superpowers paper 3 Flashcards
7.4a superpowers influence the global economy (promoting free trade and capitalism) through a variety of IGOs (World Bank, IMF, WTO, World Economic Forum (WEF))
USA, EU and Japan (in 2016 accounted for 60% of GDP) are:
capitalist (people own businesses, employ workers, and make profits for themselves), promote free trade in goods and services across borders (free from import/export taxes and quotas restricting volume of trade), are dominated by private enterprise, rather than government-owned companies, promote wealth creation and accumulation by companies and individuals
World Bank: lends money to developing / emerging economies to promote economic development
IMF: promotes global economic stability, aids economies in opening up to world trade and investment, comes to the aid of countries in economic difficulty
WTO: works to remove barriers to international trade
WEF: swiss non-profit organisation, acts as a forum for discussion between business, politicians and IGOs. pro-free trade and pro-TNCs
7.4b TNCs are dominant economic forces in the global economy and economic & cultural globalisation in terms of technology (patents) and trade patterns.
(P: role of TNCs in maintaining power and wealth)
TNCS: key drivers of the Western capitalist economic system and economic and cultural globalisation.
Economic Power: produce goods more cheaply than national firms. TNCs account for 80% of global trade. influenced by superpowers: 62% of the world’s 2000 biggest companies in 2016 were from the EU, USA and Japan, with 25% from the USA.
They spread cultural globalisation through their ideology and soft power. TNC creation of new technologies helps to maintain military superiority for hard power.
Their economic power influences trade patterns and the location of areas of growth through FDI. Partially responsible for global shift. If they decide to move elsewhere they can cause economic decline.
They invest their large profits heavily in new technologies and patents. This earns them more money through new products and royalties paid by other companies to use their patents. It may make their products cheaper or better quality. 90% of global patent royalties are paid to EU, US and Japanese countries.
