Name: Maria Catroga

Class: 9-1

T3 – Formative Assessment 1 – Quiz

The following is an extract from the book ‘Globalization and its

discontents’, written by Nobel prize-winning economist Joseph
Stiglitz.

Behind the free market ideology there is a model, often

attributed to Adam Smith, which argues that market forces—
the profit motive—drive the economy to efficient outcomes as if
by an invisible hand. One of the great achievements of modern
economics is to show the sense in which, and the conditions
under which, Smith's conclusion is correct. It turns out that
these conditions are highly restrictive. Indeed, more recent
advances in economic theory—ironically occurring precisely
during the period of the most relentless pursuit of
the Washington Consensus policies—have shown that whenever
information is imperfect and markets incomplete, which is to say
always, and especially in developing countries, then the
invisible hand works most imperfectly. Significantly, there are
desirable government interventions which, in principle, can
improve upon the efficiency of the market. These restrictions on
the conditions under which markets result in efficiency are
important—many of the key activities of government can be
understood as responses to the resulting market failures.
Question 1: (Criteria D)

In terms of its origin, purpose, values and limitations, analyse the usefulness of the
source above to an MYP student studying globalization.

A. State the origin of the source.

[1]

This source (Globalization and its discontents) was published on June 2002. The
publisher of this source is W.W. Norton & Company. The author of this source is
Joseph E. Stiglitz. The full author's credentials are not included although
information such as the fact that the author Joseph E. Stiglitz was a Nobel prize-
winning economist.

B. State the purpose of the source.

[1]

This source has the aim of providing a peek behind the closed doors of the global
financial institutions. The source is a mixture of facts and opinions, from what could
be interpreted is that the intent of this source is clear because the book is about only
one subject (globalization). This source's point of view also tends to be empirical
due to the fact that the knowledge given in this article is based on personal
observations, such as how the market and economy performs on the basis of facts
demonstrated by personal experiences.

C. Outline two values for an MYP student studying social unrest and globalization.
[2+2]
1. This source can be extended to a project to provide proof of globalization and
how it works. Since the book is about the workings of the market, economy and
globalization mechanism, and how business or other organisations gain foreign
influence or begin to operate internationally.
2.
This article is important as it offers insight into what globalization is and how the
economy operates. When a student at MYP studies about globalization, then this
guide is very useful. Provides forms in which the economy operates and how, for
reasons of its destruction, the capitalist system as well as the issues with
globalization in its present form and for some understanding.

D. Outline two limitations for an MYP student studying social unrest and
globalization. [2+2]

1.
This source is credible as the information provided in this report has clear claims
and contains real facts based on personal experiences. As This shows how the
economy functions, the business and financial system has both positive and negative
aspects. Hence this source is trustworthy.
2.
The source is subjective because it has been influenced by personal experiences.
Through the point of view of the writers he shares his viewpoint and the workings
of trade, business and globalization behind the scenes of hope. Why the situation
has evolved with the globalization and the author's point of view. That is why the
source is subjective.
Question 2: (Criteria A)

Using the source and your own knowledge, discuss the role of global systems and
institutions in promoting economic development.

Hint:
• Use key words and terminology in your discussion.
• Use examples and evidence to support all your points.
Global systems and globalization help to foster economic growth in a number of
ways. Processes such as advertisement, legislation, and business systems, etc.
Global structures as a whole tend to boost the economic income of a company /
business. The goal of globalization is to help individual economies around the world
by making markets more productive, increasing competition, reducing military
conflicts and distributing wealth more equally. Globalization allows businesses
create a broader environment for business plans and execute these plans in order to
boost revenue and gain increased revenues from the various markets. It has been
shown that globalization has led to poverty, which is why it would accelerate
economic growth. Evidence indicates that until 1800, the vast majority of people
around the world lived in severe poverty, with only a tiny minority enjoying higher
standards of life. Evidence shows that between 1980 and 2000, globalization and
trade between countries increased from 23 to 46% of the gross domestic product
(GDP) in China and from 19 to 30% in India. This improved their economies at a
very high rate and provided opportunities that some nations use and others do not,
to a large extent, rely on their domestic political and economic institutions. It is also
clear that globalization has improved the economy in many ways, as well as the
various global networks, connectivity, exchange and trade between countries have,
ultimately, created more job opportunities for people and improved to increase the
income of the economy.
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