Final Exam International Relations 2

Explain why the sub-prime crisis that started in the USA in 2007 spread all around the world particularly in Europe.

USA was giving credits so easily to people who couldn't afford paying them, increasing the debt of the banks and construction companies, it spread mostly because of bonds interdependence and the fact that subprime loans were mixed up with other loans and were sold to banks world wide.

How is the moderate poverty line as defined by the World Bank?

2 dollars per capita in PPP.

Explain the concept of "wealth shift" in the current international economic context.

It means that the economic relations have been shifting from industrialized states forwards developing states. There's no longer a North-South divide but rather a polycentric world.

CREDIT CRUNCH: A situation where banks and other lenders all cut back their lending at the same time, because of widespread fears about the ability of borrowers to repay.

SECURITIZATION: Taking the debt from a number of mortgages and combining them to make a financial product, which can then be traded.

SUB-PRIME MORTGAGE: A loan to finance the purchase of real state that carries a higher risk to the lender (and therefore tend to be at higher interest rates) because they are offered to people who have had financial problems.

INSOLVENCY: A situation in which the value of a borrower's assets is not enough to repay all of its debts.

Which is the top 3 of the following countries that invested the largest amount of FDI (outflows) abroad in 2010 in billions of US $?

USA, Germany, France

INFLOWS: USA, China, Hong Kong

Explain the current composition of the United Nations Security Council and the way the group of the "United for consensus" wants to perform it.

The UNSC is composed by 15 members (5 permanent members), the proposal is that Italy Spain and some other countries want enlarge the number of permanent members to 10.

Explain the difference between "failed states" and "rogue states". Support with examples.

Rogue states is a US concept introduced by Reagan in the 1980's to indicate states who are hostile to the US interests and are considered dangerous for international security because of trying to obtain weapons of massive destruction such as North Korea and Iran.

COUNTRIES

BRAZIL: Upper middle income economy having 3,8% GDP growth in 2011 and 11,845 $ of GDP per capita in PPA in 2011; main exports markets USA and Argentina.

RUSSIA: Upper middle income economy having a 4,3% GDP growth in 2011 and 16,687$ GDP per capita in PPA in 2011; high dependence of gas and oil export.

INDIA: Lower middle economy having a 7,8% GDP growth in 2011 and 3703$ GDP per capita in PPA in 2011; sevice-led economy.

CHINA: Lower middle economy having 9,5% of GDP growth in 2011 and 8394 $ GDP per capita in PPA in 2011; medium HDI

Explain