Global Systems And Global Governance Flashcards
WTO as a global financial institution
Role and criticisms ?
Creates rules for international trade and aims to remove all government interference
- asks countries to remove taxes of foreign import and subsidies to domestic products so trade is free
- to receive international loans a country must agree to WTO rules
Criticisms
- free trade benefits developed more than developing countries
- criticisms for maximising GDP and ignores environmental considerations
Mostly controlled by western nations e.g USA
World bank as a global financial institution?
- finance development of ex-colonies
- lends money on global scale and aims to eliminate poverty + implement sustainable development
Criticisms
- funds environmentally challenging projects
- assumes low income countries need advice from rich countries to modernise
- real aim may be to use conditional loans in exchange for neoliberalism of economic policies
IMF as a global financial institution
?
Formed after ww2 USA
- wanted to stab slide currencies after depression following WW2
- 44 countries joined to crest fund to be loaned out helping countries in debt
- directs loans from wealthier countries to countries applying for help
- in return recipients must agree to run free market economies open to investment so TNCs can enter these countries
Criticisms
- slow to react to crisis situations
- some military dictators supported
Overall benefits of GFI’s ?
- coordinated response
- collective decision making
- help bi-lateral aid agreements
Further of GFI
- long term role of WTO questioned as lack of success on agreement of global aspects of trade
Place affected by globalisation and global systems
Uganda
- 20% poverty
- Imports 5.5 billion USD
- Exports 2.3 USD
Exports
- coffee tea and cotton (agricultural exports = 80% total exports) low profit
Influence of new technology
- village phone allowing farmers to check seed prices and villagers to start up mobile phone businesses
Why less globalised than other countries
- during British empire predatory Nile Perch introduced causing indigenous fish to become extinct = lower fish exports
- smallholding owned by subsistence farmers unlikely contributors to trade
- malaria= 14% countries deaths as health care = issue
- lack of tech = inability to trade
- lack of FDI
Trade
- Dependent on low value products
- huge loans spent on military products
Pros and cons of global systems effecting Uganda
Pros
- 10% more access to clean water
- 15 million more attending school
- farmers gaining more knowledge about crops and comparing techniques
Cons
- high inequality (gov spending FDI on military products)
- can’t stay up to date with HICs as bad technology
- provides West with cheap labour and raw materials
Global inequalities?
Communication cheaper and transport faster, LICs close gap on HICs but some countries become more unequal
- Gino index = measures inequality based in score 0-1, 1 = all countries income goes to one person
- China’s index increased by 34% over last 20 years
- 8 billionaires own same wealth as 3.6 billion poorest
- worlds riches 1% own more than other 99%
- globalisation benefited ‘global middle class’ but people at bottom of income ladder lost out
Average pay of FTSE100 chief exec = 129x higher than average employee
Effects of unequal power relations
- drives systems of trading benefitting already wealthy e.g high taxes and tariffs on certain goods ‘when America sneezes we all catch a cold’
Doha talks ?
- aimed to reform trade in agricultural products between developed and developing nations
- wanted to reduce tariffs by 30%
- would allow developing countries trade befits
- reduced prices for consumers in MEDC’s
Fairer prices for farmers in emerging economies
Problems
- developed nations argued bigger developing countries should open market to western manufactured goods
- emerging nations demanded more cuts in subsidies and tariffs used as protectionism
- DOHA eventually collapsed due to disagreement between countries who couldn’t compromise on size of tariffs
Why’s Africa bypassed benefits of globalisation ?
- Few countries have attracted FDI by increasing their trade substantially
- low income globalisers e.g China and Brazil GDP per capital increased by 5% a year in 1990s compared to developed countries
- entire Africa continent no larger than Spain’s
- Africa’s share of world trade fallen recently
- Africa’s trade barriers high historically
- Sahara fester acting as a physical trade barrier hindering trade between north and rest of Africa
-artificially cheap foods been flooding African market due to US gov subsidies undercutting Ghanaian rice industry e.g
Ghana used to be rice exporter now imports 100 millions £ a year
Cash crop example?
Coffee
- Employs third of world economically active population, may working at subsistence levels
- 25 million fams involved in growing it
- prices dropped dramatically so cost of farming becomes unprofitable
- Brazil = top coffee producer (30% total coffee exports)
Largest importers = Germany and USA - second most traded commodity after oil
- Used to be all subsistence
- technology advanced creating larger yields = surplus crops able to be sold
- during colonial times African countries encouraged to farm cash crops instead of staple food crops, now Africa has to import old staple food crops
- many countries can’t compete with power of MEDCs so must keep producing for rich buyers
TNCs compete for cheapest cash crop
- after WW2 coffee prices cane controlled by ICA to limit over production and keep coffee prices relatively high
- ICA fell apart after Cold War and coffee prices fell 65% in 20 years
- coffee consumption decreased and LEDCs had to accept low offers due to huge competition on market
Problems for growers
- in 2000 estimates 30,000 Hondurans went hungry due to coffee Crisis
- Uganda families can’t afford to send kids to school
- lack of export revenue = less money to spend on infrastructure= more people susceptible to disease and hunger
Future
- fair trade coffee become increasingly important as gives farmers a living wage and promise to buy coffee for few years
- also benefits environment, but there are feet Themis market will become over saturated and not able to cure coffee crisis
Ghana chocolate case study ?
Problems associated with non free trade choco in Ghana
- less demands for fair trade choco which is damaging for 2 million farms in Ghana
Unequal power relations ?
- HICs exploit Ghana workers, most profits going back to HICs who charge high taxes for processed goods and lower taxes for raw materials e.g cocoa cheap to import but cocoa butter expensive to import
Benefits of fair trade for Ghana
- aims to change rules of international trade, fair trade foundation set up by CAFOD to ensure better deal for producers from developing countries
- kuala Kokomo an association of cocoa farmers in Ghana who sells its cocoa for the benefit of its memeber farmers and communities
Patterns of global trade ?
Exports from HICs to LICs over 100billion higher than LICs to HICs
Recent changes in global economy
- many advanced economies experienced deindustrialisation = less national output generate by manufacturing sectors
- collapse of communism opens up countries to world trade so therefore increase their share of world trade by taking advantage of low production costs and wages
- newly industrialised countries such as China and India have dramatically increased their share of world trade
Pros and cons of international trade
Pros
- transfer of technology
- fewer domestic monopolies
- comparative advantage
- purchasing power
- increased employment
- economies of sale
Cons
-over specialisation
-de skilling
- stunted growth of local and emerging industries
Product dumping
- exploitative labour and intensive industries
- protectionism and tariffs
Factors allowing TNCs to grow ?
- cheap labour
- mergers and takeovers
- cheap land to develop
- funding and FDI to fund expansion
- technological developments
Advantages of a company being global ?
Helps escape tariffs e.g Nissan decision to produce cars in Sunderland to gain access to EU market
- reach foreign markets more effectively
- exploit minerals or resources available in other countries
- outsourcing of production
- branding of services / products so easily recognisable
Define vertical and horizontal integration ?
Vertical- where supply chain of company is owned entirely by them at company from raw material to finished product e.g BP
Horizontal
- where company diversifies its operations by expansion, merger or takeover to give broader capability at the same time as access e.g Kraft taking over Cadbury’s to gain more diverse base in grocery and confectionary market
Define SDT and example?
Special differential treatment
E.g EUs everything be arms agreement that accepts all products from LEDCs but arms and ammunition
Pros and cons of SDTs?
Pros
- LEDCs given chance to trade freely with MEDCs giving access to more markets and greater incomes
Cons
- not all LEDC countries get to be accepted to SDTs
- LEDCs aren’t always aware of SDTs
- favoured trading agreements led to flooding of cheap imports to markets and undermining their own industrial base
Negative of food production in a globalised world ?
- 10 firms control 28% of food production
- GM crops + use of synthetic ingredients
- food waste
- obesity
- loss of culture and traditional foods
Risks of interdependency ?
- global financial risk
- global impact of Brexit
- social media and radicalisation
- increasing global arms sales
Palm oil case study ?
Edible vegetable oil
Grown
- Africa, Asia, North And South America
What it’s used for
- used in thousands of everyday items e.g food, toothpaste and soap
- UK consumes 32,000 tonnes a year
Why demand is increasing
- cheap to produce 10 x cheaper to produce per acre compared to closest competitor
- cheap as producers disregard environment
Sustainability of palm oil production
- plantations tripled in last decade
- forces labour claims
Social impacts
- locals have to walk further for raw materials for building houses and medical plans e.g half an hour to half a day
Economic impacts
- companies are MEDC exploiting labourers, money is reinvested into plantation with little going to workers and community
Environmental
- forests destroyed decreasing biodiversity and destroying medical plants + burning forests = greenhouse gases
How to make more sustainable
- green palm certificates issued to producers and plantations meeting RSPO guidelines so consumers know which products to ethically buy
Success of attempts towards sustainability
- RSPO Attempts been criticised by NGOs as orang-utan population remains under threat but is working towards sign successful
-
Define SDT and example?
Special differential treatment
E.g EUs everything be arms agreement that accepts all products from LEDCs but arms and ammunition
Pros and cons of SDTs?
Pros
- LEDCs given chance to trade freely with MEDCs giving access to more markets and greater incomes
Cons
- not all LEDC countries get to be accepted to SDTs
- LEDCs aren’t always aware of SDTs
- favoured trading agreements led to flooding of cheap imports to markets and undermining their own industrial base
