IR 002: Lecture 18 Flashcards
What was international trade like up to the 15th century?
-Economic fragmentation
-International trade was seen as a threat
-Geographic distance discouraged commercial connections
What was international trade like from the 16th-18th century?
-Idea of international trade generating wealth develops
-Zero-sum game (one must minimize imports and maximize exports to win)
-Strong reliance on protectionism
What is protectionism?
Protecting the national economy by penalizing the competitiveness of foreign products (making imports expensive, restrictive norms, etc.)
What was international trade like starting in 1776?
-Emergence of economic liberalism
-Publication of “The Wealth of Nations” by Adam Smith
What were the key ideas of “The Wealth of Nations” by Adam Smith?
-Free trade is good for every country (not a zero sum game)
-Get ride of protectionist barriers
-Support private initiatives (capitalism)
What was international trade like from 1945 to today?
-United States led global promotion of free trade
-Decline of trade barriers worldwide
-Development of common standards and norms to facilitate trade
-Technological breakthroughs that facilitated trade (transportation, information, communication, etc.)
What were the main institutions of the post-World War II international economic system?
-General Agreement of Tariffs and Trade (GATT)
-World Bank
-International Monetary Fund (IMF)
What was the post-World Ward II international economic system like?
-Bretton-Woods system
-United States led system
-Global scope (excluding communist countries)
When was the General Agreement of Tariffs and Trade created and what was its purpose?
-Created in 1947
-Objective: negotiate the reduction of trade barriers
-Decreased the average official tariffs worldwide from 50% to 5%
What were the main objectives of the post-World Ward II international economic system?
-Encourage free trade
-Boost international investments
-Stabilize monetary relations
-Promote capitalism (private actors)
When did the World Trade Organization replace the General Agreement of Tariffs and Trade?
1995
What were the achievements of the World Trade Organization?
-Reduced barriers to trade and investments
-Accepted new members (ex. communist China)
-Stronger dispute settlement mechanisms
-Global harmonization of economic practices
-Sky rocketing global trade flows ($32 Trillion)
When as the World Bank created and what is its main objectives?
-Created: 1944 in Washington, DC
-Dominated by the United States
-Promotes capitalism
-Original Objective: Loans to help Western Europe’s recovery
-Current focus since 1970s: Help develop the third world and focus on poverty reduction
When as the International Monetary Fund created and what is its main objectives?
-Created: 1945 in Washington, DC
-Dominated by the United States
-Promotes capitalism
-Original Objective: Loans to stabilize the international monetary system
-Current focus since 1950-1960s: Growing focus on underdeveloped countries
What are some of the opinions on when globalization began?
-1492: Discovery of the Americans by Christopher Columbus (start of colonialism)
-19th century: Sudden drop in transportation costs due to technological breakthroughs
-1870-1913: Skyrocketing rise of international trade (due to British-inspired free trade policies)
-Post World War II: United States Leadership
-Post-Cold Wra
What globalization like post-cold war?
-Ongoing process of international economic and technological integration (goods/services/capital/technology)
-Globalization of ideas/people/cultures
-Abolition of geographical distance
What is the liberal conclusion on post-cold war globalization?
Despite its problem, globalization has unlocked the world’s economic potential
Who was the founder of Marxism?
Karl Marx
What are the assumptions of Marxism?
-Growing inequalities between countries (Europe vs. the rest of the world) and inside each country (rich vs. poor)
-Capitalism is evil (Unfair inter-state competition, greedy corporations, confiscation of wealth by the rich)
-State policies are designed to please capitalist elites (open new markets abroad, vote exploitative labor laws, vote tax cuts, wage lucrative wars, etc.)
-Main actors are the socioeconomic classes (Capitalist elites who own factories and banks and workers (masses who work for the elites))
-Revolution is imminent (exploitation cannot be tolerated, revolution by the workers, communism will prevail)
What is the legacy of Marxism?
-Dependency theory
-Capitalism as a system of oppression
-Capitalism as an unstable system (recurrence of crises)
-Inter-governmental organizations protect the rich (WTO, IMF, etc.)
-Multinational corporations control governments
-Globalization only made things worse
What is dependency theory?
-Inspired by Marxism; emerged in the Third World
-Opposed to free trade (makes rich countries richer and poor countries poorer)
-Solution for poor countries is protectionism (vs foreign actors), state investments in key industries, and regulation (vs corporate greed)
How did the demise of the Soviet Union (1989-1991) effect Marxism?
Critical blow to the credibility of Marxism but some Marxist themes remained relevant
What are the reasons to oppose globalization?
-Environmental degradation (depletion of world resources)
-Deregulation has caused financial crises (ex. global spread of America’s 2008 financial crisis)
-Growing inequality between countries and within each country
-Erosion of labor and social rights
-Undemocratic liberal economic institutions (WTO, WB, IMF)
What is geoeconomics?
Using economic instruments to advance strategic objectives vis-à-vis other states
What is the typical economic strategy of a state?
-Need to optimize growth (economic integration with world and playing by the rules of free trade)
-Forge economic ties without losing any political/economic autonomy
-Pursue relative gains vis-à-vis rivals
-Geoeconomics
What are examples of geoeconomic policies?
-State investments in education
-Foreign loans/aid to make other states dependent
-Protect strategic sectors with tariffs
-Leverage the size of your national market to obtain concessions
-Trade/investment controls
