Global Systems: Trade And Governance Flashcards
(43 cards)
What is the International Monetary Fund?
- An organisation of 190 countries
- Offers financial stability and provides support to countries in need
- Performed well in the Asian financial crisis of 1997-1998 (some disagree)
- Critiscism of poor human rights records, limited resources and strict/unpopular policies
What is the G20?
- Established in 1999 as an informal gathering of the world’s largest economies (comprised of 18 countries plus the European and African Union)
- Accounts for more than 85% of global economic output, around 75% of global exports and about 80% of the world’s population
- Most impressive achievement is arguably the groups robust response to the 2008 financial crisis and discussions on climate stability
- Concern over limited membership, difficulties in reaching consensus, democratic deficits and the undermining of existing international institutions
What is the World Trade Organisation?
- Created in 1995
- Head office in Geneva, Switzerland
- Consists of 164 nations and 24 observer governments
- Aims to ensure trade flows as quickly and predictably as possible
- The Banana War: the EU had high tariffs on imported bananas. Latin American growers said European countries were favouring bananas from their former colonies: WTO made agreement which was signed by EU and 10 Latin American countries which ended a 20 year dispute
- The WTO Unilateral trade systems (e.g raising tariffs on some materials like steel and iron) threatens the Multilateral trade system
What is the World Bank?
- Created in 1944
- Main aim is to create a peacekeeping system post-war (WW2)
- Assists in developments and promotes private investment
- Dropped the price of drugs for HIV/AIDS from $10,000 to $100 annually per person
- Argued that funded projects have a negative environmental and social impact and hte displacement of an estimated 3.4 million people
What is the G7?
- Founded in 1975 in response to the OPEC oil embargo (inflation and recession)
- No fixed HQ
- Strengthened international economic and security policies, advanced discussions of global issue including climate change and gender equality
- Loaned Ukraine $50 bn by leveraging revenues from sovereign Sovereign Assets
- Spearheaded several major global initiatives, including efforts to combat the HIV/AIDS pandemic in the 1980s
- Not able to pass legally binding policies and there is concern over lack of representation for poorer countries
What is a comparative advantage in trade blocs?
If each country specialises in different sectors (e.g due to climate, labour), the whole region can thrive and there can be ‘leader nations’ in an enlarged market
What is a common external tariff?
A common external tariff may make externals outside the trade bloc less interested in trying to sell products inside the bloc, as they will gain less profit from member countries. This can protect all from overseas imports.
What is the frictionless movement of goods and services?
A factor of Trade Blocs which makes trade competitive and a good deal for consumers. This is enhanced through ‘economies of scale’ - enlarged market in trade bloc lowers manufacturing costs per unit
What is remittance?
Money earned by people working ‘overseas’ who send it home
What is a diaspora?
Community of foreign nationals
What are the positives of a trade bloc?
- Enables countries to take advantage of physical proximity (many trade blocs are regional)
- Alliances (economic and political) advantage
- Security for companies as there is less competition
- Share expertise/collaboration throughout the bloc
- Reduction of goods and prices
- Collectively a larger range of resources and markets
- In times of economic instability, support is provided
- Common external tariff provides an incentive to develop domestic industry. When 10 new nations including Poland joined the EU in 2004, Lidl gained 75m potential new customers
What is AGOA?
US government’s African Growth and Opportunity Act —> duty-free (and preferential) access to lucrative US markets for qualifying sub-Saharan African countries, including Lesotho and Ghana. This encourages trade and investment, and potentially boosts economic growth and job creation.
What is the Trans-Pacific Partnership?
A planned trade deal between 11 pacific rim nations, including Japan, Australia and Canada (USA originally in, but Trump abandoned the deal)
What is Autarkic Development?
‘Going it alone’ - no trade bloc. Very risky as it can isolate countries from trade and cause them to suffer economically.
What is meant by the term, ‘friction of distance?’
The tendency for a ‘trade decay’ means that more trade happens with neighbouring countries —> 65% of exports in Europe are intra-regional
What are Trade Blocs?
A legal obligation from one country to another that is usually regional and based on free trade. The primary aim of Trade Blocs is to stimulate free trade
What are the negatives of Trade Blocs?
- Difficult and costly to join Trade blocs
- If a country is not invited to join —> isolation
- Can lead to exploitation (e.g Mexico in NAFTA)
- Loss of sovereignty and individual decision making
- Limits potential to join alliances
- If one country struggles, the rest are obligated to support
- Limits political alliances outside the bloc
- Loss of a member can reduce sales in some market areas
- Declining domestic capability
- Vulnerability to trade disruption
What is Mercosur?
A regional trade bloc in South America aimed at promoting economic integration and free trade.
What countries are full members of Mercosur?
Argentina, Brazil, Paraguay, Uruguay, and Bolivia.
What type of economic union is Mercosur?
A customs union that allows free trade among members and imposes a common external tariff.
What are the main goals of Mercosur?
To enhance economic cooperation, reduce trade barriers, and strengthen political ties among member nations.
What environmental concerns are associated with Mercosur?
The EU-Mercosur trade agreement has raised concerns about deforestation and environmental sustainability.
How does Mercosur impact agribusiness?
It expands agricultural exports but has been criticized for contributing to land grabbing and displacement of indigenous communities.
What are some challenges Mercosur faces?
Internal disagreements on tariffs, environmental pressures, and balancing economic growth with sustainability
