Course Review

INT 301, International Relations

City University of Seattle
Course delivered at Bratislava, Slovak Republic, in Spring Term 2015
Instructor: James Caldwell, J.D.
Course textbook: Goldstein, J. & Pevehouse, J. (2012). International relations.
10th edition. Pearson.
All page citations refer to the textbook.

How many countries, or recognized countries, or member states? World-198 (includes

Taiwan, Palestine and Transnistria), US-195 (not including TW), UN-193 (Kosovo and
Vatican City are not members), WTO-160, OECD-34. Confirmed as of 6 Apr 2015.
CHAPTER 1. THE GLOBALIZATION OF INTERNATIONAL RELATIONS.
1.

There is a narrow and a broad definition of international relations

(IR). What are they?
The narrow definition refers to IR as the study of the relationships between
the worlds states, as represented by their governments. The broad
definition expands the field of inquiry beyond just states, but also nonstate actors and their impact on international security affairs and the
international political economy. See page 3.

2. Although national governments may be the most important actors in IR,

they can be strongly influenced by a variety of nonstate actors. Describe
the different types of nonstate actors. See page 16.
IGOs (intergovernmental organizations such as the UN and NATO), NGOs
(nongovernmental organizations such as Transparency International and
Amnesty International, MNCs (multinational corporations such as Royal
Dutch Shell and OMV Group), and other individuals and constituencies,
such as Bono, al Qaeda, etc.
3. What is meant by the term, the collective goods problem?
The problem of how to provide something that benefits all members of a
group regardless of what each member contributes to it. The problem of
getting individual actors to cooperate for the common good without a
central authority to make them do it. See pages 4-5.
When there is shared interest but also conflicting individual interests. For
example, how to get all countries to cooperate on stopping global warming,
when each has an individual interest in burning fossil fuels to keep its own
economy going.
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There are three basic principles which offer possible solutions to the collective
goods problem: dominance, reciprocity and identity.
4. How does the principle of dominance solve the collective goods problem
in IR?
When a group of great powers, or even a hegemon (a superpower) can
basically impose its will on the weaker states to make them cooperate.
Brute force alone is not the only tool used. See page 5.
Advantage: it does achieve the required cooperation and minimizes open
conflict within the group. Disadvantage: Lower ranking members may
harbor resentment and conflicts between members over status ranking can
occur. So it is not as necessarily stable as it may appear. Example:
Roman Empire maintained the Pax Romana for a long time. The UN
Security Council today is an example.
5. How does the principle of reciprocity solve the collective goods problem
in IR?
It is the behavior of you do for me and I will do for you. It works in the
opposite direction, also: You hurt me, then I will hurt you. It requires no
central authority. Reciprocity is the basis of most of the international
relationships and institutions that exist. It works on actors responding to
rewards and punishments as they seek their self-interests. See pages 5-6.
6. How does the principle of identity solve the collective goods problem in
IR?
When an actor voluntarily does for the group because of his self-identity
with it. In this case, the actors behavior is not driven by self-interest but
by the common good. Examples: Scandinavian countries donate a lot to
foreign aid. Canada has high participation in peacekeeping activities.
Example: The English-speaking world almost always works closely
together on critical issues. See page 6-7.
7. Identify and describe the four levels of analysis used to analyze IR
issues. See pages 17-19.
First level: the individual level. Concerned with the choices and actions of
individual persons. Examples: Lenin, Hitler.
Second level: the state or domestic level. Concerned with the choices
and actions of groups of individuals within states that influence state
action in the international arena. Examples: the military-indiustrial
complex, political parties, public opinion.
Third level: the system or interstate or international level. Concerns the
actions and decisions of the states towards each other. Traditionally, the
most important level of analysis.
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Fourth level: the global level. Concerned with transnational forces that
influence the behavior of states. Examples: fear of terrorism, the NorthSouth gap, cultural clusters.
8. What is meant by the North-South gap?
It is the code phrase used to mean the gap between the worlds relatively
rich, industrialized countries and the relatively poor, developing countries.
See page 21.
9. Why do the lessons of World Wars I and II seem contradictory?
The 1938 appeasement of Hitler seemed to make it clear that
appeasement is not the best way to maintain peace, that only a hard-line
policy with preparation for and willingness to go to war will prevent war.
But those very policies apparently led Europe to war in 1914. So what is
the right policy? Good question! Probably the correct balance between
the two. What is that balance? That is the eternal question. See page 29.
10.Describe the era of the Cold War between the United States and the Soviet
War. Did it provide a level of security and stability? Yes, the two sides
were in a MAD (mutually assured destruction) situation, which kept the
peace between them. See pages 31-33.
11.What are proxy wars?
Wars in the third to fifth worlds, often civil wars, in which competing great
powers jockey for position by advising and supplying one of the
combatants. See page 32.
CHAPTERS 2 AND 3. The various theoretical approaches to IR:
realism, liberal theories, social theories (constructivist, postmodern,
and Marxist), peace studies, and gender theories.
CHAPTER 2. REALIST THEORIES.
12. There is a school of thought in IR, traditionally the most discussed and
debated theory, called realism. How does realism explain IR? In terms of
power, and how states exercise power towards each other. See pages 4345.
13. Realism has a challenging theory called idealism, also liberalism. What
are some of the large differences in assumptions between the two
theories?
Realism assumes that IR can best be explained by the choices of states
operating as autonomous actors rationally pursuing their own self interests
in an international system of sovereign states without a central authority.
Liberals see the international system as one based on a community of
states that have the potential to work together to overcome mutual
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problems. They believe that international law, morality, and international

organizations, not just power alone, are key influences on international
events.
The difference is whether one is optimistic or pessimistic about whether
states will VOLUNTARILY cooperate with each other. See pages 43-45.
14. What is power in terms of IR?
The ability or potential to influence others behavior. See page 45.
15. What is probably the single most important indicator of a states power?
Its GDP (Gross Domestic Product). See pages 45-47.
16. Why are a states long term resources so important with respect to power?
They are the sources from which a state can build up military capabilities
and material wealth to extend foreign aid (the so-called carrot and the
stick, also known as good cop, bad cop. See 47-49.
17. What are some examples of a states long term resources (the base of
power)?
Tangible resources such as GDP, population, territory, geography and
natural resources. Intangible resources include political culture, patriotism,
education of the population, strength of the states scientific and
technological base, the credibility of its commitments, and the ability of its
culture to shape the thinking of other states. See page 47.
18. What capability do realists consider to be the most important power
capability?
Realists consider military force the most important power capability. See
page 47.
19. What is the natural result of international anarchy, i.e., the lack of a world
government?
It means that each state is a sovereign and autonomous actor pursuing its
own national interests. See pages 49-51.
20. What does the principle of sovereignty mean?
The government of each independent state has the right, in principle, to do
whatever it wishes on its own territory. It answers to no higher authority.
See page 50.
21. The international system is based on what concepts?
The sovereignty of independent states, their right to control affairs on their
own territory, and their responsibility to respect internationally recognized
bodies. See pages 50-51.
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22. In general, what is meant by a great power?

A state that can be defeated militarily only by another great power. See
page 54.
23. Which countries are generally recognized as the seven great powers
today?
U.S.,Britain, China, France, Germany, Japan and Russia. See page 55.
24. What percent of the worlds GDP do the seven great powers account for?
Roughly half. See page 55.
25. What percent of the worlds military expenditures do the seven great
powers account for?
Almost three quarters. See page 55.
26. What warning does the power transition theory make regarding when a
war may be likely?
Whenever a rising power is surpassing (or threatening to surpass) the most
powerful state in a balance of power situation. See page 57.
27. What does hegemony mean?
Hegemony is the situation when one state holds so much power relative to
the others that it can single-handedly dominate the rules and
arrangements by which international political and economic relations are
conducted. Such a state is called a hegemon. See pages 57-58.
28. Give two examples of hegemonies.
Britain in the 19th century and the U.S. after World War II. See page 58.
29. What is the hegemonic stability theory?
It holds that hegemony provides some order similar to a central
government in the international system: reducing anarchy, deterring
aggression, promoting free trade, and providing a hard currency that can
be used as a world standard. See page 59.
30. What are two important formal alliances that dominate the international
security scene?
The more powerful is the North Atlantic Treaty Organization (NATO),
the second is the U.S.-Japanese alliance.
CHAPTER 3. LIBERAL AND SOCIAL THEORIES.

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31. German philosopher Immanuel Kant was influential in establishing liberal

theories of IR (1795). His theory for world peace was based on which of
the two following bases:
that it is more rational for states to follow their short term interests, even if
that means war, or should they realize that international cooperation and
peace is more rational and better for their long term interest than war?
The latter. See page 87.
32.What was Kants theory re interdependence?
He thought trade between states led ultimately to peace between the
states because over time they would become mutually dependent
(interdependent) on each other for necessary goods. See page 87.
33. What is the neoliberal approach to IR?
It concedes to the realists that autonomous states acting in their own
interest are the main actors in IR, but that pursuing the self interest does
not rule out international cooperation, based on reciprocity. Example:
WTO. Neoliberals think realists are too pessimistic about the chances for
international cooperation. See page 88.
34. What is meant by international regimes?
An international regime is a set of rules, standards and procedures where
the expectations of the international actors has converged. The actors
have agreed on the rules governing their interaction. They all expect each
other to play by the same rules. Examples: world trade, world health,
arms control, Antarctic exploration. See page 90. Very often the regimes
will become institutionalized, such as the WTO and the IMF. This
strengthens the power of the regime.
35.What is meant by collective security and how is it an example of liberal
theory in action?
In a collective security arrangement, a group of states agrees to respond
together to aggression. The UN and NATO are examples. It demonstrates
the liberal idea that individual states, acting in their own rational selfinterest, can voluntarily cooperate for the common good. See page 92.
36.What is a good summary contrasting realist IR theory with liberal IR
theory?
Realism says states want more power. Liberalism says states, interest
groups , and individuals want peace and prosperity. See page 97.
37.What is constructivism and give an example of a situation which can be
explained by a constructivist approach?

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In IR, constructivism concentrates on identity issues and how they explain

how a state perceives its national interests. Example: why does the U.S.
consider North Korea such a threat but not Britain, when Britain is far more
dangerous militarily than North Korea? Because of the shared identity
between the U.S. and Britain as being part of the Anglophone world, whose
international regime includes the rule that Anglophone countries do not
threaten each other militarily. see page 97.
38.What is the basic idea of Marxism and what implications does it have for
IR?
Marxism is a branch of socialism that believes that there is a power
struggle between the capitalist class, who owns the means of production
and derives the profits from the working class. The workers create the
wealth but the owners keep almost all of it to themselves, thereby
exploiting the workers. The workers must fight to get their fair share.
Marxists view the world in much the same way, seeing a pattern of
exploitation by the rich nations of the poor nations. See page 105.
39.What does the term peace studies mean?
It refers to the movement among scholars to view war as not just caused
by states seeking their own self interests, but that there are underlying
structural problems in societies like poverty, hunger and oppression (called
structural violence) which lead to conflict or encourage leaders to use
war as a distraction and a safety valve to blow off steam when the
domestic situation heats up too much. See page 106.
40.What does the term gender studies or feminist studies mean and
how do they affect the study of IR?
Scholarship on the idea that gender matters in understanding how IR
works. See page 110.
41.What is one of the more popular ideas discussed among gender theorists?
That women are naturally suited to be better peace makers than men are.
See page 114. Another idea follows naturally from that: that there would
be less war if more women ran countries, instead of men. People who
believe this are called difference feminists.
42.What was the basic plot in the ancient Greek play Lysistrata, written by
Aristophanes, a famous ancient Athenian playwright?
A war was then being fought between Athens and Sparta, called the
Peloponnesian War. It was unpopular. In an attempt to stop the war, a
young woman named Lysistrata organizes the Athenian and Spartan
women into withholding sex from the men until the men stop the war. It
worked. (In the play). See page 114.

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43.What is the big difference between difference feminism and liberal

feminism?
D-feminists argue that realism reflects a masculine perception of social
relations, whereas L-feminists say women can be just as realist as men.
L-feminists believe that using more female participation in foreign policy
will enhance a states capabilities, whereas D-feminists hold that womens
abilities are better spent trying to transform the current masculine-based
world of IR into a more uniquely feminine concept of IR. They say the
current game is a mens game, and it should be changed into a womens
game. There would be less war then. See page 119.
CHAPTER 4. FORMATION AND IMPLEMENTATION OF FOREIGN
POLICY, INCLUDING THE KEY INSTITUTIONS INVOLVED IN THAT
PROCESS.
44.What is meant by foreign policy?
They are strategies governments use to guide their actions toward other
states. See page 146.
45.What is the foreign policy process?
How foreign policies are decided and implemented. See page 146.
46.There are three models of decision making which can be seen in the
formulation of foreign policy. What the three models?
1) the rational model, which logically lists goals, alternatives for
achieving them, the benefits, costs and risks of each alternate, and then
select the best alternate. This requires a lot of time, relatively speaking.
2) the organizational process model, where many decisions are
decided in accordance with standard operating procedures, or general
principles, or in favor of the least controversial decision. Many lower level
decisions are decided this way.
3) the government bargaining model, where decisions are made by
negotiation between different government agencies with differing
interests. See pages 127-128.
47.Is individual decision making totally based on logical reasoning?
No, that would be humanly impossible. Logical reasoning is used, to be
sure, but other psychological factors also affect an individuals decision
making. See page 129-132.
48.What are some of the psychological factors which can influence an
individuals decision making?

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1) a persons personality, 2) their personal values, 3) their personal beliefs,

4) misperception (the individual does not perceive something accurately
because of some pre-existing bias), 5) selective perceptions (accepting
only some kind of information, again, maybe because of pre-existing
biases), 6) emotional biases, and 7) cognitive biases (the attempt to avoid
cognitive dissonance, i.e., people tend to try to maintain mental models of
the world that are logically consistent). See page 129-132.
49.What is the difference between optimizing and satisficing?
Optimizing means picking the very best option versus satisficing, which
means picking the good enough option that meets some minimal
criteria. The word satisficing was created out of a combination of
satisfying and sacrificing. See page 131.
50.What is groupthink and how can it affect a groups decision making?
It is the tendency for groups to reach consensus on decisions without fully
or accurately assessing their consequences, because individual members
tend to go along with ideas others support.
Example: everyone else seems to think an idea will work, so a team
member with doubts about its success will suppress his opposition to the
idea. This can make groups more optimistic than an individual by himself,
and therefore the group may be willing to take greater risks than an
individual will. After all, a team member can share responsibility for a
decision gone wrong among all the team members, but an individual must
bear it all himself. See page 132.
51.What is the military-industrial complex?
The huge interlocking network of government agencies, industrial military
contractors, and research institutes, all of whom work together to supply a
nations military forces. They have a shared interest in large military
spending, which may lead them to favor aggressive foreign policies based
on dominance.
52.Who are the actors in the process of making foreign policy?
1) individual leaders, 2) bureaucrats, 3) competing government agencies,
4) private interest groups in the general public, 5) potentially the militaryindustrial complex, 6) public opinion, and 7) legislatures (at least in
democracies).
CHAPTER 5. INTERNATIONAL CONFLICT
53.There are 5 different types of war. Identify and describe them. See pages
153 - 156.

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1) hegemonic war: war over control of the entire world order, including
world hegemomy. Also known as world war. Last hegemonic war to be
fought was World War II.
2) total war: war by one state to conquer and occupy another. In total
war, the entire society and economy is mobilized for war. The entire
society and economy of the enemy is considered to be legitimate targets.
The last total war fought between the great powers was World War II.
3) limited war: war one with an objective short of conquest and
occupation of an enemy. Example: 1991 war by US against Saddam
Husseins Iraq. Liberation of Kuwait was the objective. Many border wars
are of this character. Once a combatant gets the land he wants, he stops
the war.
4) civil war: war between factions within the same state. Outsiders are
not direct participants. Purposes of these wars are to a) change the entire
system of government, b) replace the people in the govt, or c) split a
region off as a new state.
5) guerilla war: warfare without front lines. Irregular forces operate in
the midst of civilian populations. Purpose is not to directly confront an
enemy force but to harass it to gradually liberate a territory from its
control. This kind of war is seen more and more in the world.
54.Many theories have been developed, on all 4 levels of analysis, as to why
some conflicts turn violent and others do not. But most of the theories are
not well supported by strong empirical evidence. Therefore, can political
scientists reliably predict the outbreak of war?
No. See page 160/
55.What is nationalism and is it important in modern times?
Devotion to the interests of ones own nation over the interests of other
states. It may be the most important force in world politics in the last 200
years. See page 160.
56.Which types of conflict have been more likely to start conflict: ethnic and
religious conflicts, or ideological conflicts?
Ethnic and religious conflicts.
57.Which are more likely causes of war: territorial disputes and conflicts over
the control of governments, or economic conflicts?
Territorial conflicts and control over governments are likely to lead to the
use of violence. They are high stakes issues. Economic conflicts
between states are more common, but are FAR less likely to lead to war.
See page 185.

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58.The UN Convention on the Law of the Sea (UNCLOS) establishes rules

regarding how far a states sovereignty may extend into the sea. What are
they?
within 3 miles: territorial waters of a state
within 12 miles: state can control all shipping in those waters
with 200 miles: state has control over fishing and mining rights but there
is free navigation for all. See page 183.
59.Is airspace above a state considered part of its territory? What about
outer space?
Airspace above a state is considered the territory of that state. To fly over
a states territory, an airplane must have that states permission.
Outer space is considered international territory, like the high seas. See
page 184.
CHAPTER 6. MILITARY FORCE AND TERRORISM
60.The 7 great powers account for what percent of world military spending?
What percent of the worlds soldiers? What percent of the worlds
weapons? What percent of the worlds nuclear weapons?
About three quarters of the worlds military spending; a third of the worlds
soldiers, a third of the weapons, and 99% of the nuclear weapons. See
page 194.
61.How many supporting ships does an aircraft carrier typically require for
protection and supply?
20 to 25 supporting ships. See page 197.
62.How many large carriers does the U.S. operate?
11 carriers. See page 197.
63.There is only one country today which can project military power
simultaneously in most of the worlds regions. What country is that?
The U.S. See page 200.
64.What country accounts for almost half of all world military expenditures?
The U.S. See page 223.
65.What is the traditional purpose of terrorism?
To demoralize a civilian population in order to use its discontent as
leverage on national governments. See page 205.
66.What are the three general types of weapons of mass destruction?
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Nuclear, chemical and biological. See page 209.

67.What is the general impact of military spending on an economy?
It can provide a short term boost to the economy, but is generally
detrimental in the long run, because it uses resources that could go into
other goods and services. One exception might be spending on state of
the art high tech research, which could then be commercially productized
and useful in peace.

CHAPTER 7. INTERNATIONAL ORGANIZATION, LAW, AND HUMAN

RIGHTS
68.Is the UN General Assembly a legislature?
No, it is a conference of ambassadors, each country gets one vote in the
Assembly. See page 236 et al.
69.What are countries are the 5 permanent members of the UN Security
Council?
GB, FR, RU, CN and US.
70.The 5 permanent members of the UN Security Council have a special
power that no other member state of the UN has. What is that power?
Any of the 5 may veto any action of the Security Council. In other words
the other 14 members can vote yes, but if one of the permanent 5 votes
no, the action is defeated. See page 242.
71.What are the 3 big differences between national law and international law?
1) national law is usually easy to find. It is usually codified in a collection
of laws, called a code. International law is not completely codified and
whether or not some principle is or is not a rule of international law is open
to debate.
2) There is no international police force to enforce intl law. Whether intl
law is enforced depends on who broke the law and who got hurt.
3) There is no world court with BINDING authority to adjudicate disputes
between states. The World Court, in The Hague (NL), has only moral
authority. It cannot enforce its decision on a state who loses in a case
before the court. See pages 254 et al.
72.What are the 3 sources of international law?
1) treaties
2) customary rules we have inherited from the ancestors
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3) general principles held in common by the worlds major legal systems.

See page 254 - 255.
73.What is the prize of war rule in the international law of war?
If a state is at war against another state, then it has the right to arrest any
citizens of the enemy state which it can physically capture, including
unarmed civilians and noncombatants, and hold them as prisoners of war
until the end of the war. It has the right to seize any property, physical or
financial, of an enemy citizen which it can physically seize. It has the right
to take this property without paying anything for it. It has the right to keep
the property after the war is over, and not reimburse the enemy citizen.

74.What is happening with human rights in modern times?

International norms concerning human rights are becoming stronger and
more widely accepted. However, human rights law is problematic because
it entails interference by one state in anothers internal affairs. See page
269.
CHAPTER 8. INTERNATIONAL TRADE
75. What kind of trade policies do mercantilists favor and why?
Mercantilists favor trade policies that produce a trade surplus for their own
state. Why? This generates money that can be used to enhance the
states power versus other states. See pages 283 & 284.
76. What does liberal economics emphasize?
Liberal economics emphasizes international cooperation - especially
through worldwide free trade - to increase the total creation of wealth
(regardless of its distribution among states). See page 284.
77. What does free trade mean?
Free trade means the abolition of political barriers to trade, such as, import
tariffs, quotas, etc. See page 286.
78. What does the term balance of trade mean when applied to a country?
It is the measure of the value of a states imports versus the value of its
exports. If a state runs a trade surplus, it exports more than it imports. A
trade deficit is when a state imports more than it exports. See page 287.
79. What concept does David Ricardos 1817 theory of comparative
advantage use which distinguishes it from the theory of absolute advantage?
The concept of opportunity cost. Remember that the highly competent
brain surgeon who does every task as efficiently as possible will still hire
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the lazy teenage boy next door to cut his grass, even though the surgeon
could cut the grass more efficiently. Why? Every hour the surgeon wastes
cutting the grass is one hour he is not available for much better paid brain
surgery. See page 288 & 289.
80. What does autarky mean?
A policy to become self-sufficient,meaning the state would produce
everything it needs by itself and not import anything. At first glance, it
may seem a good idea, but in reality, it makes a country even poorer. See
page 291.
81. What is protectionism?
Protecting domestic industry from foreign competition. See page 291.
82. Discriminatory pricing is a form of dumping. Describe discriminatory
pricing.
Discriminatory pricing occurs when a supplier provides lower prices to foreign
buyers than to domestic customers. It is done intentionally to gain market
share in the foreign market. See page 293.
83. Predatory pricing is a form of dumping. Describe predatory pricing.
Predatory pricing occurs when a supplier purposefully sells product at below
cost in order to drive his competitors into bankruptcy or at least out of the
business.
84. In order to find a case of dumping, we have to measure or compare prices
at what level?
At the factory door, i.e., we compare the EXW (ex works) prices. It is not
correct to compare the retail prices of goods in one country with those in
another because there are many non-dumping related reasons why retail
prices can vary widely.
For example, some Japanese-made cars are cheaper to buy in Baltimore (US)
than they are in Tokyo (JP). Does this automatically mean that dumping is
occurring? No. The car dealership must pay rent to its landlord. Rents are a
lot cheaper in most U.S. cities than they are in Tokyo.
85. What is a tariff?
A tariff is a tax levied on the international sale of goods or services. There are
import tariffs, export tariffs, and transit tariffs, e.g., oil pipeline operators must
pay a transit tariff to the host country for permission to let the oil pass over
their territory. CU had to pay EUR 250 to Serbian authorities in autumn 2004
for permission to drive its van full of books and other property across Serbian
territory from Hungary to Bulgaria. See page 293.
86. What is an import quota?
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An import quota is a form of import barrier. An import quota is a quantitative

limit on the amount of a certain product or service that may be imported into
the country establishing the quota. The wealthy nations traditionally
maintained import quotas on textiles and clothing in order to protect their
domestic industry from much cheaper imports from the poor countries. See
page 293.
87. What is the World Trade Organization?
The WTO is a global, multilateral IGO that promotes, monitors, and
adjudicates international trade. See pages 294 - 298.
88. Describe the WTO in the simplest terms.
The World Trade Organization (WTO) is a club of nations who have chosen to
join together to form a trading club. They agree to give each other most
favored nation status. It acts as the referee in world trade disputes, when
one member accuses another of unfair trade practices.
89. What does most favored nation status mean?
MFN status means that one country will give another its best trade
treatment. It does not mean tariff free trade. It does mean that one member
will offer the other member the lowest tariffs it has on the second members
products. See page 295.
90. What is GATT? What is its function?
The 1947 General Agreement on Tariffs and Trade (GATT) is the basis for the
modern world trading system. The agreement provides the rules for fair world
trade and a procedure to further liberalize trade regulation, as well as an
enforcement mechanism against countries which break the rules. See page
295.
90. What is the ultimate goal of GATT?
The ultimate goal of GATT is free world trade, i.e., international trade free of
any tariffs or other non-tariff barriers (NTBs) to trade. Quotas are an example
of an NTB to trade. In practice, no nation has completely free trade.
91. The cumulative effect of the GATTs eight completed rounds has been a
substantial reduction in tariffs. Compare the average tariffs imposed by
developed countries in 1948 to those in 2003.
1948: average tariff was more than 40%. 2003: average tariff is
approximately 3%.
92. Which organization enforces GATT rules?
The World Trade Organization (WTO) administers and enforces the GATT rules.
The organization is headquartered in Geneva, Switzerland. There are 160
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member states, as of 26 Jun 2014. Newest members: Yemen joined on 26

Jun 2014, RU joined on 22 Aug 2012. Confirmed on 6 Apr 2015 at
www.wto.org.
Why did RU join so late? RUs problem: Its domestic manufacturing was not
up to world standards. Some RU-made machinery is superior quality but cost
more than the JP competitors! With their market protected against foreign
imports, the Russian manufacturer was not cost competitive. Biggest exports:
oil & gas.
RS has observer status, meaning they are obligated to begin accession talks
within 5 years after becoming an observer.
Dates when the countries joined: AT, BR, CA, CZ, DE, FR, GB, GR, HU, IE, IN, IT,
JP, KR, MX, RO, SK, US: 1 January 1995; TR: 26 March 1995; CH, PL: 1 July
1995; BG: 1 December 1996; MD: 26 July 2001; CN, TW: 11 December 2001;
MK: 4 April 2003; UA: 16 May 2008. Source: www.wto.org.
93. What can the WTO do to enforce GATT rules against a member country
who breaks them?
The WTO has a procedure to authorize member states to impose punitive
trade sanctions on the offending member. These sanctions can be imposed on
a member against its will.

94. What was the famous bargain made in the 1995 Uruguay Round between
the rich, industrialized countries and the poor, developing nations?
The poor countries agreed to start protecting intellectual property rights of
investors, which was a huge concern of the rich countries, in return for the
rich countries opening their markets to the products of the poor countries,
particularly agriculture and textiles and clothing. Beginning on 1 January
2005, barriers against the import of clothing and textiles were liberalized in
most members of WTO.
95. What is the latest round of WTO-sponsored world trade talks called?
The Doha Round, named after Doha, Qatar, where the trade ministers held
a meeting in 2001 to agree to such talks. See page 296.
96. Is the Doha Round completed?
No. It started in 2001 and is still incomplete. The talks are stalled over the
Norths resistance to cutting agricultural subsidies as demanded by countries
of the South. See page 297.
97. What is NAFTA?

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The North American Free Trade Area, consisting of Canada, the U.S., and
Mexico. It is the worlds second largest free trade area, after the EU. See
page 300.
98. What is the worlds third largest free trade area?
The ASEAN-China FTA. See page 302.
CHAPTER 9. GLOBAL FINANCE AND BUSINESS
99. What is a gold standard?
When the value of a currency is fixed to an exact amount of gold, that is
called a gold standard. See page 322.
100. What is the difference between hard and soft currencies?
A hard currency is freely convertible into other currencies in the country
where it is issued. A soft currency is not freely convertible in the country
where it is isuued. for example, in China, if you want to exchange Chinese
renminbi for dollars or euros, you are only allowed to buy so many dollars or
euros each day. There is a daily limit, set by the authorities. That means the
Chinese currency is not freely convertible, therefore it is not a hard currency.
See page 323.
101. What is the advantage of holding a hard currency?
You are not stuck with it. You can always freely exchange it for another
currency.
102. What is the disadvantage of a soft currency?
The holder of soft currency cannot freely exchange it for other currencies.
There are either limitations or he may not be able to do it at all, except on the
black market.
103. What are the five most popularly traded currencies (and also the five
most popular currencies to be held as a reserve currency)?
USD, EUR, JPY, GBP, and CHF.
EUR-19 vs. EUR-25: AT, BE, CY (Cyprus), DE, EE (Estonia), ES, FI, FR, GR, IE
(Ireland), IT, LU, MT (Malta), NL, PT, SI, SK. Lithuania joined on 1 January
2015. Actually, 25 states officially use the euro, even though only 19 have
officially joined the European Central Bank: the non-members who use it are
Andorra, Kosovo, Monaco, Montenegro, San Marino and Vatican City. Retrieved
on 6 Apr 2015 at ec.europa.eu .
104. What is hyperinflation?
Extremely high, uncontrolled inflation. An example would be more than 50%
per month. See page 323.
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105. It is generally accepted that a healthy inflation rate is up to how much

percent?
Up to 3% per year is considered to be acceptable.
106. What is a fixed exchange rate?
When the government or central bank sets a fixed exchange rate for its
currency versus another currency. There is no fluctuation in the rate. see
page 324.
107. If a central bank wants to fix the value of its currency against another
currency (called the reference currency), what must it hold in its reserves?
The other currency. Example: Argentina fixed the value of its peso to the U.S.
dollar. It had a 1:1 exchange policy. So it had to hold U.S. dollars in order to
back up its pledge that one peso was equal to one dollar. Every time someone
wanted to exchange one peso for one dollar, the central bank had to have
dollars available to execute the transaction. Did Argentina need permission
from the U.S. in order to have such a policy? No. Argentina can unilaterally
adopt this policy, but it has to have the dollars to back up its promise.
When BG fixed the lev to the DEM, the Bulgarian National Bank had to hold
sufficient quantities of DEM in order to back up its promise that one lev equals
one Deutsche mark.
108. What is a floating exchange rate?
That is when there is no fixed rate and the exchange rates rise and fall over
the course of the business day, based on the market forces of supply and
demand. see page 324.
109. What is a managed float?
When there is a floating exchange rate, but the govt or central bank maintains
their own currency within an acceptable range. They do this by intervening in
the currency market. See page 325.
110. What four items were agreed upon at the 1944 Bretton Woods
conference? The poetry of English: good, God, gold.
A.
modified gold standard: 1 ounce (oz.) of gold = $35. Price of one ounce of
gold on 6 Apr 2015: $1,220 = @ 1,110 EUR. Price from www.monex.com,
exchange rate on 6 Apr 2015 from www.xe.com/ucc.
B.
other major currencies were pegged (fixed) in value to the dollar
C.
establishment of International Bank for Reconstruction and Development
(IBRD), the World Bank. Purpose: lends money to govts for economic
development projects. Headquarters: Washington, D.C.
D.
establishment of the International Monetary Fund (IMF). Purpose: to
coordinate and stabilize the world monetary system. It discourages competitive
devaluations of currencies, informs the worlds central banks of the exchange
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policies of each central bank, and provides loans to govts to correct

maladjustments in their balance of payments. Headquarters: Washington, D.C.
111. Of the four items agreed upon at Bretton Woods, which two are still in
existence?
The World Bank and the IMF still exist. The peg between the dollar and
gold has been abolished and the other major currencies now float in value
against each other.
112. What is meant by Keynesian economics?
The policy that the government should actively intervene in its national
economy to try to achieve the optimum conditions. For example, if there is
a recession, then the govt should increase spending in order to stimulate
the economy out of the recession. see page 335.
CHAPTER 10. INTERNATIONAL INTEGRATION
113. What is meant by international integration?
The process by which supranational institutions replace national ones - the
gradual shifting upward of sovereignty from state to regional or global
structures. Best example: the EU. See pages 355 & 356.
114. What did the 1957 Treaty of Rome accomplish?
It created the forerunner to days EU, called the European Economic
Community (EEC).
115. Who were the orginal members of the EEC?
There were six original members: FR, DE, IT, BE, NL and LU.
116. Which institution is the most powerful decision-making body of the
European Union?
The Council of the European Union (sometimes called the Council of
Ministers). See page 361.
117. Which interests are the members of the Council of the European Union
supposed to pursue: those of their home governments or those of the EU itself as
an organization?
Those of their home governments. The Council acts very much like a meeting
of ambassadors.
118. Which interests are the members of the European Commission supposed to
pursue: those of their home governments or those of the EU itself?

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Those of the EU itself. So the Commission is the supranational authority that

will enforce EU law against a member state who violates EU law. See page
361.
119. Which EU institution enforces EU laws against member states? The
European Commission.
120. Which EU institution acts as the administrative branch of the EU and where
is it headquartered?
The Commission. Its HQ are in Brussels. See page 361.
121. Which EU institution administers the EUs permanent bureaucracy (about
25,000 employees, popularly known as Eurocrats)? The Commission. See page
361.
122. How many members does the European Parliament have?
751 members, elected in the 28 member states. What is the minimum
guaranteed to each member state? 6 MEPS (Malta has 6). What is the largest
amount a member can have? 96 MEPS (the size of Germanys delegation).
Source: www.europarl.europa.eu, retrieved on 6 Apr 2015.
The Treaty of Lisbon (also known as the Reform Treaty, signed on 13
December 2007) reallocates the seats for the next elections, in June 2014. The
Treaty entered into force on 1 December 2009. Source:
www.europarl.europa.eu, retrieved on 2 Oct 2010. Also check www.europa.eu
Lisbon Treaty governed the elections in June 2014. Germany lost 3
seats, while ES gained four. FR, AT and SE each gained 2 seats and 8
other countries each gained one seat. DE: 99 96 (the maximum
allowed), FR: 72 74, GB & IT: 72 73, ES: 50 54, PL: 50 51,
RO: unchanged at 33, CZ, GR and HU: unchanged at 22, AT: 17
19, BG: 17 18, SK: unchanged at 13, IE unchanged at 12. See
www.wikipedia,org, retrieved on 27 Aug 2012.
Why know this? A certain number of Eurocrat jobs will be reserved for
citizens of each member state. So many applicants for so few jobs. There is a
test to eliminate most of the candidates. The successful applicant will be an
expert on the EU and its institutions. You have to know every little detail, like
how many members are there in the Euro Parliament.
123. In which city does the European Parliament normally meet?
It normally meets in Strasbourg, France.
124. Of the EUs governing bodies, which one was originally the weakest? The
European Parliament. See page 362.
125. What was the European parliaments original role in the EU policy making
process? Originally, it had only a consultative role in the process.
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126. What is the co-decision procedure in the EU policy making process?

Parliament has the power to reject a proposal of the Council by an absolute
majority, in which case the proposal fails.
127. In what areas is the co-decision procedure used? The co-decision procedure
is now by far the most common legislative process in the EU. It applies to the
vast majority of policy areas, specifically including asylum and immigration,
consumer protection, culture, education, employment, health, the environment,
the free movement of workers, the internal market, the right to move and reside
(this includes the Schengen rules), and transport.
128. What is the role of the European Court of Justice and in which city does it
sit? It serves as the highest appeals court interpreting EU law. It sits in
Luxembourg.
129. What is the most important aspect of the 1993 Maastricht Treaty? Without
a doubt, the most important aspect of the Maastricht Treaty is the establishment
of the economic and monetary union. The major task was to create the single
currency, the euro. See page 363.
130. If a country adopts the euro, it loses control over what three economic
forces? It loses direct control over money supply and interest rates, and indirect
control over inflation.
131. What institution gains control over the first two forces and indirectly
influences the third factor, and in which city is it headquartered? The European
Central Bank, headquartered in Frankfurt (DE).
132. What factor is contributing greatly to the development of global cultural
integration? Telecommunications. see page 379.
133. Besides telecommunications, what are some other factors contributing to
global cultural integration? Sports, music and tourism. see page 380.
134. The process of global cultural integration could lead to the development of
what? A single world culture. See page 380.
135 What is cultural imperialism? When one countrys culture becomes the
dominant cultural influence in another country or countries. see page 380.
136. Which country seems to export its culture so successfully that it runs the
risk of cultural imperialism? The United States. see page 380.
CHAPTER 11. ENVIRONMENT AND POPULATION
137. Environmental problems are a good example of what concept from this
course? They are a good example of the collective goods problem. See page
387.
138. Why are world environmental problems rather difficult to solve? The large
number of actors involved makes them difficult to solve. many players: govts at
all levels, private parties: businesses and individuals. See page 388.
139.
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