MIDTERM 4 Flashcards
State
A territory with a population governed by an authority structure (ie. a territorial organization)
Things a government cannot control
Paramilitary groups Undocumented Migration Refugee flows Black Markets Export Processing zones
Nation
Group of people with shared culture, history and ancestry
Nation State
Perfect correspondence of state and nation; an ideal which doesn’t actually exist
Plural State
State with minority population(s); prone to internal conflict
(ALL STATES)
Hyperglobalists
believe the state is irrelevant in global economy (thesis has been more or less rejected)
Evidence to support hyperglobalists
increased power of corporations and IFIs
Globalization –> New “borderless world”
State governments no longer control economic activity borders
Rejection of hyperglobalist thesis
- States differ
• Varying ability of states to control national (or global) economy • Who is economically dominant today? Tomorrow? - Private firms and markets engage with the state in
mutually dependent relationships. - States are dynamic and always changing
The State, as an “architect” in the economy, serves
6 KEY FUNCTIONS:
- Ultimate guarantor of economy
- Regulator of economic activities
- Manager of national economy
- Business owner
- Investor
- Provider of public goods and services
State as the ULTIMATE GUARANTOR of the economy
- deals with financial crises (stabilizing system, bailouts)
- guarantees national economic instruments (Maintain value of currency and govt bonds )
• sets interest rates (regulating loan to deposit ratios) - secures international economic treaties (international trade and investment agreements)
- property rights and the rule of law
State as a REGULATOR of the economy
Market regulation
Regulating economic flows
Budget spending
State market regulations
Labour laws
Contract laws
Anti-Monopoly regulations
Upholding “fairness of the market”
State economic flow Regulations
Cross-border flows of trade
Capital
Labour
Workers, Products, Money
State control of budget spending
collecting taxes
injecting $ back into the economy
Subsidies
State as a MANAGER OF NATIONAL ECONOMY
Creates and maintains policies to sustain or promote economic development.
The state creates and maintains policies to sustain or promote economic development via:
Trade Strategies
Tariffs and import quotas
Labelling and safety regulations
Foreign investment FDI strategies
Labour market strategies
Industrial Strategies
How does the government develop labour market strategies
Hiring and Firing
Welfare
Wages
Industrial Strategies of the government
Subsidies (Canadian government subsidizes oil and gas and agricultural sectors)
Import Quotas
Taxes
Access to raw materials
State as a BUSINESS OWNER
State Owned Enterprises (SOEs)
Government-Linked Corporations (GLCs)
State Owned Enterprises (Crown Corporations)
Public enterprise directly owned and managed by the state (controlling share, could be <100%)
Examples: CBC, BCHydro
Why would the government own a state enterprise?
An ideological belief that state ownership of economic resources is beneficial for the world.
Can be used to maintain cultural institutions
Can be used to take control over environmental issues
Government-Linked Corporation (GLCs)
State has direct or indirect stake in profit driven enterprises. (May have partial ownership)
eg. Renault, Fiat, Singapore Airlines
State as an INVESTOR
Certain states have become major global investors
through Sovereign Wealth Funds (SWFs)
Capital accumulation
Investments in
Capital Accumulation by:
Rich natural resources (eg. oil)
Surplus exports
Budget surpluses
State Investments are made in …
Financial services
Real estate
Energy Infrastructure
Industry
Resource extraction
Telecommunications
State as PROVIDER OF GOODS AND SERVICES
- Services fundamental to national well being
- Transport, education, health, infrastructure,
public housing - State often largest employer of a nation
Public Goods
Services fundamental to national well being. Ideally: goods that are not depleted when consumed by others and everyone has access; in reality, accessibility varies.
eg. Parks, Water, Transportation, Fire Protection, Police Protection, Education
Private Goods
Ideal private goods are exclusive: once one person has bought/consumed it, then it’s no longer available to others
- provided for purposes of making profit; excludes those who can’t afford them
Sovereign Wealth Funds
A state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, raw materials or in alternative investments such as private equity fund or hedge funds.
Examples of Neoliberal States
Canada
U.S.
U.K.
Examples of Welfare States
Sweden
Finland
Germany
Examples of Developmental States
Japan
Brazil
Mexico
Examples of Authoritarian States
Uzbekistan
Saudi Arabia
Turkmenistan
Neoliberal State
Political, economic ideology based on strong
belief in individual liberty, free markets, and
private enterprise.
emerged in 1970’s, took off in 1980’s
Thatcher, Reagan.
Dirigiste
A system in which strong state influence over economy
Characteristics of a neoliberal state
Minimize government role in economy
Lower taxes
Financial and trade liberalization
Privatize state enterprises
Widespread deregulation
Characteristics of a NEOLIBERAL STATE
Minimize government role in economy
Lower taxes
Financial and trade liberalization
Privatize state enterprises
Widespread deregulation
Types of State
- Neoliberal states
- Welfare states
- Developmental states
- Authoritarian states
- Fragile States
- Dependent/Neocolonial state
Characteristics of a NEOLIBERAL STATE
Minimized government role in economy
Lower taxes
Financial and trade liberalization
Privatize state enterprises
Widespread deregulation
Types of States (6)
- Neoliberal states
- Welfare states
- Developmental states
- Authoritarian states
- Fragile States
- Dependent/Neocolonial state
Welfare State
a system whereby the government undertakes to protect the health and well-being of its citizens, especially those in financial or social need, by means of grants, pensions, and other benefits.
Characteristics of a WELFARE STATE
- govt regulation and management of economy
- progressive taxation
- goal of full employment
- unions + collective bargaining
- welfare system (social safety net)
- ↑ govt spending in economic downturns
- protectionism
progressive taxation
a tax for which the percentage of income paid in taxes increases as income increases
regressive taxation
a tax for which the percentage of income paid in taxes decreases as income increases
proportional taxation
a tax for which the percentage of income paid in taxes remains the same for all incomes
Developmental States
A system whereby there is relative autonomy of the capitalist state from corporate interests and voters. The government takes on an active and direct role to develop the economy.
Characteristics of DEVELOPMENTAL STATES
- strategic industrial policies support & protect domestic industry
- state relatively autonomous from business & interest groups → allows it to pursue strong economic policies
- state agencies consult with private sector to create strategic industrial policy
- state nurtures certain industries/firms, creates needed economic & social infrastructure
- capital and labour regulation
Authoritarian States
Former socialist states that have liberalized their
economies but maintain strict political control.
Characteristics of Authoritarian States
• Economies dominated by a mixture of SOEs and private firms (domestic and foreign) • Highly regulated private sector
Former developmental & Authoritarian state example
South Korea
Dependent
(Neocolonial) States
States where:
Oligarchs/corporations have more power than govt.
Natural resource economies – volatile commodity prices
State indebted to IFIs or other states (eg. US)
Governments lose control of their economies (SAPs, corporations)
Neocolonialism
Example of neocolonialism in Chad
Exxon takes 100% of its profits out of Chad
Fragile States
A state significantly susceptible to crisis in one or more of its sub- systems. (It is a state that is particularly vulnerable to internal and external shocks and domestic and international conflicts).
Characteristics of a fragile state
- Weak institutional capacity, poor governance, political instability
- Limited domestic revenues and limited access to alternative financing
- Often experience ongoing violence
- Widespread corruption
- International agencies perform state roles
Examples of Fragile States
South Sudan
Somalia
Syria
Factors that “disintegrate” fragile states:
Internal factors (civil war, coup)
External factors (international pressure, invasion)
“Upscaling the State”
State delegates some control of national
economic affairs to international or macroregional
organization.
Example: EU
“Downscaling the State”
Regional devolution of power to subnational,
regional or municipal organizations; increased
autonomy for local/regional authorities, NGOs.
Example
INTERNATIONAL ORGANIZATIONS
IMF (1944)
World Bank (1944)
WTO (1995)
UN (1945)
G7 (1997) → G8 (1998) → G20 (1999)
Head of the IMF is always
European
Head of the World Bank is always
from the U.S.
The country with the most voting power in the both the World Bank and the IMF is
The U.S.
Goal of G20
facilitate international economic
cooperation, strengthen global economy,
reform IFIs, improve financial regulation
Goal of World Trade Organisation (WTO)
“ensure trade flows as smoothly,
predictably and freely as possible”
Macroregional Group types
Economic/political integration:
Free-trade areas (USMCA)
Customs unions (Mercosur)
Common market (COMESA)
Economic union (EU)
European Union
A political and economic union of 27 members operating within a single market with a standardized system of laws.
Characteristics of EU
- common trade, fisheries and agricultural policies
- free movement of people, goods, services and capital
- Common currency adopted by 19 members
- European commission and parliament
Summary of why hyperglobalism isn’t real
States continue to shape the economic activity
within/across their borders in many ways.
States differ in their ability to control their economies
and influence international institutions.
States retain major influence on global political/economic activity.
Structural Adjustment Policies
Structural adjustment programmes consist of loans provided by the International Monetary Fund and the World Bank to countries that experienced economic crises, but that are applied with a neoliberal economic ideology or agenda as a precondition to receiving the money.
Structural Adjustment Policies negative impacts
while
- conversion to cash crops
- devaluation of local currency
- widening inequalities
- Cut social services and government spending
- Eliminate food and energy subsidies
- Financial deregulation
- Removal of tariffs and import quotas
- Addition of local taxes
- Privatization
Downscaling of the state
Devloution of powers from national government to councils, provinces, regions, municipalities. As a result: hollowing out of the state
characteristics of Not For Profit Organisations
- little profit that has to be put back into company
- self organized
- Funds: foundations, govt, fees for services. govt. like to spend on direct action stuff not administrative
- 5% of Global GDP
- Typically run by volunteers
Privatisation undermines ____
democracy.
Why does Privatization undermine democracy?
As more and more goods are privatized, private lobbyist groups have more power to influence the state.
If the government does what you don’t like, you can vote against it, but there is much less you can do when a corporation does.
