Globalisation - 3.2 Flashcards
Bretton Woods - International Monetary Fund (IMF) - members
There are 185 members but they don’t have equal voting value. Voting rights are proportional to the amount of money invested into the fund
- USA has 17% (largest economy)
- EU has 25.7%
- Western developed countries have 54.4%
- BRICs have 9.7%
Bretton Woods - International Monetary Fund (IMF) - rules
Countries receiving this help must agree to run free market economies that are open to outside investment (TNCs work in these easily)
The rules and regulations can be controversial especially the strict financial conditions forced on borrowing governments, who may be required to cut back on health care, education, sanitisation and housing programmes
Bretton Woods - The World Trade Organisation (WTO) - intention
Intends to supervise and liberalise (removing gov. influence) international trade
Bretton Woods - The World Trade Organisation (WTO) - what do they ask countries to do
Remove tariffs/taxes on foreign imports and subsides to domestic products so that trade is free and without barriers
Bretton Woods - The World Trade Organisation (WTO) - receiving international loans
They must agree to WTO’s rules
Bretton Woods - The World Trade Organisation (WTO) - international trade
International trade exposes home grown products to foreign competition. Foreign goods are cheaper and of higher quality, so local firms will go out of business thus reducing local employment.
This happened in Ghana with Italian tomatoes and in India with American rice
Bretton Woods - The World Bank - current aim
Aiming to achieve the Millennium Development Goals in an attempt to end poverty and implement sustainable development
Bretton Woods - The World Trade Organisation (WTO) - loan to the Philippines
$470 million loan granted for a poverty reduction programme
Bretton Woods - The World Trade Organisation (WTO) - 2014
distributed $65 billion in loans and grants
Bretton Woods - The World Trade Organisation (WTO) - similar to IMF
They have conditions on their loans and grants and also has a proportional voting system based on the amount of money invested
Bretton Woods - How are the IMF, WTO and World Bank similar?
They are run by the USA and Western world thus benefiting them more whilst appearing to help others
The EU and ASEAN - free market liberalisation
neoliberalism (1) gov intervention in market impedes economic growth (2) wealth increases and trickle dow will occur from the richest to poorest
The EU and ASEAN - privatisation
overseas companies run the UK such as the French Keolis owns a large proportion of South England rail network. Since the global financial crisis, the UK approached Chinese and Middle Eastern sovereign wealth funds to help fund new infrastructure projects
The EU and ASEAN - encouraging business start ups
methods range form law business taxes to changing the law allowing both local and foreign owned finesses making more profit.
Sunday trading, introduced in 1994, became more attractive market for foreign retailers - Burger King to Disney Store
China and the 1978 open door policy
- FDI from China and its TNCs is predicted to total $1.25 trillion from 2015-2015
- China agreed to export ‘rare earths’ minerals to other countries in line with WTO
- Foreign TNCs are now allowed to invest some sectors of China’s domestic markets, including its rail freight and chemical industries
How could global flows be seen as threats?
- imports of raw materials and commodities can threaten nations own industries
- migrants can bring cultural change and religious diversity which isn’t welcomed by everyone
- information can provide citizens with knowledge that their government finds threatening
Globalisation isn’t an automatic outcome
- not everywhere has the population density or market potential to attract international investors
- economic differences can also result in places becoming divided
FDI
The Bretton Woods institutions have created a global legal and economic framework that’s suited to free trade and FDI
Governments and trade BLOCs
- national governments became new players in globalisation when they adopt policies that allow TNCs to grow in size and influence
Trade BLOC
voluntary international organisations that exist for trading purposes, bringing greater economic strength to the nations that join
Eg. the EU, NAFTA and the South East Asian Nations
How does free trade increase globalisation?
Government takes away barriers that make trade more difficult and costly
= as costs are reduced, TNCs will see a profit and want to invest in nations
= TNCs will bring new ideas, products, cultures etc to a nation
= the TNC will also generate wealth
= this wealth and development will increase standard of life and demand for foreign products
= as an economy has more TNCs they become interconnected and interdependent on each other
Tariff
a tax imposed on imports
Subsidy
financial assistance to a business by a gov. to make it competitive or prevent collapse
Quota
limit on the quality of a good a country can allow into a country
Protectionism
policies to protect businesses and workers in a country by restricting/regulating trade with foreign nations
Free market economy
market economy based on supply and demand with little or no gov. control
Free trade
gov. policy where gov don’t interfere with imports/exports by applying tariffs/quotas etc
Neoliberalism
Political philosophy of free markers, trade, privatisation and increasing the role of business in society (while decreasing gov influence). It’s thought that by making trade easier, there’ll be more, meaning more wealth and reduction of poverty
