Globalisation, Aid-Dependency and the Resource Curse Flashcards
What is globalisation?
Globalisation is the process through which global interconnection widens and deepens. The world becomes ‘smaller’ as speed of travel and transport increases.
What dimensions are there to globalisation?
Governance: institutions, global governance, social movements (BLM, XR)
Cultural: ideational trends, pop culture, identity
Ecological: population growth, biodiversity reduction, food globalisation
Economic: trade, aid, TNCs, international economic institutions (IMF, World Bank, WTO)
How do policy changes and technological advancement respectively create economic globalisation?
Policy - governments have generally encouraged economic globalisation. Also been spurred on through trading organisations set up and international financial institutions (IMF, WB, WTO)
Technology - transport, comms, IT, services, etc. have allowed flows of goods and services much quicker across the world.
What are key features of the first era of globalisation?
The first era of globalisation saw industrialisation, colonial expansion and a domination of trade by Europe.
What are key features of the second era of globalisation (late 19th, early 20th Century)?
This era was characterised by trade and technological advancements, based around transportation and manufacturing. Multinational companies also developed, as well as global governance (LoN as an example).
What evidence is there that the second era of globalisation saw the world becoming more globalised?
There was a global convergence of prices of goods, indicating that there were global markets for these goods. Greater foreign investment occurred. Migration began to boom, too.
What has characterised the third era of globalisation (late 20th Century to present)?
This era has been marked by the digital revolution, as well as the rise of NEEs (India, China, Brazil). Financial services have become more significant, global economic governance has broadened
What does Martin Wolf see as being the benefits of economic globalisation?
Martin Wolf believes that economic globalisation has liberalised trade, reduced prices, as well as increasing wealth and material wellbeing.
What do Stiglitz and Chang respectively see as being the drawbacks of economic globalisation?
Stiglitz: results in job losses in developed countries as manufacturing is outsourced to countries with cheaper labour costs
Chang: it develops the global North at the global South’s expense due to the exploitation of workers here, the hoarding of profits in the developed world.
How can countries develop?
Countries can develop through industrialisation, through economic growth, the development of a services economy. CAN ALSO have better human outcomes - longer lives, better health outcomes, rights, freedoms, etc.
Which IR theory makes the case for the positive outcomes of globalisation helping development?
Liberalism mainly makes the argument for globalisation aiding development, believing it has allowed states to participate in a global market of converging prices, as well as allowing foreign investment that can develop countries.
What branch of IR theory makes the case against globalisation helping development?
Critical theories mainly make the case for globalisation harming development, believing this has widened the gap between rich and poor, benefited the rich excessively, created unequal growth and exploited the Global South to develop the North.
Explain the idea of the ‘golden straitjacket’ and how this has limited development resulting from Globalisation
Globalisation has seen increased roles for intl. economic institutions, such as the IMF and World Bank. These have granted development projects and financial assistance to developing countries on the condition of limiting economic policy space - imposing privatisation, liberal taxes, govt. budget cuts and deregulated FDI measures, often to the detriment of countries. Reduces autonomy and leaves prone to economic collapse.
What is the rationale behind state intervention in the economy?
Governments are able to take calculated economic risks where necessary by investing in banks and enterprise. They can also avoid market failures by bailing out industries and banks (see 2008). They are able to also have considerations beyond profit, having ethical and social considerations.
What arguments exist against state intervention? Make reference to Hayekian thought and the ideas of Adam Smith
States intervening excessively in an economy can prevent economic growth. There is also ideological opposition to this given the burden this places on taxpayers and restriction on economic liberty/profit-making incentives (Hayek)
What are the advantages of aid? What are the disadvantages?
Advantages: aid can plug gaps in government spending and economies, can reduce inequality and help to provide basic amenities
Disadvantages: can disincentivise the development of a domestic economy, reduces the responsibility of a government to provide for its people. Creates AID DEPENDENCY.
What are the main negative consequences of aid dependency?
Aid dependency can mean that donor countries have control over the policies of recipients. IT REDUCES POLICY SPACE. Aid flows are also unpredictable compared to domestic taxes, reducing economic stability and planning. It can also mean that governments are unaccountable for what is provided for citizens.
When can aid be seen as substandard?
Aid can be substandard when counted as debt relief, in that this does not provide anything positive for a country. It can also be diverted away from the poorest for political needs, as well as be tied to responsibilities that a recipient country must meet in order to receive the aid.
How can the UK’s aid be seen as substandard in recent times?
The UK in recent times has cut its own aid budget to 0.5% of GDP from 0.7%. It has also prioritised sending this to countries it hopes to do trade deals with, rather than those in need.
What fraction of the UK’s aid budget is being spent on asylum seeker costs rather than development and aid?
1/4 of the UK’s aid budget is currently spent on asylum seeker costs rather than development and aid.
How would critical theories disagree with the economic arguments for globalisation?
Critical theories observe that the most powerful states in an economically globalised system will create a system of unequal exchange, favouring themselves.
What is real aid?
Real aid is aid which is focussed on the world’s poorest, designed to improve their situations and wellbeing. It is desired by the recipient populations, as well as fairly priced and without any hidden obligations placed on it.
What is the idea of the resource curse, as posed by Auty?
The resource curse focusses on issues facing countries rich in natural resources, yet failing to benefit from this. These states often are more authoritarian, corrupt, less economically stable and more prone to conflict.
Explain Wallerstein’s concept of ‘World Systems Theory’. How does this see things operating ABOVE the level of states?
World Systems Theory describes a global economy OPPOSED TO STATES HAVING ECONOMIES. It involves wealthy ‘core’ states influencing poorer ‘periphery’ states, making them follow economic policies that are damaging to the periphery but beneficial to the core.
