Economy 2 Flashcards
How does the lecture define globalization?
A dynamic process where geographic, economic, and cultural boundaries fade, especially in capital movement (e.g., 24/7 digital financial markets).
Beyond capital, what else does globalization make boundary-less?
Goods, people, services, ideas, values, diseases, and environmental effects (e.g., global warming threatening Caribbean coasts).
How does globalization affect politics?
National politics cannot be understood in isolation; interconnected with global dynamics (e.g., trade policies influencing local elections).
Key Term: “Interdependence”
What three factors make post-1990s globalization unique?
◾Revolutionary technologies (e.g., internet).
◾New political actors (e.g., NGOs, TNCs).
◾Neo-liberal policies (e.g., trade liberalization).
Exam Tip: Often asked to compare pre/post-1990s globalization.
How did technology accelerate globalization?
Transport: Cheaper air travel and increase access to movement
Communication: Phones/cable TV shrank distances.
▪Stat: Caribbean led global international call rates (74 mins/person in 1996 vs. global avg. of 11).
What are criticisms of globalization’s tech advances?
Promotes materialism (e.g., U.S. consumer culture dominating Jamaica via media proximity).
Example: Jamaica’s higher materialism vs. Trinidad due to closer U.S. market, comms and other media.
Who challenges state dominance in global politics?
◾IGOs (e.g., WTO, IMF).
◾NGOs (e.g., Amnesty International).
◾TNCs (e.g., multinational firms).
Stat: 300+ IGOs today vs. 30 in 1909.
How do IGOs like the WTO affect Caribbean states?
Limit sovereignty by imposing policies (e.g., trade liberalization).
Example: IMF structural adjustment programs.
What role do NGOs play in globalization?
Advocate for issues (e.g., human rights via Amnesty International), pressuring states.
Contrast: IGOs = state-based; NGOs = civil society.
Why are TNCs powerful in globalization?
Operate globally (53,000 TNCs in 2000); some revenues exceed Caribbean GDPs.
Example: Bauxite firms in Jamaica.
What two policies define neo-liberal globalization?
1) Remove barriers to capital flow.
2) Reduce state market intervention (e.g., deregulation).
Key Term: “Washington Consensus”
How did globalization reduce state roles?
IGOs (IMF/WB) pressured states to privatize, deregulate, and cut welfare programs.
Criticism: Hurts social safety nets.
What sectors attract FDI to the Caribbean?
Tourism (regional), bauxite (Jamaica), oil (Trinidad), telecoms/banking (multi-island).
Example: Sandals Resorts (tourism FDI).
How does FDI address Caribbean capital shortages?
Injects external funds, boosting growth/incomes (e.g., telecom investments).
Debate: Not all economists agree FDI solves capital gaps.
How does FDI improve efficiency?
TNCs transfer tech/know-how (e.g., Digicel’s telecom upgrades in Jamaica).
How does FDI create jobs?
Local hires at all levels (e.g., bauxite firms initially used expats, now Caribbean managers).
Caveat: May favor mechanization over labor.
How do consumers gain from FDI?
Competition raises quality/lowers prices (e.g., new tech/products introduced).
Example: Flow/LIME telecom competition.
How does FDI benefit public finances?
Corporate taxes + CSR projects (e.g., scholarships by TNCs).
Key Term: “Corporate Social Responsibility”
How can TNCs threaten sovereignty?
Some revenues dwarf Caribbean GDPs; may override local laws (e.g., mining firms).
Example: Alcoa’s influence in Jamaican bauxite.
How might FDI harm local businesses?
TNCs borrow local funds → higher interest rates; outcompete SMEs with superior tech.
Example: Foreign banks vs. local credit unions.
Why might FDI not boost employment?
TNCs prefer mechanization (e.g., agribusiness) and may hire expats for senior roles.
Stat: Caribbean unemployment remains high despite FDI.
What is the primary goal of TNCs?
Profit → may cut wages, ignore environmental/cultural concerns.
Example: Cheap labor in export-processing zones.
What risks do FDI critics highlight?
Political influence by TNCs.
Capital flight when incentives end (e.g., Jamaican tax breaks expiring).
Quote: “Sovereignty at bay.”
How can FDI drain foreign exchange?
Profits repatriated to TNC home countries (e.g., bauxite revenues to U.S./Canada).
Historical Context: 1970s dependency theory.
