Economic Gvernance Flashcards
(23 cards)
Q1: What is global economic governance?
A: It is the framework of rules, regulations, and institutions—designed mostly by powerful states and international organisations—to manage and regulate economic activity at the global level, including trade, development, taxation, debt, and commodity pricing.
Q2: What is the main role of the IMF (International Monetary Fund)?
A: The IMF acts as a lender of last resort, offering emergency loans to countries facing financial crises to stabilise their economies and balance of payments.
Q3: Why is the IMF criticised?
A:
• Dominated by wealthy countries (e.g. USA holds 16% of voting shares)
• Imposes Structural Adjustment Programs (SAPs) requiring:
• Austerity (spending cuts)
• Market liberalisation
• Privatisation
• These policies often aggravate poverty and social problems in borrower countries.
Q4: What does the World Bank do?
A: The World Bank provides long-term loans and interest-free financial assistance to developing countries for infrastructure, education, health, and economic development projects.
Q5: Why is the World Bank criticised?
A:
• Promotes free-market ideology
• Controlled by the interests of rich countries (G7 holds 40% of voting power)
• Funded projects have caused human rights violations, forced evictions, and environmental damage
Q6: What is the main role of the WTO (World Trade Organization)?
A: The WTO seeks to liberalise trade, reduce trade barriers (like tariffs), and settle disputes between member countries. It covers 98% of world trade.
Q7: Why is the WTO criticised?
A:
• Favors wealthy countries and TNCs
• Promotes export/import food systems that hurt small farmers
• Weakens food sovereignty and harms poorer communities, especially in the Global South
Q8: Who are the G7 and G20? What do they do
A:
• The G7 (USA, UK, France, Germany, Italy, Japan, Canada) and G20 (G7 + emerging economies) are intergovernmental forums.
• They coordinate on global economic issues: trade, debt, financial reform
Q9: What are criticisms of the G7/G20?
A:
• Protect the global economic dominance of the Global North
• Often fail to reach consensus on major issues like climate change or global taxation
Q10: What is BRICS / BRICS+?
A: A coalition of emerging economies (Brazil, Russia, India, China, South Africa + since 2024: Ethiopia, Egypt, Iran, Saudi Arabia, UAE) aiming to challenge Western economic dominance and promote South-South cooperation.
Q11: What are the limits of BRICS?
A:
• Members are economically unequal
• Internally divided
• Often dominated by China
Q12: What is OPEC, and what does it do? -
A: OPEC (Organization of Petroleum Exporting Countries) consists of 13 major oil exporters. It controls the supply and pricing of oil to protect its members’ economic interests.
Q13: Why is OPEC criticised?
A:
• Acts like a cartel, manipulating oil prices
• Plays a major role in fueling the climate crisis
• Accused of delaying global climate action
Q2: How has global economic governance remained unchanged despite emerging challenges?
A: Traditional IGOs like the IMF, World Bank, and WTO continue to promote free trade and remain dominated by powerful economies such as the USA, EU, and Japan.
Q3: What was the significance of the 2021 global corporate tax agreement?
A: It showed that large groups of countries can unite to reform aspects of the global economy and tackle inequality, representing a rare moment of global cooperation beyond geopolitical rivalries.
Q4: What role is China playing in global economic governance?
A: As the world’s second-largest economy and the largest foreign investor (FDI), China is a key force behind shifting governance, leading efforts in BRICS+ and launching institutions like the Asian Infrastructure Investment Bank (AIIB).
Q5: What economic challenges do BRICS+ members face internally?
A:
• Inequality: High GINI scores in Brazil, Russia, South Africa
• Poverty: Ethiopia is still a Least Developed Country (LDC); India is a Lower-Middle Income Country (LMIC)
• Economic diversity: Contrasts with high-income members like Saudi Arabia and the UAE
• Geopolitical tension: China’s push to adopt the Yuan as BRICS reserve currency was seen as hegemonic
Q6: Why are some countries turning toward BRICS+?
A: The decline of Western powers (since the 2008 crisis), dissatisfaction with voting power in IGOs, and the desire for a more balanced global order have made BRICS+ attractive—with over 20 candidate countries applying to join in 2023.
Q7: How economically significant is BRICS+ today?
A:
• 45% of global population
• 36% of world GDP
• 50% of fossil fuel production
• Strong influence in OPEC and growing weight in global trade and energy
Q8: Does BRICS+ rival traditional IGOs financially?
A: Not yet. In 2022, the BRICS New Development Bank had lent around $15 billion, compared to the World Bank’s $60 billion in 2021. Traditional institutions still have more financial power and global reach.
Q9: What is the AIIB, and why is it important?
A: The Asian Infrastructure Investment Bank, launched by China, is now the second largest multilateral financial institution. With 109 members, including France and Germany, it supports infrastructure and development globally, offering an alternative to Western-led finance.
Q10: Which powers still dominate global economic regulation today?
A: The USA and EU remain dominant in regulating key sectors like banking, finance, and digital services. The US dollar is still the main global currency, symbolising the structural power of the US in financial governance.
Q1: Why was the BRICS New Development Bank (NDB) created?.
A: To provide an alternative to the World Bank, supporting infrastructure and development projects in the Global South and allowing emerging economies more control over global financing structures.
