Key concepts - Lec 7-9 Flashcards
Bretton Woods
- Goal to stabilize the international financial system and facilitate expansion of trade.
- Establishment of IMF, World Bank and WTO
- New monetary order with stable exchange rates (all currencies fixed to USD through gold standard)
Capitalism
A system of generalised commodity production in which wealth is owned privately and economic life is organised according to market principles
Three major features:
- Capital itself and the desire of capitalists to amass more capital (profit).
- Markets provide information, predictability and order.
- Capitalism has two forms of power: market and state.
Foreign Direct Investment (FDI)
It concerns the transfer of capital, personnel, know-how and technology from one country to another for the purpose of establishing or acquiring income-generating assets.
International Monetary Fund (IMF)
- Promote international monetary cooperation.
- Facilitate expansion and balanced growth of international trade.
- Promote and maintain high levels of employment.
- Promote exchange rate stability and avoid competitive exchange rate cooperation.
- Eliminate foreign exchange restrictions.
- Offer resources to countries to correct maladjustments in their BoP without resorting to measures destructive of (inter)national prosperity.
- Shorten the duration and lessen the degree of disequilibrium in the international BoP of its members.
Structural Adjustment Programs (SAPs)
- A set of political and economic measures to help states confronting chronic balance of payments deficits.
- Includes structural adjustment loans, strategies and conditions designed to improve the country’s overall BoP positio
World Bank
- Initial task was to provide loans to the shattered economies of Europe after WWII.
- Seeks to reduce level of poverty in Third World. Concentrates efforts on large infrastructure projects.
Critique:
- Bank as primarily and institution for opening up the Third World markets for the First World rather than being devoted to reducing world poverty.
- The Bank’s large project mentality has failed to consider local issues such as the environment and the role of women in development.
Clash of Civilizations
- Argues that the world is divided into a number of civilisations.
- In the future, we can expect conflicts to emerge along the major fault-lines between civilisations.
Democratic Peace Theory
Democracies do not go to war with another. Has been proven and tested with various requirements.
Democratization
The process associated with the spread of democracy around the world from its core in North America and Western Europe.
Humanitarian Intervention
- Humanitarian intervention refers to (forcible) action by one state or a group of states in the territory of another state without the consent of the latter, undertaken on humanitarian grounds or in order to restore constitutional governance.
- Must be distinguished from humanitarian aid, whose delivery requires the consent of the receiving government. Humanitarian aid is consistent with state sovereignty. Humanitarian intervention is not.
Regionalism
- Successor to nation-state, and alternative to globalization.
- Has become more prominent since the late 1980s.
- Theory of practice of coordinating social, economic or political activities within a geographical region comprising a number of states.
- Exists on several levels, like the institutional, which involves a growth of norms, rules and formal structures, or the effective level, which implies a realignment of political identities and loyalties from the state level, to the regional level.
There are three types:
- Economic regionalism, - creation of greater economic opportunity through cooperation
- Security regionalism, - cooperation designed to protect states from common enemies
- Political regionalism. – cooperation with goal of strengthening and protecting values, and thereby gain more powerful diplomatic voice. Examples include the Arab League and African Union.
Fair Trade
Trade that doesn’t just benefit you economically, but is also morally right. Related to alleviating poverty and respecting the best interests of sellers and producers in poor areas. In contrast, completely free trade may rob these less economically privileged areas of modernization, as you keep them in poverty by making them dependent on trade of primary goods.
Keynesianism
Argued that the actions of individuals in the private sector can create negative macroeconomic results. For the free market, but under the opinion that the state should be present in sustaining capitalist relations and correct the failings of the market (because they are inherently unstable).
Neoliberalism
- Basically emphasizes cooperative behaviour within the international system, while simultaneously accepting the anarchic character.
- In essence, liberalism with a hint of realism. In economic terms, its philosophy is that the market is good, and the state is bad. Laissez-faire
- Economy works best when left alone by the government, which means tax cuts, privatization, reduced welfare provision, low public spending, etc.
Washington consensus
- A set of policies put forward by the IMF, World Bank, and US treasury department for the reconstruction of economies in the developing world.
- Very much drawn on the ideas of neoliberalism.
- Controversial because it set certain policies as the blueprint for economic development, without regard for differences between countries in terms of anything, really.
- A few policies include: cutting public spending, tax reform, floating and competitive exchange rates, openness to FDI, privatization, trade liberalization, etc.
