Economic Global Governance Flashcards
What are 3 aims of global economic governance and how have they been pursued?
> Promote stability
-> through gold standard which limited inflation, ultimately died out due to Great Depression in 30s
-> US dollar became new system as US became economic superpower after WW2
->Breton Woods conference recognised effects of economic crises on rise of extreme ideologies in the 30s
->protect worst outcomes like economic collapse
Promote prosperity - human flourishing
->World Bank and IMF
->prevent intra-state conflict
Ending poverty and unequal development
->IMF
->MDGs and SDGs
What was the Breton Woods system?
International monetary fund - established dollar as global reserve currency (others fixed to its value)
General Agreement on Tariffs and Trade (replaced by WTO) - established rules on international trade and a forum to make deals
World Bank - established pool of investment funds for middle income countries
How has and hasn’t globalisation addressed poverty?
HAS:
>Interconnectivity between states through IGOs and economic integration has increased overall amount of wealth
>Gap between global north and south is narrowing
>Reduction of number of people living in extreme poverty from 1.2 billion in 1980 to 702 million by 2015
>Global production doubled 2000-2014
HASN’T:
>Benefits of globalisation not evenly distributed
>levels of tax etc at nation-state level so IGOs haven’t led to fairer distribution
>Industrialisation tends to be less advanced in global south
>Sustainable development has not been pursued -> north has done so much damage
>Exploitation of south in trade agreements
Define development
> Actions taken to reduce poverty and improve social and political conditions in less-wealthy states
What were the Millenium Development Goals?
> first set of internationally agreed development goals
helped states coordinate efforts and gave guidance to developing nations
set by UN in 2000 to be achieved by 2015
POLITICAL but many reflect capacity of economic globalisation to produce change e.g. eradicate extreme poverty and hunger
What are the sustainable development goals?
> replaced MDGs in 2015
environment and political freedom considered
e.g. affordable and clean energy, peace and justice with strong institutions
How can we define poverty?
- Income poverty -> no income or not sufficient income for living safely
- Lack of social needs -> e.g. shelter
UN definitions:
- Absolute poverty - person earns less than $1.25 a day
- Relative poverty - whether people have a minimum income to maintain the average standard of living that people in that country enjoy (typically less than 60% avg. income) - around 10 mil in UK
What are the differences between realist and liberal views on development?
REALISM:
>states should focus on own economic development first and spend govt. money on needs of own pop.
>states only help other states to develop if it protects/advances their interests (e.g. US invests most aid in Afghanistan)
>Aid likely to make states dependent on other states
>Debt relief encourages states to continue to mismanage their economic resources
LIBERALISM:
>Developed states have responsibility to help -> in global interest to do so
>IGOs have key role to play in coordinating efforts of international community
>Aid can be used to empower developing states e.g. microfinance initiatives
>Debt relief gives states opportunity to invest in own development not repaying loans
What is Maslow’s hierarchy of needs and how does it relate to development?
> Maslow argued that the first priority of a human being is to protect physiological health
Then, they progress onto other needs:
Physiological
Safety (from conflict, natural disasters)
Love/Belonging (democracy and human rights)
Esteem (reducing inequality of income and opportunity)
Self-actualisation (economic empowerment e.g. helping set up businesses)
> Human development incomplete if unable to progress through these needs
Do they need to be addressed in order or at the same time?
What is world systems theory?
What are some arguments for it?
> 1974
Immanuel Wallerstein
global capitalism maintains developing world in neocolonial dependence through exploitation -> global south needs north for capital and investment
no linear structure to development
Three types of states:
1. Core states -> wealthy, highly industrialised, dominate domestically and globally, pay high wages, produce range of goods, population is mobile and well-educated
2. periphery states -> poor, underdeveloped, yet to industrialise, possess resources that core states need, cannot use what they have
3. semi-peripheral states are somewhere between
+recognises interconnectedness
What is the capability approach?
> Amartya Sen and Marta Nussbaum
Addresses human rights aspect of development -> economic prosperity and access to material goods are less important than the capacity to realise wellbeing
Freedom to achieve wellbeing (substantive freedom) is primary moral goal
Wellbeing needs to be understood in terms of people’s capacity to be married, educated, well-nourished etc.
What does Jeffery Sachs argue is needed to end extreme poverty?
> good governance and development assistance -> aid can speed up process of building infrastructure and public services (e.g. in sub-Saharan africa) and prevent deaths
investment in health and education
spread of tech.
0.7% GDP from rich countries, which has been promised but in reality it’s currently 0.31%
institutions need to make better use of existing knowledge and assemble cross-disciplinary teams
What does the IMF do?
How does it work?
What are some criticisms of it?
> provides financial support/loans to states suffering or likely to suffer a debt crisis
monitors outlook of global and member states economies (surveillance) inc. forecasting and commenting on potential weaknesses
advises member countries on how to manage economies e.g. regional training centre in africa
In 2020, provided debt service relief to 25 members to help address the effects of the pandemic -> Catastrophe Containment and Relief Trust provided about $500 million
> 189 member states
payments by member countries are quotas which reflect wealth in global economy
voting power weighted according to contributions
- interference into political issues e.g. report on -ve economic impact of brexit in UK a week before referendum
- structural adjustment programmes (economic reforms usually based on neoliberalism e.g. spending cuts imposed on a state on condition of receiving IMF loan) make excessive demands, infringing on sovereignty and imposing a Western-based idea of economic management e.g. Greece had to reduce public spending on govt. wages and welfare and make $1bil savings on pensions
What does the World Bank do?
What are some positives and criticisms of it?
> helped reconstruct states post-WW2 but now focuses on developing world outside Europe
now focused on human and social development
International Bank for Reconstruction and Development: provides loans and assistance to middle-income countries (some have conditionality and elements of SAPs)
International Development Association: provides low/no interest loans to poorest countries
Funds specific development projects e.g. $700mil for developing offshore natural gas resources in Ghana to help generate 40% of power
Advice and analytical/research work
+contributed to MDG 1: reduce world poverty
+focuses on direct grants which prevents creation of additional debt pressures
-USA has 16% of voting power and no one else has over 5% -> outdated in increasingly globalised economy
-every president has been a US citizen
-contributions dwarfed by those of private investors
What does the WTO do?
How does it work?
How effective is it?
> reduce barriers on trade which are usually tariffs
forum for negociations
checks states are following trade agreements
research
helps resolve trade disputes
> 164 members, 97% of trade
every member has to agree to a trade deal
Principles include:
non-discrimination (between domestic and foreign products)
more open (free trade)
predictable and transparent
more competition (should not give themselves the edge)
more benefits for less-developed countries (catch-up)
protection of the environment
- Doha round (latest set of rules members abide by) in gridlock over agricultural subsidies which developed states are defending
- > powerful nations are blocking less developed nations to preserve status quo
- > since creation in 1994, only one major international trade deal has been agreed
- political power resides with west and they get the most out of deals
- decision making biased towards those with large representation
- workers’ rights and environmental protection are disregarded
- unable to make decisions quickly -> Ministerial Conferences are too infrequent and consensus makes it slow
- states bypass and make agreements outside it
