Question

1. What does the trade-to-GDP ratio measure? Does a low value indicate that a country is closed to trade with the outside world?

            

2. Describe the pattern over the last century shown by the trade-to-GDP ratio for leading industrial economies.

       

3. In relative terms, international capital flows may not be much greater today than they were
a hundred years ago, although they are certainly greater than they were fifty years ago. Qualitatively, however, capital flows are different today. Explain.

                

4. What is an institution? Give examples of both formal and informal institutions. Explain how they differ from organizations.

                

5. What are the arguments in favor of international organizations? What are the arguments against them? Critics of the global institutions have a variety of complaints about the WTO, the IMF, and the World Bank. Explain the main categories of complaints.

               

6. Describe the main functions of each of the following: IMF, World Bank, GATT, WTO.

Answer 1

1. Trade to GDP ratio means the ratio of the total trade volume of a country (import + export) and the GDP of the country.

So, trade to GDP ratio:

Total trade volume (import + export)/GDP

The higher the trade to GDO ratio, the higher is the level of international trade in the country. A low value means the level of international trade is low in the country as compared to its total output i.e. total GDP. A completely closed economy's trade to GDP ratio is 0.