7.4 Superpowers and the Global Economy Flashcards
7.4a Influencing the global economy through IGOs
general
what % of the global GDP did USA, EU and Japan account for in 2015?
Superpowers have a disproportionate influence on the global economy; in 2016 the USA, EU and Japan accounted for 60% of global GDP
7.4a Influencing the global economy through IGOs
The World Bank
what is the main aim of the world bank?
which superpower has the greatest influence over the world bank?
The World Bank lends money to developing and emerging economies to promote economic development
Loans are made within a ‘free market’ (Western capitalist) model that promote exports, trade, industrialisation and private businesses, which benefits large developed-world TNCs.
The USA has the greatest influence (largest voting influence) giving it the choice of where the benefit loans go.
The President of the World Bank is from the USA.
7.4a Influencing the global economy through IGOs
International Monetary Fund (IMF)
what is the aim of the IMF?
who has the greatest influence over the IMF?
The IMF promotes global economic security and stability, and assists countries to reform their economies.
The IMF President is from the EU.
Economic reforms often mean more open access to developing economies for TNCs.
The US has 17% of voting power.
The EU has 23% of voting power.
G20 has 70% of voting power.
7.4a Influencing the global economy through IGOs
World Trade Organisation (WTO)
what is the main aim of the WTO?
The WTO regulates global trade.
Established in 1995, it has brokered many agreements aimed at promoting open trade and reducing protecitonism.
Previously known as the General Agreement on Tariffs and Trade (GATT).
7.4a Influencing the global economy through IGOs
World Economic Forum (WEF)
The WEF acts as a forum for discussion between businesses, politicians, philanthropists and IGOs
It is pro-free trade and pro-TNCs
Swiss non-profit organisation
Superpowers manipulate the WEF to encourage free-market liberalisation of less developed countries whilst maintaining their own tariffs.
7.4a Influencing the global economy through IGOs
IGOs
what are IGOs?
what is a common aim of IGOs?
IGOs are regional or global organisations whose members are nation states. They uphold traits and international law, as well as allowing co-operation on issues such as trade, economic policy, human rights, conservation and military operations.
Many IGOs promote free-market capitalism and free trade.
7.4a Influencing the global economy through IGOs
Free trade
what is free trade?
Free trade is the exchange of goods and services free of import/export taxes and tariffs or quotas on trade volume. Taxes, tariffs and quotas are forms of protectionism designed to make imports more expensive than locally produced goods (thus protecting local producers).
7.4a Influencing the global economy through IGOs
Free market capitalism
Free market capitalism has become increasingly dominant as alternative economic systems have weakened:
the collapse of socialist economies in the USSR and Eastern Europe after 1990
China’s movement away from a socialist economy and towards what has been called ‘state capitalism’
reform in communist Cuba, allowing limited private ownership of businesses
7.4a Influencing the global economy through IGOs
the global economy
The global economy is the economies of the world’s individual countries considered together as a single economic system.
7.4b The role of TNCs
Public TNCs
what are public TNCs?
Public TNCs are owned by numerous private shareholders (usually other TNCs, banks and large financial institutions such as pension funds) around the world
- capitalist, free-market economies have mainly public TNCs
- shareholders receive a proportion of annual profits as a dividend
7.4b The role of TNCs
State-led TNCs
what are state-led TNCs?
majority or wholly owned by government
- state-led TNCs are found in countries with communist command economies or mixed economies such as China and Russia
- often within strategic industries such as oil and gas, vehicle manufacturing and the steel industry
7.4b The role of TNCs
the dominance of TNCs in the global economy
what features of TNCs allow them to dominate the global economy?
their economics of scale mean they can outcompete smaller companies and, in many cases, take them over
their bank balances and ability to borrow money to invest has allowed them to take advantage of globalisation by investing in new technology
the move toward free-market capitalism and free trade has opened up new market, allowing them to expand
7.4b The role of TNCs
TNCs
TNCs are driven to maximise profit by their shareholders, who benefit from these profits
The largest TNC is Walmart, with a revenue of more than $485 billion in 2015- larger than the GDP of Belgium. This was followed by State Grid (Chinese) with a revenue of $329
TNCs encourage cultural globalisation through heir ideology and soft power. TNC creation of new technologies helps to maintain military superiority for hard power
A criticism of TNCs is their pursuit of shareholder profit above all else
7.4b The role of TNCs
technology (patents)
who benefits from patents?
TNCs invest in patents to protect the new technologies they develop
money is earned through new products and royalties paid by other companies to use their patents
90% of global patent royalties are paid to EU, US and Japanese countries
7.4b The role of TNCs
trade patterns
what influences trade patterns and how?
how does this link to the global shift and economic decline?
TNCs influence trade patterns and therefore location of areas of growth through FDI
TNCs are partially responsible for global shift, which can cause economic decline. For example, car manufacturing in the US moving out of Detroit
