global governance - economic Flashcards
When was the Bretten Woods Conference?
1944 in the US (New Hampshire)
Why did the Bretten Woods Conference occur?
to consider how the world’s financial systems and trade could be managed in peacetime
What were the main aims of the Bretten Woods Conference?
- to create an agreed system of rules for international economic matters
- stabilise world currencies, reduce wide fluctuations
- prevent a repeat of the Great Depression
- bolster capitalism against the rise of communism
What economic global governance IGOs did the Bretten Woods Conference create?
- The IMF
- The International Bank for Reconstruction and Development (World Bank)
- The General Agreement on Tariffs and Trade (World Trade Organisation)
What does global cooperation on economic governance focus on now?
- poverty/development
- free trade
- single currency
- forums
What are the main actors in economic global governance?
- IGOs
- Informal intergovernmental forums (G7/G20)
- Multinational cooperations (MNCs)
- Multilateral forums (WEF)
What is the main role of the IMF when it was founded?
- encourage stability in world exchange rates
What was the fixed exchange rates system?
- linked to the US dollar and then gold
- states and traders in the international financial system knew how much currency was worth and could make investments with a greater stability
When and why did the fixed exchange rate system break apart?
1971 because US president Richard Nixon abandoned the fixed link between the value of the US dollar and gold
What has been the role of the IMF since the 1970s?
- provides economic stability (financial support or loans to suffering states)
- monitors the economic outlook of both the world economy and individual member countries
- advises member countries on how best to manage their economies
What are the top three main functions of the IMF?
- surveillance and monitoring
- lending
- capacity building
How many members does the IMF have?
190
Who is the managing director of the IMF?
since 2019 - Kristalina Georgieva (Hungary)
What is the main source of the IMF’s financial resources?
payments made to it by member countries
Why has the IMF been criticised for being undemocratic?
its voting power is weighted according to how much states contribute financially -> the most economically powerful states are allocated more power over decision making
In 2020 how much did the IMF lend to 83 countries?
$165 billion
In 2020 how much did the IMF lend to low income countries?
$16 billion
In 2020 where did majority of IMF loans go to?
the Western hemisphere (Chile,Colombia,Mexico)
In 2020 who was the largest contributor to the IMF?
The US = 17% of member states contributions
What are the two key aims of the IMF?
- to try to keep afloat the economies that are suffering the most/ prevent them from collapsing or getting into so much debt they can’t pay it back
- prevent a financial crisis from spreading to other countries
What are the three major financial crisis the IMF has assisted on?
- The Asian financial crisis (1997)
- Emergency lending to Brazil (1998) and Argentina (2000)
- The Eurozone crisis (from 2008 onwards)
What must a state do to receive an IMF loan and what are they called?
undergo economic reforms to overcome the problems that led to it to request help in the first place -> called Structural Adjustment Programmes (SAP)?
What may an SAP include?
- cutting public spending and raising taxes
- selling government-owned assets to private ownership
- increasing the amount of taxes that the state collects
- reducing public sector wages/ state pensions
What did the government in Argentina set out to do in 2019 in order to receive an IMF loan?
increase taxes on wealth and create a new independent body to review the governments budget and make forecasts
Why may making loans conditional and demanding SAP be criticised?
they are excessive demands which infringe on state sovereignty
What are some specific criticisms of SAPs?
- economic reforms (privatisation) see and increase in corporate profit which isn’t shared with wider society
- tax rises can sometimes hit the poorest the hardes
- most of the poorest work in the informal sector which means reform of the formal sector has little impact on them
What was the founding objective of the World Bank?
source of loans for reconstruction and development projects in countries lacking financial capital
What did the World Bank work on after WW2?
rebuilding key infrastructure e.g. roads and electricity
What are the two key institutions within the World Bank?
- The International Bank for Reconstruction and Development
- The International Development Association
What is the International Bank for Reconstruction and Development?
responsible for providing loans to help meet middle-income countries development needs
What is an example of the International Bank for Reconstruction and Development providing loans?
to the State Bank of India, $700 million to develop solar energy projects
What is the International Development Association?
provides loans to the poorest countries, loans tend to have very low interest rates and sometimes no interest at all
What does the World Bank predominately work on now?
its projects work in support of the wider UN human and sustainable development agenda, focuses on medium to long term projects rather than emergency assistance
How much does the World Bank deploy in financial assistance every year?
$50 billion
How many projects has the World Bank supported worldwide since its founding?
over 12,000 projects
What is the overarching goal of the World Bank?
to end poverty within a generation and boost shared prosperity
What does World Bank technical assistance focus on?
human and social development
What project did the World Bank carry out in India?
Water and Sanitation -> provided $3.4 billion to improve access to clean drinking water and sanitation, long-term project, since 2000 and is estimated to have helped 36 million people
What project did the World Bank carry out in Afghanistan?
Reconstruction of Afghanistan -> since 2002, invested over $4.7 billion for development and reconstruction of Afghanistan, mostly through grants and no-interest loans
How does the World Bank decide what decisions to make?
World Bank Executive Board agrees new loans, programmes, budgets and priorities -> decisions are then put to a member vote
How many World Bank member states are there?
189 member states
How is World Bank voting power decided?
weighted according to the amount that states contribute
Who carries the most voting power in the World Bank?
US carries 16%
How has the US traditionally dominated the World Bank?
largest shareholder -> every president since its creation has been a US citizen and is nominated by the US
Who is the current president of the World Bank?
Ajay Banga
How has the World Bank been successful?
- recognised as a base for the world’s foremost experts in development economies
- acted as a source of finance to many states as they sought to develop e.g South Korea received nearly $15 billion and is now a leading donor to poorer states
- moved away from conditional loans to grants and has become less demanding on economic reform
How has the World Bank been unsuccessful?
- competing development banks make the World Bank less powerful and create other less US-dominated sources of finance
- criticised for SAPs that pushed a neo-liberal reform agenda to aggressively -> resulting ‘shock therapy’ in economies has been criticised as undemocratic and an attempt to impose a US-centric economic model on states too quickly and in the global interest opposed to the recipient states’ interest
Why was the General Agreement on Tariffs and Trade created?
to reduce obstacles to international trade
When was the General Agreement on Tariffs and Trade signed and by how many states?
1947 by 23 founding nations
What was the aim of the General Agreement on Tariffs and Trade?
to agree a set of international trade rules where tariffs on goods would be reduced
By 1995 how many states had signed the General Agreement on Tariffs and Trade?
over 100 states
By 1995 how much did the reduced tariffs on goods set by the General Agreement on Tariffs and Trade amount to?
approximately $300 billion of world trade
What is the WTO’s primary goal?
reduce barriers on trade in both goods and services
What two things does reducing barriers on trade and goods and services include (WTO)?
- reducing and removing tariffs imposed by states on imports from other states to agreed levels
- quotas on the amount of imports of particular goods from other states
How else can states reduce tariffs barriers?
states are free to enter into agreements with one or more other states
What does the WTO offer?
the opportunity to put together extremely comprehensive trade agreements that will involve nearly all international trade
What are the main functions of the WTO?
- checks that states are following trade agreements
- helps to resolve trade disputes between states
- produces research on global trade and economic policy
How many members does the WTO have?
164 member countries
How much of world trade do WTO member states account to?
97% of world trade
What states are currently applying to join the WTO?
Iraq, Libya, Somalia and Sudan
Who is the most recent member of the WTO?
Afghanistan - joined in 2016
What do EU members of the WTO have to do?
act together as a unified bloc of states
What does membership of the WTO involve?
- rights e.g. right to export to other countries
- obligations e.g. need to limit tariffs on imports and to follow rules
What is the highest decision-making body in the WTO?
Ministerial Conference
How often do the Ministerial Conference (WTO) meet?
every 2 years
How are decisions in the WTO made?
by consensus and are binding, so every member has to agree to a trade deal or there is no trade deal
What does the need for consensus cause in the WTO?
makes decision making very slow
What are the six key principles the WTO operates on?
- non-discrimination
- more open
- predictable and transparent
- more competitive
- more benefits for less developed countries
- protection of the environment
What is ‘non-discrimination’ as a principle of the WTO?
states should treat trading partners equally and fairly
What is ‘more open’ as a principle of the WTO?
commitment to free trade and to progressively lowering tariff and non-tariff barriers
What is ‘predictable and transparent’ as a principle of the WTO?
states should not raise trade barriers without warning
What is ‘more competitive’ as a principle of the WTO?
states should not interfere in order to give themselves an unfair competitive edge
What are ‘more benefits for less developed countries’ as a principle of the WTO?
allows less developed countries to catch up and transition to becoming participants in international trade
What is ‘protection of the environment’ as a principle of the WTO?
environmental protection must be respected both nationally and intentionally
How many negotiating rounds have there been in the WTO?
nine
When was the most recent negotiating round in the WTO?
2001 (Doha Round)
What was the aim of the Doha Round?
improving developing countries access to global markets, mostly for agricultural products
What did the Doha Round intend to do?
reduce global subsidies on exports that boost prices and domestic subsidies that go directly to farmers
What was one of the specific proposals of the Doha Development Round?
reductions in government agricultural subsidies of up to 75% (EU) and 66% (US)
Why has there been resistance from both developed and developing states?
developed = seeking to defend their interests
developing = rejecting compromises they judge to be against their interests
What would critics say about the Doha Round?
powerful nations are blocking less developed nations and attempting to preserve the status quo for protectionist reasons
What has happened to the WTO in recent decades?
gridlocked
Why do states seek to agree trade deals outside of the WTO?
WTO can not make decisions quickly
What happened to the Doha Round in 2015?
effectively abandoned without agreement
What are the main problems of the WTO?
- consensus decision making is slow
- frequently sidelined by states forming their own agreements
- economically powerful states hold considerable bargaining power over less powerful states
What are the main successes of the WTO?
- has reduced the cost of international trade by reducing tariffs
- expanded a single set of trade rules to 164 member states
- increased predictability and order in world trade
When was the G7 founded and who by?
1975 - the six wealthiest worlds economies
Who is currently part of the G7?
Canada, France, Germany, Italy, Japan, UK, US
What happened with Russia and the G7?
Russia joined in 1998 but was suspended in 2014 after the annexation of Crimea
What was always intended for the G7 membership?
made up of like-minded states sharing similar values and international outlook
How did the Council of Foreign Relations describe the G7?
steering group for the West
What does the G7 do in its annual meetings?
monitor and address developments in the world economy
How are the G7 and G20 different to IGOs?
- no formal rules
- can invite any states, IGOs or NGOs to its meetings
- can remove any members from meetings
- no budget or formal secretariat
- decisions are non-binding and rely on individuals will
- no defined objectives
- primarily a forum for world leaders to interact at an annual summit
What were some of the agendas and outcomes at the 2021 G7 meeting?
- covid-19 pandemic response = committed to 1 billion vaccine doses
- climate change = commitment to limiting global temperature rises to 1.5 degrees, net zero carbon emissions by 2050
What are some criticisms of the G7?
- its membership reflects an outdated vision of the worlds economic powers
- the scope for the G7 to achieve major breakthroughs is limited
- G7’s flexibility and informal approach makes it difficult to hold its members to account
What is the main argument for reform of the G7?
widen its membership to include other significant emerging and established economic powers
When was the G20 created?
1999
Why was the G20 created?
to expand the G7 to include a wider group of industrialised states and emerging economic powers
What is the objective of the G20?
an informal forum that promotes open and constructive discussion between industrialised emerging market countries on key issues related to global economic stability
What are the key features of the G20?
- membership represents both established and emerging economies
- has key economic IGOs attending its meetings
- agenda has become increasingly broad
How is the G20 more effective than the G7 has an informal forum?
- it is a balance between traditional, historic powers, newly emerged economic powers and emerging economic powers
- includes more states that do not always agree with each other
- inclusion of an partnership with the major Bretton Woods economic IGOs has benefits
- widening of the agenda to include non-economic matters
- has taken decisive action on both economic and non-economic matters
What are the main criticisms of the G20?
- meetings have often been a focal point for anti-capitalist protests
- G20 outcomes are ‘watered down’ or ‘lowest common denominator’
- prioritising the needs of its member states and defending the interests of global capitalism
