component 3: economic global governance Flashcards
1
Q
international monetary fund
A
- part of the bretton woods system: formed to establish a system of global economic governance, has 190 members and produces annual report on world econoic outlook.
- responsibilities: promote economic stability: a last resort to deal with debt via loans. Surveillance: monitor economic stability, Advise on how to maximise eocnomic potential.
- strengths: GIves loans to states and reduces likelihood of recession e.g. IMF gave assistance to Argentina in 2018 to stabilise economy. Provides monitorign to help states identify threats. Encourages states to reform economies to one suitable for growth e.g. Greece in 2010: required to reduce gov spending and increae taxes. Debt relief: 1996: HIPC launched, wrote off $76 bn of debt from 36 countries.
- weakenesses: Forces states to comply with conditionality in a way that interferes with sovereignty,imposes harsh conditions: greece conditions: 150,000 jobs cit, cuts in education, imposes neo-liberal western view, limited accountability.
2
Q
world bank
A
- group of 5 international organisations responsible for adviceto countries for eocnomic development and poverty rduction. Provides loans to member countriesand grants to poorer ones. Operates in fields of:human developmen, gricultural & rural development, envionrmental protection, governance, infrastructure.
- Successes: provides financial assistance to developing countriees to improve SOL. Supports infrastructure projects e.g. IN Vietnam, WB has financed construction of a major highay. ENcourages policyreform in exchnage for assitance.
- failures: May prioritise economic growth over social and envionemtnal concerns - criticised for large scale infrastrcutre: e.g. Laos: 10,000 indigenous affected. Criticised for imposing neo-liberal policies - promotes privitisation & demands cuts in welfare. Limited accountability as its governed by memebr states. Its decision making pocess is opaque: always headed by a VS - appointed by USA.
3
Q
world trade organisation
A
- concernedwith regulation of international trade between nations, commenced in 1995.Deals with regulation of trad in goods, services and provides framework for negotioating trade agreements and dispute resolution.
- strengths: By 1995: WTO had been signed by >100 and reduces tariffs o goods: amounting $300bn on world trade. Promotes free trade and economic growth: increased exportsfrom $6.4 trillion 1995, to $32 trillion in 2022. Enforces trade aggreemens e.g. 2018: gave forum for USA to place tariffs on EU goods, settles disputes.
- weaknesses: slow decision making process e.g. Doha 2001 round negotiaitons yet to be concluded.Unequal representaton of developing countries, they are less likely to have voices heard e.g. 2003: ministers of developing countries walked out of Cancun meeting. Limited scope of agreements: focus primarily on trading goods: dont adress envionemntal concerns
4
Q
G7 and G20
A
- G7 is Canada, France, Germany, Italy, Japan, UK & USA, these 7 represent 58% of the global net worth. G8 included Russia, but wassuspended after Crimea 2014.
- G20 is 19 countries plus the EU. G20 accoutns for 90% of gross world prouct and 80% of world trade + 2/3 of world population.
strengths: G7 has little impact on state sovereignty: doens’t force states to do something, informality allows members to focud on any issues of importance, smaller no.of states
prevents grid lock decision making. For G20: balance of historic powers (UK, USA) and new powers (China, India) and emerging powers (Argentina, Indonesia). Membership includs states that don;t always agree: dispute resolutions. Partners with regional and international actors e.g. UN. G20 takes action on economic and non-economic matters.
weaknesses: G7s membership is outdated e.g. no cihna. G7 was diviided under trump: clash of outlook between USA and allies. States normally allways agree; no other viewpoints included e.g. russia, issues of the moment dominate summits not major breakthroughs. G20: clashes between statese.g. USA vs Russia and china. Criticised for fenednign interests of global capitalism.
5
Q
structural adjustment programmes (SAPs)
A
- structural adjustment is a set of economic reforms that a country must adhere to in order to secure a loanfrom IMF or world bank.
- 1970s: adopted new approach to promote development: washington consensus: based on orthodox model and drew on ideas of neo-liberalism.
- essense of washington consensus is described as stabilize, privitize, and liberalise.
- advocates policies of tax reform (cut tax), fiscal discipline (cutting public spending), free trade, privitisation, financial liberalisation (deregulation of financial markeets), openess to FDI.
6
Q
economic issues: poverty
A
- North/side divide: norht = high-investment industrialised north, contains 20% of population but consumes 60% of world production: NA, West Europe, Japan, soviet bloc.
- Souh: low wage, low invetment and rural south, has 80% of world population but consumesonly 40% of world production. Includes latin america, Africa, middle east, Asia.
measurements of poverty: - HDI: based on education, GDP and life expentacy.
- Absolute poverty: lack of basic necessities needed for survival e.g. food, Living on less than $2,15 a day.
- ectreme poverty: living on less than $1.90 a day, Un estimates 100million people are in extreme poverty - 80% in SSA and SAsia.
- relative poverty: puts the poverty people experience into context by compating it with others who live in the same state.
7
Q
economic governance theories
A
- orthodox view: development is viewed entirely in economic terms, barriers to eocnmic growht are internal. Encourages individuals to pursue own self interest, views the free market system as the central mechanism for economic growth.
- modernisation theory: 5 stages for economic development: emphasises industrialisation, technological progress and market orientated policies
- Neoliberalism: emerged in 1970s: dominant ideology bretton woods. COmponents are: low gov spending, low tax, deregulation of financial markets, privitisation.
