Role of state in the global economy

Question 1

Roles of National economies

Answer 1

• Public expenditure / investment
• Taxation
• Fiscal policy - tax + spending
• Monetary policy - targeting interest/inflation rate
• Servicing national debt

Question 2

Roles of international economies

Answer 2

• Trade tariffs and duties
• IGO membership - voice/influence
• Promotion of multilateralism and trade agreements
• Emphasis on foreign affair and trade

Question 3

Factors in a changing global economy

Answer 3

• Political
• Technological
• Trade agreement
• Risk/uncertainty
• Rise of protectionism

Question 4

Rise of protectionism - brief explanation

Answer 4

Globalisation began post ww2, focusing on peace rather than war, so countries began trading, liberalising policies eg, tariff barriers.

Question 5

Rise of protectionism - contributing factors

Answer 5

• Ukraine war
• Cost-of-living crisis
• Covid-19
• Oil crisis

Question 6

Rise of protectionism - Japan example

Answer 6

In Japan: locally produced rice is 5% more expensive than importing globally. Government prioritises helping local farmers with subsidies etc.

Question 7

Nation State - definition

Answer 7

Nation State =
Specific form of political entity (government) existing to provide a sovereign territory for a nation, derives its legitimacy from that function.
Unified by a single system of law + government. Sovereign.

Question 8

3 levels of state analysis

Answer 8

1. National
2. Regional
3. Global

Question 9

Types of National Economic Systems: COMMAND ECONOMY

Answer 9

COMMAND ECONOMY
Government plans, distributes and regulates the national economy and has substantial ownership of industry and services. eg, North Korea, Cuba

Question 10

Types of National Economic Systems:
PLANNED ECONOMY

Answer 10

PLANNED ECONOMY
Government plays a key role in planning, distributing and regulating national economy, allows private ownership, wealth creation and foreign investment.
eg, China - 75% government owned, 25% private.

Question 11

Types of National Economic Systems:
MIXED ECONOMY

Answer 11

MIXED ECONOMY
Economy is a mix of private and public sector ownership. Government sets minimum standard, regulates and enforces. eg, France

Question 12

Types of National Economic Systems:
LIBERAL MARKET ECONOMY

Answer 12

LIBERAL MARKET ECONOMY
Consumer-led, prices in response to consumer decisions. Government marginal to functioning of the market.
eg, UK, US ?

Question 13

Regionalism =

Answer 13

REGIONALISM = a dynamic process bounded by geography and history that deepens economic, political and sociocultural linkages:
- Common experience/vision
- Development of regional inter-governmental organisations.

Question 14

Key influences in regionalism

Answer 14

1. Multilateral agreements
   eg, GATT - 124 RTAs, WTO - 400 RTAs
2. Institutionalisation of inter-governmental agreements
3. Growth/spread of global value chains.