Midterm

Question 1

Globalization as a “global heritage” - Sen

Answer 1

1. Posits idea that developments confined within Western conception – global civilization is a world heritage, not just a collection of disparate local cultures
2. Viewing globalism as merely western imperialism = costly error, major global developments didn’t include West

Question 2

Sen on distributional benefits of the global economy

Answer 2

1.Through withholding technology will not make poor people less poor, observe how the gap between rich/poor changes with shift
Ex: Women are doing better in general, but worse compared to men – wage gap
2.Increase fair trade, more accessible technology/institutions
3.How to improve intensification of networks
“Even if the poor were to get just a little richer, this would not necessarily imply that the poor were getting a fair share of the potentially vast benefits of global economic interactions”

Question 3

Interdependence

Answer 3

1.Kaldor
2.Freedom/open space for different actors
Actors can contest domestic/international norms
Ex: international organizations

Question 4

Globalism

Answer 4

1. Keohane & Nye
2. Thickening of density of networks of connections across multi-continental distances, increase international participation and institutional velocity (response speed)
3. Branches – economic, military, environmental & social/cultural

Question 5

Globalism

Answer 5

1. Keohane & Nye
2. Thickening of density of networks of connections across multi-continental distances, increase international participation and institutional velocity (response speed)
3. Branches – economic, military, environmental & social/cultural
4. Cohen & Nye Definition
   2 main parts:
   1. It involves networks of interdependence
   1. In this network, it implies an increase in number and relationship
   2. It is about multiple-relationships, not just single linkages
   2. It is multi-continental
   1. Regional networks of interdependence aren’t good enough either
   2. EU might not fit this definition of globalism
   1. Has to be multicontinental
   3. In other words, it has to have a global reach
   4. Globalism is about that global reach…not like interdependence
   5. It cannot be one independent relationship

Question 6

Thick globalism

Answer 6

Ex: financial markets, environmentalism is thickening

1. Involve many relationships that are intensive as well as extensive: long-distance flows that are large and continuous, affecting the lives of many people.
2. The operations of global financial markets today for instance, affect people from Peoria to Penang.

Question 7

Social globalism

Answer 7

1. Movement of ideas, information, people, media, norms and human rights (mostly increase through net)
2. Process of international socialization, driven by norms
   Ex: soap operas, tourism, internet users, MNC

Question 8

Economic globalism

Answer 8

1. Long distance transfers of goods, services, capital and information
2. Trade: GDP ratio – small countries must engage in trade via importation, lower GDP
   Ex: Singapore imports water

Question 9

Military globalism

Answer 9

1. Premise of introduction of force

Ex: Cold War between US and Soviet Union

Question 10

Globalization (according Keohane and Nye)

Answer 10

1. “Globalization” is the process by which globalism becomes increasingly thick.

Question 11

Global Cities

Answer 11

1. Sassen Saskia
2. Transformation to new spatial order, city > state
   Ex: New York, London & Tokyo
3. 4 characteristics of global cities:
   
   1. Highly concentrated sources for world economy
   2. Firms that specialize in producing things – global in nature (MNC location)
   3. Headquarters – of decision making and production
   4. Markets for those producers

Question 12

Westphalian System

Answer 12

1. Was established in 1648 as part of the Peace of Westphalia
2. Three core points to the treaty
   
   1. The principle of state sovereignty
   2. The principle of (legal) equality of states
   3. The principle of non-intervention of one state in the international affairs of another

Question 13

IMF

Answer 13

1. International Monetary Fund
2. International organization consisting of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world
3. Functions:
   
   1. Designed to stabilize currency and exchange rates
   2. Provides short term loans to cover negative balances of trade
   3. States give up some control, but are assured stability of currency

Question 14

WTO

Answer 14

1. World Trade Organization
2. International organization dealing with the global rules of trade between nations
3. Main function is to ensure that trade flows as smoothly, predictably and freely as possible
   
   1. The result is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them.
   2. The result is also a more prosperous, peaceful and accountable economic world. Virtually all decisions in the WTO are taken by consensus among all member countries and they are ratified by members’ parliaments. Trade friction is channelled into the WTO’s dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries’ trade policies conform with them. That way, the risk of disputes spilling over into political or military conflict is reduced.
   3. By lowering trade barriers, the WTO’s system also breaks down other barriers between peoples and nations.
   4. At the heart of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody’s benefit.
   5. The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business.
   6. The goalis to improve the welfare of the peoples of the member countries

Question 15

Winners of free trade

Answer 15

1. Exporters with competitive advantage
2. Workers who gain jobs in export industries
3. Net economic welfare gains for society
4. Consumer who benefit from cheaper import prices
5. Domestic firms who see higher demand from consumers who now have more disposable income due to cheaper imports
6. Consumers who see lower prices due to competitive pressure of trade

Question 16

Losers of free trade

Answer 16

1. Domestic firms who are uncompetitive and lose out to cheaper imports
2. Workers who lose jobs in these uncompetitive industries
3. Particular regions which see a concentrated decline in industries which are now under competitive
4. Social costs of new trade deals like TIPP
   Ex: alleged promotion of fossil fuels over renewable energy

Question 17

Losers of free trade

Answer 17

1. Domestic firms who are uncompetitive and lose out to cheaper imports
2. Workers who lose jobs in these uncompetitive industries
3. Particular regions which see a concentrated decline in industries which are now under competitive
4. Social costs of new trade deals like TIPP
   Ex: alleged promotion of fossil fuels over renewable energy

Question 18

Comparative Advantage

Answer 18

1. The ability of an individual or group to carry out a particular economic activity more efficiently than another activity
2. Economies ability to produce goods and services at a lower opportunity cost than trade partners
3. Comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins

Question 19

Absolute Advantage

Answer 19

1. The ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group
2. When a nation can make a product at a higher quality and faster rate than another country

Question 20

The World Economic Forum

Answer 20

1. Swiss nonprofit foundation based in Geneva, Switzerland
2. Its mission is: committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas
3. Annual meeting in Davos bringing together 2500 top business leaders, international political leaders, economists, celebrities and journalists for up to four days to discuss the most pressing issues facing the world.

Question 21

Foreign Direct Investment: what is it? What attracts it?

Answer 21

1. FDI means companies purchase capital and invest in a foreign country
   Ex: if a US multinational such as Nike built a factory for making trainers in Pakistan, this would count as foreign direct investment
2. Main factors that affect FDI
   
   1. Infrastructure and access to raw material
   2. Communication and transport links
   3. Skills and wage costs of labor
   4. Wage rates
   5. Labor skills
   6. Tax rates
   7. Transport and infrastructure
   8. Size of economy/potential for growth
   9. Political stability/property rights
   10. Commodities
   11. Exchange rate
   12. Access to free trade areas

Question 22

Capital Flight

Answer 22

1. Large-scale exodus of financial assets and capital from a nation due to events such as political or economic instability, currency devaluation or the imposition of capital controls.
2. Capital flight may be legal as is the case when foreign investors repatriate capital back to their home country or illegal, which occurs in economies with capital controls that restrict the transfer of assets out of the country.

Question 23

Characteristics of structural explanations

Answer 23

1. The big picture theories, focused on thick, causal accounts
2. Might look to things like global capitalism to explain globalization
3. Could also blame things like global production
4. Global division of labor…they take seriously global north and global south divides
5. Other things they look at would be modern technological development
   
   1. Inevitable causes of globalization
6. Authors of structural
   
   1. Susan Strange
   2. Sassen Saskia

Question 24

Characteristics of conjectural theories

Answer 24

1. Not a big picture, looking at a particular moment
2. Thinner explanations that look more at circumstance and events in a aparticular moment of time
3. They also think about multiple tendencies
4. They also examine the strategic choices of actors
   
   1. Why do they do what they do?
      
      1. Conditionality
5. Authors
   
   1. Keohane and Nye

Question 25

Characteristics of constructivism theories

Answer 25

1. Looks at the power of ideas and social norms
2. They think about the idea of globalization and how much power or emphasis we give to ot
3. Why are we continually talking about globalization? If we believe it to be strong, we will follow its rules
4. Based on
   
   1. The power of ideas
   2. Social norm/political norms
      
      1. Shared ideas
   3. “If we believe globalization to be a certain way (shrinking time & space). Then we are going to act in a way where we rely on th shrinking of time and space”
      
      1. If you think the global economy is like this, you will act the way in relation to this
5. Authors
   
   1. Vesseth (kind of) not really

Question 26

Brexit

Answer 26

1. The impending withdrawal of the UK from the European Union
2. UK voted to leave EU due to three reasons:
   
   1. Economics
      
      1. Opponents of the EU argued that it is a dysfunctional economic entity as it has failed to address economic problems that had been developing since 2008
   2. Sovereignty
      
      1. Rise of nationalism across the world
      2. Growing distrust of multinational financial, trade and defense organizations.
      3. institutions such as EU, IMF and NATO no longer serve a purpose but actually take control away from individual nations
   3. Political Elitism
      
      1. Political leadership of Britain faced a profound loss
      2. The “leave” voters rejected both the Conservative and Labour parties. Both parties had endorsed remaining with the EU and saw many of their members go into opposition on the issue
      3. Ultimately, it was a three-way struggle. Two established parties wanted to remain in the EU, and a third faction, drawn from both parties, opposed it. People in the third group saw both of the establishment parties as hostile to their interests.

Question 27

Social Protectionism

Answer 27

1. Concerned with preventing, managing and overcoming situations that adversely affect people’s well-being Social protection consists of policies and programs designed to reduce poverty and vulnerability by promoting efficient labor markets, diminishing people’s exposure to risks, and enhancing their capacity to manage economic and social risks such as unemployment, exclusion, sickness, disability and old age
2. Most common types of social protection:
   
   1. Labor market interventions- policies and programs designed to promote employment, the efficient operation of labor markets and the protection of workers
   2. Social Insurance – mitigates risks associated with unemployment, ill health, disability and work-related injury and old age, such as health insurance or unemployment
   3. Social Assistance – when resources, either cash or in-kind, are transferred to vulnerable individuals or households with no other means of adequate support, including single parents, the homeless, or the physically or mentally challenged

Question 28

Welfare State

Answer 28

1. Refers to a type of governing in which the national government plays a key role in the protection and promotion of the economic and social well-being of its citizens
2. A welfare state is based on principles of equality of opportunity, equitable distribution of wealth and public responsibility for those unable to avail themselves to the minimal provisions of a good life.
3. Examples of a welfare state:
   
   1. Social security
   2. Federally mandate unemployment insurance-programs
   3. Welfare payments to people unable to work