2. OHT 4.1 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 International Business : Institutions and Markets

3. OHT 4.2 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 World Trade Organisation (WTO) Successor to General Agreement on Tariffs and Trade (GATT) in 1995 WTO principles –Progressive reduction in tariff and non-tariff barriers –Non-discrimination –Solving trade disputes through consultation rather than retaliation

4. OHT 4.3 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Support for WTO Unilateralism/Bilateralism as alternative to Multilateralism Absence of rules as alternative to (imperfect) WTO ‘Localisation’ as alternative to WTO Reformed WTO seen as more balanced in approach to ‘North’

5. OHT 4.4 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Criticisms of WTO Bias to the ‘North’ Inability to progress Doha round Undue emphasis on ‘TRIPS’ Undue emphasis on liberalising trade in services

6. OHT 4.5 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 International Monetary Fund (IMF) (1) Provision of foreign currencies (via quotas) Provision of world liquidity: –Compensatory Financing Facilities –Extended Fund Facilities –Oil Facilities –Bufferstock Facilities

7. OHT 4.6 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 IMF (2) Other Instruments and Facilities –Supplementary Financing Facility –Enlarged Access Facility –Structural Adjustment Facility –Trust Fund Facility –Systematic Transformation Facility Special Drawing Rights (SDRs)

8. OHT 4.7 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 IMF Stabilisation Programmes Include some or all of the following Fiscal contraction Monetary contraction Devaluation of exchange rate Liberalisation of economy Incomes policy

9. OHT 4.8 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Criticisms of IMF Stabilisation Programme IMF programme inappropriate IMF programme inflexible IMF support inadequate and too expensive IMF dominated by major industrial countries

10. OHT 4.9 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Structural adjustment and stabilisation

11. OHT 4.10 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Exchange Rates Nominal exchange rate Effective exchange rate (EER) Real exchange rate (RER) RER = EER x P (Home) P(Foreign )

12. OHT 4.11 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 The foreign exchange market

13. OHT 4.12 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 International Debt Financing Eurocurrency markets Euro-paper and Euro-note markets Eurobond markets Futures markets Options markets Currency and interest ‘swaps’