The Globalization of Economic Relations Flashcards
1
Q
Globalization Overview:
A
- Term widely used in social sciences and public debates for 30 years.
- Lack of consensus on its meaning, determining forces, or consequences.
2
Q
- Defined as the widening, deepening, and speeding up of worldwide interconnectedness.
- Multidimensional phenomenon involving political, technical, cultural, and economic aspects.
A
Economic Globalization:
3
Q
Approaching Globalization:
A
- Mistake to approach globalization solely from an economic perspective.
- Economic dimension is a major driving force and requires special attention.
4
Q
- Involves globalization of trade, finance, technology, communication, and production.
A
- Economic Globalization Dimensions:
5
Q
- Historical process resulting from innovation and technological progress.
- Involves increasing integration of economies globally in goods, services, capital, labor, and technology.
- Qualitative transformation, not just a quantitative change.
A
- Definition of Economic Globalization:
6
Q
- Debate on the relevance of nation-states in a globalized world.
- Hyperglobalists argue states are obsolete, while others acknowledge a redefined role as managers of the national economy.
A
- Role of Nation State:
7
Q
- TNCs seen as major players in the global economy.
- Some equate contemporary globalization with TNCs.
- TNCs constantly evolving, with a significant role in economic globalization.
A
Globalization and Transnational Corporations (TNCs):
8
Q
- International monetary regimes and trade relations discussed to understand economic globalization.
- Global commodity chains concept introduced to reflect on dispersed production and global buyers’ importance.
A
Evolution of Economic Globalization:
9
Q
- No single definition or consensus on its origin.
- Some suggest ongoing since human migration; others trace back to the sixteenth century.
A
- Origin of Economic Globalization:
10
Q
- Globalization roots traced to the Silk Road and sixteenth-century long-distance trade.
- Significant economic developments in the seventeenth and eighteenth centuries.
- Nineteenth-century marked a breakthrough with the industrial revolution and increased international trade.
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- Historical Perspective:
11
Q
- Nineteenth-century characterized as a “golden age” with relative peace, free trade, and economic stability.
- Intensified economic integration linked to the division of labor and the modern world economy.
A
“Golden Age” of Globalization:
12
Q
- Current globalization challenged as a myth; concerns about its impact on income distribution.
- Supporters argue it fosters universal economic growth; critics emphasize uneven distribution and marginalization.
A
- Contemporary Globalization Impact:
13
Q
- Global Income Inequality:
A
- Historical patterns show a widening gap between developed and developing regions.
- Structuralists argue that capitalism under globalization reinforces unequal patterns.
14
Q
- Underdevelopment seen as a consequence of colonialism and imperialism.
- Capitalist system perpetuates unequal exchange and dependence.
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Underdevelopment and Inequality:
15
Q
International Monetary Systems:
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- Definition: Rules, customs, instruments, and organizations for international payments.
- In the liberal tradition, it facilitates cross-border transactions, reflecting economic power and interests.
16
Q
Critique of Globalization:
A
- World-system analysts view globalization as a relabeling of old ideas.
- Emphasis on the political nature of money and its role in diplomacy within international monetary systems.
17
Q
- Originated in the early nineteenth century, adopted by the UK in 1821.
- European nations and the U.S. shifted to gold at the International Monetary Conference in 1867.
- By 1880, roughly 70% of nations participated.
- Functioned as a fixed exchange rate regime with gold as the only international reserve.
A
Gold Standard:
18
Q
- Maintained trade balance equilibrium through the price-specie flow mechanism.
- Automatic adjustment led to loss of autonomy in monetary policy.
- Eichengreen’s criteria for a successful IMS: order, stability, elimination of balance-of-payments problems.
A
Strengths and Weaknesses of Gold Standard:
19
Q
End of Gold Standard and the Inter-war Period:
A
World War I led to the end of the classical gold standard.
- Competitive devaluations, capital controls, and tariffs in the 1930s resulted in a drop in international transactions.
- Shift from gold standard to floating currencies in the 1930s, influenced by structural changes.
20
Q
- Established in 1944 with an adjustable peg system, the gold-exchange standard.
- U.S. dollar became the only convertible currency, linked to gold.
- IMF and IBRD created to promote international financial cooperation and aid post-war reconstruction.
- Exchange rates adjusted but infrequently; U.S. faced increasing deficits leading to the collapse of Bretton Woods in 1971.
A
Bretton Woods System:
21
Q
- After the collapse, industrialized countries attempted controlled exchange rates.
- Managed floating introduced in 1973; Jamaica Accords in 1976 formalized the shift.
- Coordinated actions (Plaza Agreement in 1985, Louvre Accord in 1987) aimed to stabilize currencies.
A
Transition to Floating Exchange Rates
22
Q
Neo-liberal Era and Washington Consensus:
A
- 1990s saw the triumph of the Washington Consensus, advocating free-market policies.
- IMF’s conditionalities linked to free-market ideology criticized by Stiglitz and others.
- Unregulated capital flows, current account deficits, and pegging regimes led to vulnerability and financial crises in Mexico (1994) and East Asia (1997–8).
- Criticism of the Washington Consensus for its impact on development and globalization.
