Unit 5 Flashcards
What is economic globalization?
The economic networks that are growing more interconnected, a worldwide market. Talks about the economic actors that are unconstrained by political borders.
What does economic globalization lead to?
- Reduction in state control over economies
- A deepened cross-national connections among workers, goods, and capital
- Spread of ideas, technology, and information across international borders
- Spread of jobs across these borders
International economic organizations
IMF
WTO
EU
NAFTA
The world bank
International monetary fund (IMF)
Works to foster global monetary cooperation and the stability of the international monetary system.
Countries: UK, Russia, China, Mexico, Nigeria, Iran.
The world bank
Provides financial and technical assistance developing countries to reduce poverty and support economic development.
Countries: UK, Russia, China, Mexico, Nigeria, Iran.
The world trade organization (WTO)
Helps develop rules of trade between nations with the goal of ensuring that trade flows smoothly and safely.
Countries: UK, Russia, China, Mexico, Nigeria
Why do countries join IEOs?
- INcrease access to global trade
- To be accepted into the international community
- To gain easier access to markets
- To grow their economy / GDP per capita
How does membership in an IEO influence economic policy?
- Promotes economic globalization policies
- Requires policy changes in order to join
- Requires policy changes in order to recieve financial assistance
Multinational coporations (MNCs)
A coporation that has facilities and assets in at least one country other than its home country.
What challenges do MNCs pose to countries?
- Conflict over labor and pay in different countries
- Challenges with environmental damage
- Conflict over land rights
- Conflict over taxation
Neoliberalism
Seeks to transfer the control of economic factors from the public sector to the private sector by reducing gov intervention in the economy and promoting free-market economy.
The challenges of neoliberalism
- Increased demand on gov by civil society groups
- Protests
- Arrests of portests
- Impositions of social media restrictions
Policies regarding private ownership of industry and capital in AP6
China: SEZs (Special economic zones) along the coast
Mexico: Privatization and increased competition in Mexico’s oil industry (PEMEX)
Nigeria: State-owned Nigerian National Petroleum coporation (NNPC)
Russia: Putin’s renationalization of oil-natural gas industries and imposition of foreign investment limitations.
Privatization
Gov-owned industry transferred to privately-owned
Nationalization
Privately-owned industry —> gov-owned
How can globalization challenge sovereignty?
- Foreign direct investment and multinational corporations can pose a challenge to a government’s foundational economic political principles.
Ex: MNCs have created corruotio and gov’s dependency on oil. - Cultural influences that accompany investmenr and trade can provoke domestic backlash.
Ex: China economic reforms led to judicial reform. - Increased economic development can cause environmenta; degration and accompanying health issues.
Ex: China emphasis on economic growth over environmental protection - Foreign governments can bring political and economic pressure on countries whose actions offend them
Ex: Iran growth slowed after sanctions intended to stop Iran’s uranium enrichment program.
Differences between UK and China industries
UK: Most natural resources are controlled by private industries (China state-owned)
UK: Private industries pay taxes to gov to fund the gov
China: State-owned industry profit help fund
Similarities between UK and China industries
Natural resources are important to the national economy
Governmental response to global market forces
- Implement domestic reform in response to internal demands\
Ex: China economic reforms and anti-corruption efforts
Nigeria: Attempt to reduce corruption in oil industry - Control domestic policy debates
Ex; UK leaving EU
Iran response to protests
Extend regional influence to deflect criticism and improve economic conditions
Ex; Russia efforts to maintain trade relationships and influence with former soviet counrties
Mexico: Participation in NAFTA
Economic liberalization
Reduces its role in the conomy and embraces free markey mechanisms such as eliminating subsidies and tariffs, privatizing gov-owned industries, and opening the economy to foreign direst investment.
Neoliberal economic policies
Removal of barriers and restrictions on what internal and external economic actos can do.
Consequences of neoliberal economic policies
- Reduction in inflation
- Increase in national income
- Growing inequality in wealth distribution
- political corruption
- environmental pollution
- urban sprawl
- uneven economic development
- poor infrastructure
- regional migration
What is an International Organization?
Organization joined by member states working toward a common interest.
- Have own rules and guidelines that member states have to follow.
Examples of International Organizations
- International Monetary Fund (IMF)
- United Nations (UN)
- World Bank
Whata are the positives for member states for belonging to an international organization?
- More opportunties for global trade
- More opportunities to builde relationships with other countries
- Can help provide security and stability
What are the negatives for member states for belonging in an international organization?
- International organizations that promote free trade can hurt domestic businesses and industries
- May not treat member states as equals
What is a Supernational Organization?
An organization which member staes give the governing organization sovereignty over policies. Policies that are often related to trade.
Examples of Supernational Organizations
- Economic Community of West African States (ECOWAS)
- European Union (EU)
- World Trade Organization (WTO)
Positives of being a member of a supernational organization
- Encourage cooperation between member states
- Can prevent future conflicts between member states
- More influence in world affairs as part of supernational orgamization than as individual state
Negatives of being a member of a supernational organization
- Give up sovereignty
- Pressure on leaders and political parties to meet the demands of supernational organizations
- Policies of supernational organizations do not always align with local wants and needs
What is the difference between international and supernational organizations?
- An IO has member states working together toward common goals and interest. Decisions are made with all member states involved.
- A SO has member states give up power and allow the organization to make decisions on behalf of member states
- Much more sovereignty is sacrificed when belonging to a SO.
What does the IMF do?
- Most countries of the world belong to the IMF including ALL 6 of AP countries
- Manages exchange rates
- Provides loans to countries in need of financial assistance
Major goals of the IMF
- Ensure stability of the international monetary and financial system
- Resolve global finanicla crisis
- Promote global trade and economic growth
- Reduce poverty
What happens when countries recieve loans from the IMF?
- Privatization of state-owned companies to promote capitalism and reduction of corruption from government controlled industries
- Reduced or eliminate tariffs to stimulate free trade
- Reduce gov subsidies of domestic industries to encourage free trade and capitalism as well as reducing favortism of them
What does the World Bank do?
- ALL 6 AP countries
- Provides low interest loans to countries in financial need
- Provides grants to developing countries for projects
- Provide financial advice to countries that ask for it
Major goals of World Bank
- Provide financial support to developing countries
- Promote shared prosperity
- End extreme poverty
What does the WTO do?
- ALL 5 AP countries except IRAN
- Regulate international trade
- Oversees trade agreements
- Mediates trade disputes
- Lower or eliminate tariffs
Major goals of WTO
- Increase international trade between member states
- Reduce barriers to international trade
- Promote fairness and transparency in trade
What is the impact of import substitution industrialization policies?
- Limit imports to prop up domestic goods and products
- Encourage production of local industrialized products
- Encourage purchase of local products by citizens because price is cheaper than foreign products
- Since states are propping these businesses and industries up, this takes a lot of state revenue away from other parts of government
- Local business and industry can perform well without foreign compeitition but typically will not be innovative and produce substandard production
Goals of import substitution industrialization policies
- Support domestic businesses and reduce foreign dependency