Week 5: The historical development of the world economy: 20th century and the rise of neoliberalism

Question 1

What was the role of the US in the Cold war era?

Answer 1

• Helping the reconstruction of Western Europe and Japan
• Troops stationed abroad, creation of a Western military alliance: NATO 1949
• Arms supplied: Israel, Saudi Arabia, Iran
• Right-wing governments supported in Latin-America
• prepared nuclear weapons to deter Soviet aggression in Europe
• Backing the racist government in South Africa

Question 2

What was the role of the Soviet Union in the Cold war era period?

Answer 2

• Developed nuclear weapons
• Supplied Syria, Iraq, Egypt and Vietnam
• involved in a series of national revolutions and wars of independence (ex. Vietnam War)
• exacerbated local conflicts, violence is intensified and poverty is increasing
• Indirect battlefields: Southern Africa, Central America and Indochina

Question 3

What was the Western Political Economy?

Answer 3

1. The US provided a security umbrella for its allies through a set of institutions managing the world economy
2. a new international system to provide economic growth for members of the Western alliance of capitalist states
3. new international institutions were created to foster democracy and economic growth:
   - Created the IMF, GAAT, International Bank for Reconstruction and Development
   - Marshall Plan
   - Regional Economic institutions: EEC

CHANGE…
- In the 1970s went from providing welfare to preparing their citizens for global economic competition
- US and UK wanted to expand markets and limit state interventions so they pushed towards neoliberalism

Question 4

What was the Communist Political Economy?

Answer 4

• began in Russia after the 1917 Revolution and extended to countries such as Ukraine, Poland, Romania and East Germany
• brought central planning to countries as diverse as China, Cuba, Vietnam, North Korea, Ethiopia and Angola
• authoritarian, one-party states
• Suppressed political expression
• No private property
• Failure: Human cost

CHANGE…
- 1980s-1990s The Soviet growth model reached its limit leading to revolutions in Eastern Europe
- Newfound states struggled to establish functioning capitalism and democracy
- Even Russia transitioned to a fully capitalist state and China started opening up in 1979 by introducing private property and acquiring a majorly disproportionate society of urban and rural society

Question 5

What was the Chinese communist model?

Answer 5

• Less successful than the Soviet one
• Industrial stagnation and agricultural deficit
• 1979 Gradual opening up to Western economies
• Special Economic Zones created – attracting large sums of Western
  investment
• Political liberalization not adopted
• Authoritarian state rule continued

Question 6

What was the southern political economy?

Answer 6

1. DECOLONIZATION:
   - European states recognized the difficulty of continuing to rule foreign countries
   - local populations waged violent campaigns to force the colonialists to leave control
   - US granted the Philippines independence in 1946 and urged others to do the same
2. Many of the newly independent states tried to steer a third way in the Cold War: Non-Aligned Movement: led by India, Indonesia, Ghana and Yugoslavia

CHANGE…
- 1980s-1990s Debt crisis forced a series of structural adjustment programs
- Asian financial crisis

Question 7

Developments: Successes and failures ?

Answer 7

Successes: Japan and Asian tigers

Most populous states:
- Series of setbacks
- China: agricultural and industrial productivity destroyed
- Sub-Saharan Africa: producing goods that lost their value over time

Question 8

What were the changes in the post-cold war era from the 1990s?

Answer 8

1. From welfare to competition in the North:
   - No support for particular industries and sectors
   - macro-level: priority of low inflation to attract investments
   - Micro level: priority on increasing competitiveness and flexibility
   - Deregulation and privatization
2. Liberal and authoritarian competition in the South:
   abandoned inward-looking development strategies after the debt crisis

Question 9

Which 3 sets of organizations raised in international organizations from the mid-20th century?

Answer 9

1. UN:
   - UN Security Council and specialized agencies
2. international economic organizations: WTO, EU, IMF…
3. Corporate and civic associations: