multinational
companies”. This project, for the first time ever, put trade unions, employers’
organizations and companies around the table and initiated a debate, building on
results of discussions internal to their organizations and previous projects on TCAs
carried-out by both the ETUC and Business Europe over the recent years. All
interviews and discussions held throughout the project contributed to inform both
the enclosed final report – drafted by two independent experts, Marie-Nöelle
Lopez and Stefania Marassi – as well as the political conclusions drawn together
by ETUC and Business Europe which close the text

4. What are the roles of economic institutions in global

economy? Do these organizations have accountability in
the problem of globalization?

The roles of economic institutions in global economy is to determine attitudes,

motivations and conditions for development. If institutions are elastic and
encourage people to avail economic opportunities and further to lead higher
standard of living and inspire them to work hard, then economic development will
occur. These organizations have accountability in the problem of globalization
where there products may sometimes cause damage and issues that hinders the
globalization. We need products that are ecofriendly at the same time helps our
globalizations expand more.