Political Science 2211E Lecture Notes - Lecture 3: Structural Adjustment, Import Substitution Industrialization, Washington Consensus
11 Mar 2016
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Lecture 3 internaional finance and the 2008 financial crisis. Canadian investor spends money in foreign countries to purchase ownership/assets debit items purchase of inancial items from foreigners short term, less than one year, i. e. canadian purchasing us treasury bills long term investments includes fdi and porfolio investment. Fdi looking for foreign ownership, i. e. branch plant or subsidiary of us company in canada. Describes situaion where current account deicit cannot be inanced by the capital account. Long-term adjustments or inancing: i. e. monetary, iscal, policy adjustment. Mandate stabilize exchange rates, provide short-term loans for balance of payment problems: imf would provide the loan to correct the balance of payment shorfall and allow country to keep currency pegged to dollar-gold standard. Members contribute to pool of currencies: available for imf loans to deicit countries. Role of imf in 1982 and 1994 mexican financial crises. 1982 mexico is unable to service debt (pay interest: imf loan condiions include inancial and trade liberalizaions.
