Global Governance- Economic

Question 1

describe Bretton woods conference

Answer 1

• July 1944, brought together delegates from 44 allied nations to establish a new international monetary and financial system after World War II, resulting in the creation of the International Monetary Fund (IMF) and the World Bank
  = built framework for economic cooperation to avoid repetition of devaluations in Great Depression

Question 2

functions of IMF

Answer 2

• stability of international monetary system e.g. exchange rates
• decrease worldwide poverty
• increase employment and growth
• facilitate international trade
• liberals argue developed states have a responsibility to help developed states
  = its a global interest to help LIC
  = aid can be used to empower developing states and focus on own development rather than repaying loans and debt etc

Question 3

membership of IMF

Answer 3

• 141 countries are members
• North Korea and Cuba not members= ideological diffs= see it as US capitalist tool to bribe other states

Question 4

criticisms of IMF

Answer 4

• failed to prevent and remedy 2008 financial crash
• supports military dictatorships and HR abuses
  = supported Marcos dictatorship in Philippines 1972-1986 and Guatemala military dictatorship 1954
• SAPs benefit US not developing countries
• executive board of directors gives excessive powers to 8 countries that appoint own director
• tool of US foreign policy= James Baker (US sec of state 1985) said developing countries could only grow if they mad open market measure to increase FDI
• been failure of SAPs= conditions to receive $43 bil loan in Indonesia meant gov had to cut spending= increase poverty and social unrest= protests
• realists would say debt relief encourages states to continue to mismanage their economic resources

Question 5

describe SAPs

Answer 5

• fiscal, monetary and structural policy changes promoted by IMF and WB in developing countries
  LINK to Wallerstein’s world system theory model
• CORE countries like US give aid and help to periphery countries as they rely on their cheap labour and raw materials in order for economic system to function

Question 6

structural power in IMF

Answer 6

• US has veto= has 16.49% votes= gives most to IMF= can drive agenda
• Euro area has 21%= questions US dominance

Question 7

describe Washington consensus 1989

Answer 7

• refers to set on 10 economic policies promoted by the IMF and WB in order for LICs to get loans
  = fiscal discipline, trade liberalisation, deregulation, tax reforms etc

Question 8

disadv of SAPs

Answer 8

• some programmes disproportionately benefit the rich
• fundamental clash w state sov if an SAP is @ odds w policies that democratic gov has been elected to implement
• increase dependency on IMF
• decrease state sov= forced to implement austerity measures

Question 9

world bank institutions

Answer 9

• international bank for reconstruction and development
  = provides loans to help meet middle class country’s needs= $700 mil to India for solar energy projects
  = since 2002, invested over $4.7 billion for reconstruction in Afghan= 0 interest loans
• international development association= provides loans for poorest countries w low to no interest rates
  = $3.4 mil to India to improve clean drinking water= helped 36 mil ppl

Question 10

key IMF case studies

Answer 10

• Greece accumulated debt due to high gov spending= IMF intervened due to concern debt crisis could spread to euro zone= gave $30 mil loan in return for Greece to uphold austerity measures 2011
• Cote d’lvoire had 58% debt to GDP ratio in 2023= got $3.5 mil for economic reform and $1.3 billion to decrease greenhouse emissions
  = decreased inflation from 32.5% 1994 to 2.5% 2024
  BUT still used child slaves for coca production
• Argentina had serious debt crisis in 80s that caused social unrests and poverty= 2018, got $57 billion loan but still remained $44 billion debt

Question 11

describe world bank

Answer 11

• group of 189 member states who focus on ending extreme poverty and gives states grants for development projects
  = issue 0 interest loans and don’t have to repay grants
• US carries 16% voting power= no other state has more than 5%

Question 12

adv of world bank

Answer 12

• acts as source of finance to developing states
  = South Korea got $15 billion from WB and now is a leading donor to poorer states
• offers technical advice on projects and acts as think tank on best development delivery

Question 13

disadv of world bank

Answer 13

• pushes neoliberal reform agenda on states too aggressively
  = results in ‘shock therapy’ of economies like Russia and Argentina= undemocratic and western centric influence
• US hegemony over bank’s leadership and lack of transparency= Brazil, India and china have less than 1/3 voting power
• spends too little= 2024 defence budget of US was $841.4 billion vs WB defence budget was $117.5 bil

Question 14

diff between IMF and WB

Answer 14

• IMF focuses on global and national growth= assist loans to repay debt
• WB focuses on decreasing poverty and improve development in LICs

Question 15

examples of developing banks

Answer 15

• AIIB has 103 members of china, India, Russia, uk but no US
  = focus on improving asian development

Question 16

describe WTO

Answer 16

• formed in 1995 to replace GATT and General Agreement on Tariffs
  = aim to promote a multilateral trading system built around principle of free trade
• primary goal is to reduce barriers to trade through international trade rules
  = decrease tariffs on imports and limit quotas
• helps resolve trade disputes between states in order to prevent states engaging in unilateral trade wars
  = 350/631 cases reached final process of resolution
  = US initiated 115 cases and UK initiated 97 cases
• produce research on global trade and economic policy
• 164 member states account for 97% of world trade= EU acts as unified bloc of states= member
• ministerial conference every 2 years= everyone must agree to trade deal otherwise no deal

Question 17

principles of WTO

Answer 17

• non discriminatory= states should treat trading partners equally and fairly
• open commitment to free trade
• should be transparent= cant randomly shock trade barriers wo warning
• increase benefits for less developed countries
• protect environment= ensure eco-friendly trade

Question 18

liberal POV on WTO

Answer 18

• strengthens international connections through dialogue
• improves rule of law= all states bound to rule of law to uphold international justice
• more free trade helps everyone= less tariffs and world benefit from comp adv

Question 19

realist POV on WTO

Answer 19

• WTO only works if countries think it aids their own interests
• threat of trade wars will still remain= countries can remove sov
• WTO rules et by the strong (US) and followed by the weak

Question 20

describe Doha Round

Answer 20

• made by WTO in 2001 to help developing countries access global markets especially agriculture
• highlights that WTO can’t make quick decisions as abandoned in 2015
  = couldn’t agree on agriculture subsidies of US and EU as it puts LIC @ disadv

Question 21

describe G7

Answer 21

• canada, france, germany, japan, US, UK, russia
• no formal rules
• can inv any state, IGO, NGO to meetings
• no budget= of members want to do smoothing they say for it
• no defined objectives= allow flexibility in tackling key issues that matter to members

Question 22

examples of key G7 summits

Answer 22

• 2006 held on Russia, BRICS and mints inv
• big issues of environment change, nuts and energy development
  = Africa got $7.7 billion from G8 for African infrastructure sector, Canada gave $450 mil to African health systems
  = US criticised for refusal to sign climate agreement
• 2007 held in germany= china, India and Africa inv
  = germany proposed 50% cut in emissions by 2050, Africa given $60 bil to cure AIDS and TB= half of money came from US
• 2024 held in Italy= gave $50 billion to Ukraine and froze Russian assets in G7 countries, launched food system and energy project in Africa
• 2002, G7 pledged $12bn to Africa but Africa only got $6bn= campaigners called the aid ‘peanuts’

Question 23

disadv of G7

Answer 23

• G7 responds to issues that dominate summits e.g. UK 2021 summit focused on COVID-19 due to discussion on vaccines etc
• made up of states that usually agree apart from Russia 2014= all agreed to punish Russia
• can have divides= 2018 Quebec= disagreement centred on US tariffs of 25% on steel and 10% on aluminium= trump left early

Question 24

describe Wallerstein’s world system theory

Answer 24

• countries fall into 3 economic categories depending on their historic relations to capitalist world economy
• CORE= most powerful and wealthy countries have best military and progress of tech etc e.g. superpowers and great powers
• periphery= least developed economies due to uneducated, cheap and unskilled labour= weak gov that cant control country’s social inequality, poverty etc
• semi periphery= MINTS and BRICs= exporters of global south e.g. Zambia- manufacturers not innovators

Question 25

describe diff development theories

Answer 25

- CLASSICAL= under development caused by exploitation = Adam Smith argued market should be laissez faire to ensure fair prices and wages= free markets - NEOLIBERAL= Washington consensus that shapes IMF and WB principles= decrease gov spending, tax reform, free trade etc = focuses on modern policy approaches that emphasise reducing gov intervention = global south would grow by implementing privatisation and free trade

Question 26

describe successes of MDGs of UN

Answer 26

- extreme poverty has halved from 1.9 bill in 1990 to 836 mil in 2015= increase SOL - child mortality decreased from 90 to 43 deaths per thousand live births 1990-2015 - decreased worldwide mortality by 45% since 1990

Question 27

MDG failures

Answer 27

- economic growth in china been reason for extreme poverty elsewhere due to competitive trade - former UN sec general Ban Ki-moon said inequality is still a major issue - target for halving ppl suffering w hunger wasn't met

Question 28

describe SDGs and their successes

Answer 28

- key goal to decrease climate change, clean water and sustainable management of eco systems - 35% of leading global companies prioritise 5 to 8 SDGs, and 10% reference 12 or more SDG goals

Question 29

adv of IMF and WB

Answer 29

- have 189 member states= become principle source of funds for developing countries = don't force countries to take loans= taken on basis it will promote growth and development - IMF is a 'lender of last resort'= prevent spread of economic crises= during 1997 Asian financial crash, IMF gave $118 billion to Thailand, Indonesia, and South Korea to bail out their economies= affected countries restructured their economies as IMF required reform as a condition of help - since 2007 financial crash IMF taken role of global surveillance= identifies risks to stability and proposes solutions e.g. flagged high US debt following COVID spending = said risks of high IRs would decrease growth - During asian financial crisis in 1997, IMF gave indonesia $48 bil = helped country to repay debt in order to improve their financial situation and handling of gov finances = meant that financial pressures of currency etc didn’t spread

Question 30

adv of G20

Answer 30

- balances powers between traditional and historic power of US and newly emerged economic powers of China and emerging like Argentina = makes G20 more effective as not too exclusive nor too comprehensive to make decisions - membership includes states that don't always agree with each other= create forum for dispute resolution and problem solving = forum to discuss climate change w emerging countries like India who have opposing views - widening of G20 agenda to include non economic matters - taken action to ensure wealthiest states and IGOs work together in order to prevent and tightly regulate bank accounts that may be funding terrorists - better trade and diplomatic relations between countries = Nye would support= increases soft power - highly representative of north and south - key success was its response to global crash = measures to inject $748 bn into global economy were agreed

Question 31

members of G20

Answer 31

- ARGENTINA= 2018, IMF gave $50 billion loan agreement as part of a bailout package 2023, inflation peaked @ 300% and 2024 poverty @ 53% disabled women can have their right to reproduce taken away from them 2022, president convicted for committing fraud in public office - JAPAN= made over $25 mil 2023 from tourism hosted 2019 G20 summit but @ same time they launched new whale killing programme which rejected global views - SAUDI ARABIA= 40% GDP from oil and petroleum GDP growth down by 9% 2023= oil production was cut @ end of 2024, total debt was $319.7 billion female activists beaten and threatened by rape while campaigning women's right to drive

Question 32

disadv of G20

Answer 32

- countries are not legally required to follow through on agreements or commitments made during G20 summits - only 19 countries and the European Union, which means many nations, particularly smaller or less economically influential ones, are excluded from the decision-making process = exclusion can lead to a sense of inequity in global governance = many African nations don't have a seat at the G20 table even though they've endured poverty and economic trouble = can undermine global solutions that address specific needs and voices of these regions = e.g. issues discussed @ 2015 Paris Climate Agreement needed broader global cooperation beyond the G20 - still follows liberal, orthodox development theory which has been seen by many to have failed

Question 33

adv of WTO

Answer 33

- promoted open trading system based on multilaterally agreed rules that promote trade and growth = protectionist tariffs now average less than 5% = 25 years after WW2, world trade risen by 8% - unlike IMF and WB, WTO is democratic as decisions are made by census agreed by all members = rules are negotiated by all members - liberal trade policies sharpen competition= inspire innovation= increase success and growth - WTO's Trade Facilitation Agreement (2013) aimed at reducing trade barriers = helped simplify global trade for developing countries = agreement reduced costs and improved transparency in international trade

Question 34

evidence against north south divide

Answer 34

- rise of emerging economies in South and East Asia = 1981, more than 88% of China's economy lived under $2.55/day, by 2019 figure dropped to 1% = 1992, over 55% population lived in extreme poverty, 2019 figure fallen to less than 2% = commitment to economic reforms led to industrialisation= multiplier effect - many global south countries are now 'developed'= India, Brazil, Mexico are in top 15 global economies - globalisation has increased economic interdependence between south and north= U.S. and European countries are heavily reliant on China for manufactured goods= become a key player in global supply chains - there are a number of 'middle class' countries in the south that don't fit into binary framework of north/south divide = global poverty and development can't be simply captured by a geographic indicator of 'rich' or 'poor'= harder to distinguish = e.g. Mexico has 15th largest economy in world but 40% of the population lives below the poverty line and faces issues with corruption and drug-related violence

Question 35

proof of north south divide

Answer 35

- Sub Saharan Africa had much slower growth = 2022, over 40% population lives in extreme poverty - Nigeria and DRC are some of poorest countries in world despite receiving international aid = unequal success of countries= changing geographic distribution of poverty - wealthier nations still dominate global trade, finance and tech while south struggles with debt and underdevelopment - structure of international organisations reinforces divide as controlled by US mostly = US has 16.49% vote in IMF= structural power - south still depends on north for international aid= reinforces dependency relationship = Ethiopia was the largest recipient of US aid assistance in sub-Saharan Africa before Donald Trump froze funding 2025= when he froze funds for 90 days = USAid was the single biggest donor of food, channelling it through the UN’s World Food Programme= 16 million Ethiopians relied on donated grain 2024 - north dominates culture due to powerful MNCs= 'Mcdonalisation' - vast majority of most successful unis are in north