Migration - EQ3 - 8.8 IGOs established after the second world war contribute to the rules of world trade & finacial flows Flashcards
define global governance
- the steering of rules, norms, codes & regulations used to regulate human activity at an international level
- at this scale, regulations and laws can be tough to enforce
define neoliberalism
- the ability of a country to control its own economic policies & resources
what are the bretton woods institutions
- IMF & World Bank
when were the bretton woods created
1944
why were the bretton woods insitutions created
- created a system of rules for managing the international monetary system, based ib linking national currencies to the US dollar & following a free trade agenda to avoid protectionism
- which had led to the Great Depression & Rise of Fascism in Europe in the 1930s
Define IGOs
- an organisation composed primarily of sovereign states or other IGOs
- they are established by treaty that acts as a charter creating the group
what is the washington consensus
- free market principles that demonstrate the US’ power running the financial system
explain the different features of the washington consensus
- establishment of fixed exchange rate system based on gold & the US dolar –> making trade agreements easier & help global finacial flows overtime
- use of IMF & WB to stabilised global systems of ifnance & trade e.g via lending
- establishment of GATT the precusror to WTO –> reduce barriers to trade & FDI globally
What is the role of the iMF
- to monitor the economic & finacial development of countries & to lend money when they are facing economic difficulty,
- promoting the global flow of goods
why were saps first introduced
- structural adjustment programs
- if a country defaults on its loans, the global banking system is at risk
- in the 1980ss & 90s, the IMF reorganised many countries loans to more affordable levels after world bank loans from 70s were hit by high interest rates
- but SAPs have conditions to comply to
what are the 5 conditions of SAPs
- opening up domestic markets
- reducing the role of the government e.g privatising state industries
- removing restrictions on capital –> no limits on FDI and foreign ownership
- reducing govt spending –> cuts to infrastructure projects & welfare payments
- devaluing the currency to make exports cheaper
what are saps
- economic policies imposed by the International Monetary Fund (IMF) and the World Bank on developing countries as a condition for receiving loans or debt relief
Why did Tanzanai use SAPs
- 1980s debt crisis led them to adopt SAPs
what did Tanznia do because of SAPs
- privatisation because it was receiving dbet relief
what was the impact of privatisation by City Water om Tanzania
- City Water haemoragged profits
- prices for locals rose sharply & there was no discernible improvement in water supply & quality, so they ended up cancelling City Water’s contract
What are the benefits of SAPs
-exports
- increased connectedness with other countries & creates jobs which helps reduce ersion of economic soverighnty through global flow of goods
What are the benefits of SAPs
-budget difcits
- help to shrink govt budget deficits, eliminate hyperinflation & maintain debt repayment schedules
What are the benefits of SAPs
-FDI
- they attract FDI by reducing inflation & exchange rate volatility, which increases investor confidence
- by strengthening governance, rule of law & anticorruption –> SAPs improvetransparency of institutions and reduce the risk of corruption for invetsors
what are the negatives of SAPs
- many countries scarifice their economic soverignty as they liberalise their economies
- borrowing counties agreeing to concessions benefits developed countries
- concessions can be seen as a neo-colonial strategy, used by developed countries to maintain influence over how global periphery develops
What is the aim of the world bank
- to give advice, loans & grants for the reduction of pverty & the promotion of economic devlopemnt
how does world bank oeprate
- member counties pay money into a fund which is then used to invets in developing countries
- richer countries pay in more so they have more influence in the world bank’s decsionmaking processes
what is the hipc initiative
- In 1996, the IMF & World Bank introduced the HIPC inititaive
- aiming to reduce national debts by partially writing them off in return for SAPs,
- in hopes of freeing up resources for poverty reduction & social dveelopment
who did the HIPC initiative affect
- 36 of the world’s least developed countries, 30 of wich were from sub-sahran africa
Why did Jamaica take up the HIPC initiatiev
oil crisis in 1973, which led to Jamaica accumulate lost of debt as it is as a large importer of oil
what was the reuslt of the oil crisis for Jamaica
- IMF provided loan in 1977 due to lack of viable alternatives –> interests rates have risen from 16% to 40% 1977-84
- this is from severe ausetrity meausres, freezing wages & cutting spending
Jamaica spends …. as much on debt as it doe son ….
- twice
- education & healthcare
Jamican debt totalled …. in March 2015
- 1.85 trillion dolars
what did Jamaica not qualify for
- HIPC initaive as considered an upper middle income country
what was ugandas unrepayable debt in 1992
$1.9 billion
what happened in uganda in 2000
Uganda became one of the first countries to benefit for debt write offs through the HIPC
What were the positive impacts of HIPC in uganda
- govt spending rose by 20% - 40% more on educataion & 70% more on healthcare
- free primary education estbalished which reduced inequality with only 2% more boys going to skl tha n girls which had been at 40% pre hipc
benefits of HIPC
- interest on multilateral loans is relatively low
-it helps reduceinflation , stabilise the exchange rate & improve fiscal discipline
what are the negatives of not being given hipc for Jamaica
- increased social unrest & political instability in 1945 due to immense poverty
- maternall morality has signficantly increased in times of SAPs
1990 - 59 deaths for 100,000 births
2010 - 110 - debt to gdp ratio totalled 147% in 2013
what is the role of the WTO
- brings countries together to agree reductions in tarriffs & to standaise more products all with the aim of promote global free trade
over …% of the population are now governed by WTO rules
90%
Memebrship of the WTO provides…
- access to the world markets & a route to economic devlopment through trade
How has the WTO increased economic soverighty
- if a commodity or service is scarce there is competition for thsoe goods & service, so the producer country can exert influence on cost
what is the impact of the WTO on global development
- by expanding world trade the WTO raises the standard of living globally
- but also is indifferent to the impacts of free trade on workers rights, child labour, the nevironment & health
how can the wto reduce economic soverighty
- can compel soverign states to change laws and regulations by declaring tehse to be a violation of free trade rules
Membership of global trdae & finacial igos is almost universal but..
regional groups have emerged in the forms of trade blocs like NAFTA, ASEAN & UMESCA
There are over … trade bloc agreements and they all seek…
- 30
- some form of customs integratiib & closer political ruling such as the EU, which to a deree has reduced economic soverighty
how do trade blocs have an important role in economic osverighty
- these operate without crossborder taxation - umesca
- and permit free modvemnt of goods, services & people - eu single market
-which could lead to political union –> national boundaries disappearing with common ecnomic and defnce oilicies
which centripetal forces bring trade blocs togther
- the harmonisation of economic poliices & common currecy are centripetal forces that bring countries toegther
how can trade blocs be centrifugal forces
- economic harmisation requires shared laws & ideology so some might not want union, so nationalist can drive apart countries apart
- e.d BREXIT –> UK welcomes economic benefits of EU single market witha ceess to 500 miliion peopke ut threatens economic osveright
