Globalisation, Aid-Dependency and the Resource Curse

Question 1

What is globalisation?

Answer 1

Globalisation is the process through which global interconnection widens and deepens. The world becomes ‘smaller’ as speed of travel and transport increases.

Question 2

What dimensions are there to globalisation?

Answer 2

Governance: institutions, global governance, social movements (BLM, XR)
Cultural: ideational trends, pop culture, identity
Ecological: population growth, biodiversity reduction, food globalisation
Economic: trade, aid, TNCs, international economic institutions (IMF, World Bank, WTO)

Question 3

How do policy changes and technological advancement respectively create economic globalisation?

Answer 3

Policy - governments have generally encouraged economic globalisation. Also been spurred on through trading organisations set up and international financial institutions (IMF, WB, WTO)
Technology - transport, comms, IT, services, etc. have allowed flows of goods and services much quicker across the world.

Question 4

What are key features of the first era of globalisation?

Answer 4

The first era of globalisation saw industrialisation, colonial expansion and a domination of trade by Europe.

Question 5

What are key features of the second era of globalisation (late 19th, early 20th Century)?

Answer 5

This era was characterised by trade and technological advancements, based around transportation and manufacturing. Multinational companies also developed, as well as global governance (LoN as an example).

Question 6

What evidence is there that the second era of globalisation saw the world becoming more globalised?

Answer 6

There was a global convergence of prices of goods, indicating that there were global markets for these goods. Greater foreign investment occurred. Migration began to boom, too.

Question 7

What has characterised the third era of globalisation (late 20th Century to present)?

Answer 7

This era has been marked by the digital revolution, as well as the rise of NEEs (India, China, Brazil). Financial services have become more significant, global economic governance has broadened

Question 8

What does Martin Wolf see as being the benefits of economic globalisation?

Answer 8

Martin Wolf believes that economic globalisation has liberalised trade, reduced prices, as well as increasing wealth and material wellbeing.

Question 9

What do Stiglitz and Chang respectively see as being the drawbacks of economic globalisation?

Answer 9

Stiglitz: results in job losses in developed countries as manufacturing is outsourced to countries with cheaper labour costs
Chang: it develops the global North at the global South’s expense due to the exploitation of workers here, the hoarding of profits in the developed world.

Question 10

How can countries develop?

Answer 10

Countries can develop through industrialisation, through economic growth, the development of a services economy. CAN ALSO have better human outcomes - longer lives, better health outcomes, rights, freedoms, etc.

Question 11

Which IR theory makes the case for the positive outcomes of globalisation helping development?

Answer 11

Liberalism mainly makes the argument for globalisation aiding development, believing it has allowed states to participate in a global market of converging prices, as well as allowing foreign investment that can develop countries.

Question 12

What branch of IR theory makes the case against globalisation helping development?

Answer 12

Critical theories mainly make the case for globalisation harming development, believing this has widened the gap between rich and poor, benefited the rich excessively, created unequal growth and exploited the Global South to develop the North.

Question 13

Explain the idea of the ‘golden straitjacket’ and how this has limited development resulting from Globalisation

Answer 13

Globalisation has seen increased roles for intl. economic institutions, such as the IMF and World Bank. These have granted development projects and financial assistance to developing countries on the condition of limiting economic policy space - imposing privatisation, liberal taxes, govt. budget cuts and deregulated FDI measures, often to the detriment of countries. Reduces autonomy and leaves prone to economic collapse.

Question 14

What is the rationale behind state intervention in the economy?

Answer 14

Governments are able to take calculated economic risks where necessary by investing in banks and enterprise. They can also avoid market failures by bailing out industries and banks (see 2008). They are able to also have considerations beyond profit, having ethical and social considerations.

Question 15

What arguments exist against state intervention? Make reference to Hayekian thought and the ideas of Adam Smith

Answer 15

States intervening excessively in an economy can prevent economic growth. There is also ideological opposition to this given the burden this places on taxpayers and restriction on economic liberty/profit-making incentives (Hayek)

Question 16

What are the advantages of aid? What are the disadvantages?

Answer 16

Advantages: aid can plug gaps in government spending and economies, can reduce inequality and help to provide basic amenities
Disadvantages: can disincentivise the development of a domestic economy, reduces the responsibility of a government to provide for its people. Creates AID DEPENDENCY.

Question 17

What are the main negative consequences of aid dependency?

Answer 17

Aid dependency can mean that donor countries have control over the policies of recipients. IT REDUCES POLICY SPACE. Aid flows are also unpredictable compared to domestic taxes, reducing economic stability and planning. It can also mean that governments are unaccountable for what is provided for citizens.

Question 18

When can aid be seen as substandard?

Answer 18

Aid can be substandard when counted as debt relief, in that this does not provide anything positive for a country. It can also be diverted away from the poorest for political needs, as well as be tied to responsibilities that a recipient country must meet in order to receive the aid.

Question 19

How can the UK’s aid be seen as substandard in recent times?

Answer 19

The UK in recent times has cut its own aid budget to 0.5% of GDP from 0.7%. It has also prioritised sending this to countries it hopes to do trade deals with, rather than those in need.

Question 20

What fraction of the UK’s aid budget is being spent on asylum seeker costs rather than development and aid?

Answer 20

1/4 of the UK’s aid budget is currently spent on asylum seeker costs rather than development and aid.

Question 21

How would critical theories disagree with the economic arguments for globalisation?

Answer 21

Critical theories observe that the most powerful states in an economically globalised system will create a system of unequal exchange, favouring themselves.

Question 22

What is real aid?

Answer 22

Real aid is aid which is focussed on the world’s poorest, designed to improve their situations and wellbeing. It is desired by the recipient populations, as well as fairly priced and without any hidden obligations placed on it.

Question 23

What is the idea of the resource curse, as posed by Auty?

Answer 23

The resource curse focusses on issues facing countries rich in natural resources, yet failing to benefit from this. These states often are more authoritarian, corrupt, less economically stable and more prone to conflict.

Question 24

Explain Wallerstein’s concept of ‘World Systems Theory’. How does this see things operating ABOVE the level of states?

Answer 24

World Systems Theory describes a global economy OPPOSED TO STATES HAVING ECONOMIES. It involves wealthy ‘core’ states influencing poorer ‘periphery’ states, making them follow economic policies that are damaging to the periphery but beneficial to the core.

Question 25

How can World Systems Theory be accused of oversimplification?

Answer 25

World Systems Theory does not account for inequality and diversity within states - it should recognise that there are peripheral areas within core countries and vice versa.

Question 26

Explain Volk’s views on what has changed about sovereignty in the modern day, and how this diverges from past understandings of sovereignty (in terms of state involvement and supranational bodies!)

Answer 26

Volk questions whether it is truly feasible for sovereignty to be understood as it previously has been, owing to globalisation. The idea of ‘‘supreme authority’ over internal affairs and a dichotomy between the internal and external is impossible when states are intricately involved in each others’ affairs and when supranational bodies have so much influence.

Question 27

What is developmentalism?

Answer 27

Developmentalism is a set of ideas and approaches that places economic development at the core of governing ambition. It aims to stabilise and legitimise governing structures in developing nations through external support.

Question 28

What criticisms are there of developmentalism as an approach?

Answer 28

Developmentalism is rooted in intervention into developing states by developed ones. NEOCOLONIALISM! Also has faced attacks from the right for its interference with free market economic principles. Furthermore, it has prioritised economic development over environmental, human and social advances.

Question 29

What is Naomi Klein’s ‘disaster capitalism’?

Answer 29

Klein’s idea of disaster capitalism is a situation whereby economic crises or other disasters develop, leading to a rapid opening of the free market and exploitation of a country in the aftermath of this.

Question 30

What is dependency theory? How can it be seen as oversimplified?

Answer 30

Dependency theory is a theory about how goods flow across the global economy. Building on world systems theory, it sees periphery countries providing goods and materials for core countries, meaning that core states are dependent on the exploitation of periphery states for their economic prosperity. Oversimplified as there are parts of some core countries that are periphery and vice versa.

Question 31

Why does the resource curse come about? What causes countries with material wealth to struggle to translate this into benefits?

Answer 31

A high presence of material wealth causes an increased likelihood of conflict over these materials (Libya, Iraq, Nigeria, Angola, DROTC). Also, resources extraction creates inconsistent revenues from these, while the benefits of resource extraction does not always stay in the host country: these are often repatriated away.