Issue 3 Flashcards
To what extent does economic globalization contribute to sustainable prosperity for all?
…
What events led to the development of economic globalization?
WWII -> Transport/Communication Technology ^ -> Industrialization of some Countries
How was the new International Monetary System (agreed rules) created?
Bretton Woods in1944 to prevent economic disasters like Germany, and promote global prosperity and peace.
Highlight the Paris Peace Conference’s failures.
The Bretton Woods Agreement established a system through which a fixed currency exchange rate could be created using gold as the universal standard; to combat inflation.
The General Agreement on Tariffs and Trade (GATT)
What are the roles of the World Bank and the International Monetary Fund?
Both are:
- helping countries in the struggle
- reduce poverty
- stabilize economy
IMF: emergency funds
WB: long-term projects
How has the expansion of the free market economy encouraged economic globalization?
Lowered tariffs, regulations (health/env’t), and barriers -> Transnationals
What ideas led to the development of economic globalization?
Communism vs Capitalism
What were the ideas of John Keynes?
Protectionism/Government Intervention
What were the ideas of Friedrich Hayek?
Capitalism/Free Trade
What influence have Hayek and Maynes’ ideas had?
Keynes: economies after WWII…Hayek: Thatcher (UK) and Reagan (US)
What is the link between freer trade and economic globalization?
Local companies -> big markets
What role does the WTO play in economic globalization?
It oversees agreements and disputes. Makes rules. Frees trade.
Explain CUMSA.
The largest free trade region; it replaced NAFTA in 2020 and supports mutual trade/investment
Terms:
- Automobiles
- Mexican labour protection
- US to Canadian dairy
- Copyright
- Duties on eBooks/Music
- Expiry terms
Results:
- Standards of work ^
- Costs for labour ^
- Job relocation
What are Maquiladoras?
“Twin plants”; manufacturing plants in Mexico with administration in USA
- Companies can pay less for labour
- Poor, run-down facilities with bad conditions. Bad for environment
- Initially provided Mexico with more jobs
- Greater supply for products in NA
- Stabilized Mexican and a bit of NA’s economy
Name some of the arguments for free trade.
- economic growth (GDP)/trade (new markets)
- consumer benefits (lowered price)
- some job creation
- some wage growth
- more FDI (purchase of assets or interest in another country)
- more services/goods available
- efficient utilization of resources (tech/oil); industry expertise—higher quality of stuff
- less government spending
Name some of the arguments against free trade.
- job losses
- wage suppression
- domestic production, bad effects (no subsidies/protectionism)
- bad effects on local oil and energy markets
- pressuring immigration and the outsourcing of jobs
- because of tariffs, economic shifts mean less revenue from tax; may mean less government spending
- workers’ rights and conditions detraction
- potential overdependence on FDI
- theft of intellectual property
- bad for environment
- bad on culture and traditions
- bad on local employment
What do Free Trade Agreements do?
They regulate tariffs, taxes, duties, and quotas (terms of trade) imposed by countries on imports and exports. Allow access to markets.
IMPACT INTERNATIONAL TRADE
What are the types of FTA’s?
Unilateral: benefits one country by one country; can loosen or impose taxes
ex: USA to small countries
Bilateral: 2 countries, often around key sectors (cars, food, oil)
Multilateral (CUMSA): lots of countries, powerful but hard to do
Define prosperity, the driving force for economic globalization.
Standard of Living:
GDP - all goods and services in a country; judges a country’s level of economic development
(per capita) - divided by the number of citizens
the condition of being successful or thriving. especially: economic well-being.
QoL and SoL
Define quality of life.
- happiness
- poverty rates
- healthcare
- education
- life expectancy
- gender equality
- GINI
What are some influences of E. Globalization?
- Natural disasters
- Sanctions
- Gov’t stability
- War/Conflict
- Control of S/D (cartels/gov’t)
- Pandemics
- Investor confidence due to inflation
What are the three fundamental economic questions?
- What to produce?
- Who produces it?
- For whom to distribute to?
What is economic globalization?
- Interconnectedness of people, nations, and corporations, through trade—exchange of goods, services, information and ideas
- Has been hastened by advanced technology in media, communication, and transportation
GROWING INTEGRATION OF MARKETS
Or, global capitalism
Parts:
1) International Trade
2) International Institutions
3) International Agreements
4) FDI
5) TNCs
What are the two main government systems that are related to economic globalization?
Communism vs Capitalism
Security vs Freedom
Control vs Competition
What is the World Bank?
The World Bank is an international financial institution that provides loans and financial assistance to countries for development projects aimed at reducing poverty and supporting economic development, often focusing on infrastructure, health, and education.
What is the IMF (International Monetary Fund)?
The International Monetary Fund is a global organization of 190 countries working to secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world through policy advice, loans, and technical assistance.
Emergency funds.
What is HIPC?
The Heavily Indebted Poor Countries initiative is a joint program by the World Bank and IMF aimed at ensuring that the world’s poorest countries are not overwhelmed by unmanageable or unsustainable debt burdens, providing debt relief and low-interest loans.
What is trade liberalization?
Trade liberalization involves reducing or removing trade barriers like tariffs, quotas, and regulations to encourage free trade between nations, aimed at enhancing economic growth and efficiency by allowing countries to specialize and export goods in which they have a comparative advantage.
What is free trade?
Free trade refers to international trade left to its natural course without tariffs, quotas, subsidies, or other restrictive regulations imposed by governments, aiming to create an open and competitive international market.
What is a trading bloc?
A trading bloc is a type of intergovernmental agreement where regional barriers to trade, such as tariffs and quotas, are reduced or eliminated among the participating states, aiming to increase trade and economic cooperation within the region.
Example: EU, ASEAN