SECTION 3 Flashcards
(218 cards)
1
Q
The resource curse can be defined by ________, the symptoms are ________ (6)
A
super abundance of resource cause inflation and lack of investment in other sectors Symptoms: resources wealth, slow growth, high poverty, poor governance, work states, revolution and conflict
2
Q
What are the causes of the resource curse
A
income volatility, rent seeking, patronage, and living off the land, Dutch disease
3
Q
The problem of resource abundance is not in its ________, its in ________
A
presence/quantity the RENTS generated by the richness
4
Q
What are the 3 causes of Income Volatility in resource curse
A
- commodity price variation (it can vary very rapidly and make it difficult to manage)
- -rate of extraction (first very high than would decrease through time)
- Timing of receipt ( government payments modes varying)
5
Q
What are the consequences of Income Volatility in resource curse
A
- -Cycles of economic boom and bust -
- Government spending is cyclical
- -Borrowing money during boom times
6
Q
Define the political economy of rent seeking
A
- want to tap into the stream of wealth generated by oil - regular market is stifle- political economy is centred only on rent capture, which creates corruption
7
Q
What are the two paired factors in rent seeking, patronage, and living off the land Define them
A
-Overconsumption (living off the oil capital, spending the generated oil capital) -Underinvestment (In human capital, no school built, spending only to maintain position of power because wealth does not come from educated people)
8
Q
What are the symptoms of dutch disease
A
-Booming resource sector -Inflation and Currency appreciation (overvalued) -Withering manufacturing/agricultural sector
9
Q
What is the boom dynamic
A
the non-boom sector is not doing well because people what to work in the oil sector
10
Q
Where does the term “dutch disease” comes from
A
In the 1960, Netherlands discovered gas but then the economy did not benefit (manufacturing and agri sector declining)
11
Q
What are the economic causes of the dutch disease
A
- boom vs non-boom sector
- Tradable vs nontradeables (?)
- Resource allocation effect (Shifting of capital and labor into the boom sector )
- Spending effect ( arises because there is more money so people buy more but are investing on import, not the helping the local economy
12
Q
Resource allocation effect and Spending effect cause _________
A
deform the economy around the boom sector (both private and state capital)
13
Q
The resource curse makes the economy ____________
A
more and more vulnerable to the price of the resource
14
Q
What is an example of the downfall of a boom economy
A
Case of Amazon rubber boom (huge boom until the price of rubber falls, the economy around the sector - 3 decades of development vanish away)
15
Q
What are Norway’s strategy to avoid the resource curse
A
- Sovereign wealth fund (one of the most important fund to this day- used to set aside the oil generated resources, this money can not be in vested in anything but oil activities)
- High taxations of oil profits (78% tax rate, State very involved in oil- it delays the development of oil field)
- Collective and transparent wage negotiations via government ( determining wage rates)
- Protection of manufacturing sector ( invested in the manufacturing sector related to oil- invest in people who can help oil extortion, became a world leader in explorations)
16
Q
Why is norway an exceptional case
A
- small coutures,
- strong democracy,
- low corruption,
- media scrutiny,
- strong legal system
- accountable bureaucracy
17
Q
What is the resource situation in Nigeria
A
oil sectors brings massive wealth but the average person gets little and less through time- poverty incidence increased as more money came into the country
18
Q
What are the options for Nigeria
A
- sovereign wealth fund (state being very mad because “poverty” is urgent, need for the fund to be out of the hands of the politicians because if not it will be spent- need to set aside AND protect)
- Transparency and accountability (extractive industries transparency initiative, EITI —> knowing about the flow of money to have a certain level of accountability , but its really hard to get the government and companies to release- facts may not be enough)
- Direct distribution mechanism (Oil2Cash- money distributed to the population and taxable, politicians who tax you are available to you) -
- Unconditional vs condition cash transfers - it is hard to do while it the political dynamic started
19
Q
What are the causes of Food price spikes
A
- The price of oil ; Closely linked tot he price of food because we need fuel to produce food and to transport it
- As the oil price increase (or other fossil fuels), the demand for biofuel would rise as well, affecting the incentive for the farmers to shift from “consumptive food” to produce biofuel like ethanol, by farming sugar cane, maize, etc) cuz wages are better
- Adverse weather (climate shock)
- When the price of food rises, it creates a sort of panic among countries that would motivate them to ban exports (ex ; 6% of the rice is exported)
20
Q
What are the consequences of food price spikes
A
-Undernourishment and impoverishment (angels law=spending is constant but in poorest community this spending represents maybe 40% of income spending) -Food riots and revolt (creates unrest, a politician nightmare- correlation between wheat prices are social unrest, Haiti, Madagascar, Bread in Arab Spring. ) -Greater policy attention (investing in agriculture)
21
Q
Describe dietary transition
A
income increase, middle increase leads to shift from tubers (sweet potato) and coarse grains to cereals + shift from plant based to animal products
22
Q
Describe changes in food retailing
A
advent of supermarkets (example of South-America) = increase in quality, availability of course and a decrease in the price (especially for less nutritious food), 60% of food in South-America flows through supermarkets (which happened very quickly) - which leads concerns for health- excess weight does not mean wealth anymore, it is caused by cheap junk food amongst other things
23
Q
What are the sources of growth in terms of food supply
A
- New land (extensification)
- -Input intensification (more controlled example fertilizers) (example: Green Revolution)
- -Increased total factor productivity, more efficient farming (ratio of total commodity output to total inputs used production, example: precision farming, intimate knowledge of the land)
24
Q
2 countries that are really good in precision increased productivity
A
China and Brazil
25
What are the 5 challenges for Global Agriculture
1.Crop Yield and Closing the yield gap 2. Climate Change and crop yields 3. Dietary Change 4.Food Waste 5. World Agricultural trade
26
What is a yield gap
difference the yield you are getting and the potential yields you could get (gaps are very significant, example Mekong yield are 10 times greater than Africa for rice BUT That yield gap should only be determined for specific locations) average yield gap = huge losses
27
What are the causes of the yield gap
techno constrains (knowledge, access to seeds), marketing, risks of failure (to poor to try higher yields because more risk of fail), price regulation, geographical factors (gotta compare in the same land)
28
he yield increases are starting to \_\_\_\_\_, that is why we try to use\_\_\_\_\_
taper off GMOS
29
What are the concerns of climate change on agriculture
(adverse effect of food prod and availability temperatures (warmer will decrease prod of crops, rise will be bad for wheat and corn), crop damaging weather events, reduced H2O, shortened growing seasons)
30
Because of climate change, we see a ______ of production because of _____ and\_\_\_\_\_ productivity because of \_\_\_\_\_
decrease - heat stress increase - Co2 (plants need CO2 to grow)
31
Describe the challenge of dietary change
-Livestock consume about 55% of grains and 75% of land -If shifted to direct consumption , we could feed an extra 4 billion people - but the world is going the other way -We would need to double the area of crop land in the world to feed 9 billion people having a western diet
32
Globally _____ of our food is lost
30-40%
33
What are the different types (2) of food waste
Developing (post harvest losses- on farms or transport can be as much as 50% of the crop) vs industrialized countries (it is the consumers who waste food)
34
Less than\_\_\_\_\_ of food flows through trade because \_\_\_\_\_\_
20% (bulky and hard to move around AND limited by tariffs by quotas and quality standards)
35
Countries want to ______ their agricultural market
protect
36
reasons for countries to protect their agricultural markets
1. food security of sovereignty ,
2. do not want to compete or depend or an other countries ,
3. and social policy of protect farming sector
4. + want to stabilize markets
37
Protection of agricultural sectors leads to
* Enormous subsidizing of domestic agriculture in industrialized countries (over production)
* Underinvestment in developing countries
38
Freer trade in agricultural commodities would lead to ______ but \_\_\_\_\_
lower food prices at the cost of food security and sovereignty
39
Rise in global acquisition of land (land oversea) took off at the same as ________ in \_\_\_\_\_\_
food price peak 2008
40
Land scale can be seen as “good” for development because
maybe agriculture in development countries can be kickstarted by the land acquisition which would increase productivity and revenue
41
Foreign buys land from farmer and lends it to them - which is expected to \_\_\_\_\_\_\_\_\_\_
give a bigger income to farmer
42
Long ______ of crop production in the south for the north for example \_\_\_\_\_\_\_\_\_\_\_
(colonial) legacy ( sugar, tea, coffee)
43
What is different in the current land rush compares to the long colonial legacy of foreign crop production
1. size and frequency (large and rapid rise in the number)
2. new players (**china, Malaysia UAE, India**)
3. Disillusionment with smallholder farming (hard to promote and work with smallholders because huge transition costs at small scale)
4. Rising enthusiasm for large scale agricultural
5. Vertical integration of agribusinessiness (farming) with the production and marketing, moving further up the supply chain to have secure supply of food
6. no big contracts for farmer anymore
7. reliability
8. Land as Strategic asset
9. New crops (biofuels and carbon forest (forest of the carbon they contain and keep out of atmosphere, pay people to reforest land, not cutting down, leaving them standing or reforest) both good for economy of scale)
44
What are the drivers of the global rush
1. High food prices (agriculture is more attractive because promise of higher returns)
2. Competing land use and land scarcity (people are worried global land is becoming scarce
3. biofuels, reserves, rubber.. maybe we should buy farm land now and not wait ?)
4. protect food supply
5. strategic asset
6. Low returns on other investments ( low banking interests, stock volatility, “what am I gonna invest it?” Turns out that land is solid investment)
45
Why is land good investment
1. hedge against inflation
2. Land provides incomes
3. appreciation value
4. Returns not correlated with equity market (stock bouncing but price of land is steady)
5. Farmland price rising (America doubled, South-Am. 5-7 times) (appreciating rates have exceeded the one of residential and commercial) Why ? Low risk activity, people attracted to areas with large potential for growth
46
Explain the difference between media reports vs. Inventories
(press overestimates the mouth of land that is actually transacted- hard to have a good estimate of actual land purchased (time frame shifting, not clear about what land, minimum size restrictions varying, offer different than deal)
47
Explain the International land coalitions “land matrix”
NGO website- matrix that tries to track land holding and transactions, major focus in the debate whether land acquisition is good or not, matter of transparency)
48
Africa as focus for land acquisition for large scale acquisitions (describe each with %)
-Food prod (34%) -Non-food crop (cotton?) (26%) -flex crop (biofuels ?) (23%) -multiple uses (17%)
49
Who are the main actors in land acquisition
-nationals (urban elites+ diaspora): press tends to overlooked them but very important, they have citizenship (perhaps left the land might use remittences) in the country and participate in different ways to purchase land, very large share of the number of acquisition but not HUGE areas -Regional foreign investors (china purchasing in south-east Asia, Africa, gulf sates for example- primarily out of concern for food security as they are very reliant on food exports and have an expansing population, they know that food prices disrupt, they need to ensure cheap prices -Global foreign investors : reaching well beyond their territory -private companies, sovereign, wealth funds, pension funds, hedge funds ( top 10 buyers, USA, Malaysia, Arab Emirates, Uk, India, Singapore….) (top 10 bought in Africa, papua new , Indonesia, south sudan)
50
land grab is mostly done by _______ regardless of conception of \_\_\_\_\_\_\_
nationals “north grabbing the south”
51
-Canada is not yet a ______ in global land rush
major player
52
Why shift to mega farms
1. machinery use ( more efficient)
2. quick processing (more quickly)
3. demanding product standards (more easily)
4. farming is expensive when you become bigger, it is easier to meet standards have more market power -this is why bio struggles
5. easier to access credit and insurance (half the rate of local in Argentina)
6. New crops are expensive to get going (gmo eg)
7. Lack of local available labor (move to mechanization)
8. Public policy bias towards large farm (state prefers to deal with ONE large firm than a BUNCH of times)
9. political power is greater ; the more land you have, policies to provide cheap land and capital, r and d becomes substitute, whole systems turns to large farms
53
What are the concerns with current global rush
-Rich Countries capture land from poor and vulnerable people (very small share of land owned by actual small farmers AND disposition of small farmers) -Food security in food-insecure regions (food security of these countries at risk) -Employment opportunities limited for the people pushed off the land (highly mechanized , no need for people unless very skilled ) -Loss of smallholder farming -Water “grabbing” with land ( getting land but also locking up water)
54
Why are big land acquisition frustrating for small farmers
\*buying up the very best land, leaving the marginal land to everybody else) - poor follow through, put the fence and just sit there which is WRONG is the peasant ethos (land is life) so locked up land is so wrong
55
larger mouth of land purchased where there is the \_\_\_\_\_\_\_\_\_\_\_\_\_\_
weakest land government
56
What is to be done about the global land rush
1. Land purchases restriction (but sometimes doesn't acknowledge the nationals grabbing)
2. Strengthen land governance and better manage land-investments (land need to be registered which is long and expensive, maps are often poor, no reporting sales BUT will be tracked in the future block chain solution
3. Guideline for best practices (ethical guidelines)
4. Level playing field for family farms (still need room for small farmers if not cities are going to explode, but very challenging because people don’t believe in it anymore)
57
Resource curse
Countries with large natural resources are often performing worst in term of economic development and good governance than countries that have fewer resources
58
Symptoms of resource curse (6)
- Resource wealth - Slow growth - High poverty - Poor governance - Revolution - Conflict
59
3 causes of resource curse
1. income volatility 2. rent seeking 3. dutch disease 4. low production cost 5. own by states
60
who avoid Resource curse ?
developed countries (especially norway)
61
Income volatility ; 3 causes
1. commodity price variation, can vary very rapidly and make it difficult to manage 2. Rate of extraction (first high than would decrease through time) 3. Timing of receipt (derives from the nature of agreements between the producing companies and the gov. Not always perfect schedule
62
Consequence of income volatility
1. boom-bust economic cycle 2. borrowing money during boom time
63
Resource rent
difference between the production cost and what you fet on the market e.g. saudi arabia extract oil 1$ and sell at 70$
64
Patronage ;
system where someone in a position of authority gives jobs or privilege to other people in return of support
65
Rent seeking
the sector is so lucrative you want to be in it. attractiveness, the other sectors are being forgotten imply patronage
66
2 implications of rent seeking
1. overconsumption ; spending a lot and living off the capital that have been generated by the oil. you spend the wealth amongs the most powerful people 2. underinvestment you spend money to preserve your position of power without investing in education, infrastructure or health
67
Dutch Disease
A sudden rise in the value of natural resource exports produces am appreciation in the real exchange rate it makes exporting non-natural resources more difficult and competing with imports impossible
68
DUTCH DISEASE SYMPTOMS
1. Booming resource sector 2. inflation 3. currency appreciation 4. withering manufacturing and agricultural sectors 5. people moves because of high wages jobs
69
dutch disease example
amazon 1910 ; florishing economy $$$$$ 1940 ; can't compete with SEasia so price decrease as well as economy
70
Nigeria case ;
1960 ; largest oil reserve in Africa people are getting poor as money come in the country option ; 1. sovereign wealth fund 2. transparency and accountability 3. direct distribution mechanism ; let people decide
71
Why spikes are important (food system)
prices spikes are important because the price of food is inelastic ; - people will buy the same amount whether the prices rises or fall - Supply side is also inelastic beucause it takes a lot of time for the food to grow, animal to mature, A small change in the supply can lead to a jump of the food price
72
Causes of spikes
1. The price of oil it is closely linked to the price of food cuz we need fuel to produce food, transport it. the demand for biofuel would rise as well, affecting the incentive for the farmers to shift from "consumptive" food to produce biofuels like ethanol. 2. Adverse weather 3. Panic when the prices of food rise ; countries ban exports (i.e. only 6%of rice is exported worldwide)
73
Food demand ; what we see
transitions as the prices increase, as income increase
74
transition of food demand
1. shift from tuber crops (sweet potatoes, casava, manioc) and coarse grain (like millet), toward cereals (wheat corn rice) 2. from plant-based diet to animal product (livestock revolution) especially in China where it has happened at amuch more fast pace than the US
75
Retailing
How food is sold affect what type of food is sold - supermarkets were establish in many country rapidly
76
supermarkets leads to...
1. increase in quality and availability of food 2. less nutritious food availability 3. decrease in the price of food
77
3 drivers of food demand
1. increase of population 2. dietary transition 3. food retailing
78
Food supply : increase in...
1. new land/extentification ; 2. Input intensification 3. total factor productivity (TFP)
79
around 1990 (agriculture)
shift from extentificationANDintensification to Total factor productivity
80
new land/extentification ;
Bringing new land into production to produce more food
81
input intensification
High yield varieties, irrigation, fertilizers, pesticides
82
total factor productivity (TFP)
You are getting more for less Efficient farming instead of spraying fertilizers everywhere, you apply it very precisely + typographical survey, uses of drones
83
Five challenge of global agriculture
1. Crop yield and yield gap 2. climate change 3. diet changes 4. food wastes 5. world agriculture trade
84
Crop yield
the amount of the agricultural production harvested per unit of land area
85
yield gap
the DIFFERENCE between irrigated crops, rainfed crops or partially irrigated crops and the actual yield difference between what you get and what you could have produce eg. 4 tones of rice when you could have produce 7 ton, gap yield = 3tons amount of productivity being lost for all kind of reasons
86
causes of yield gap
1. technological constraint (technology, skills, knowledge, access) 2. market, marketing 3. prices regulation 4. risk
87
climate change (agriculture)
Brings negative climate events that decrease the productivity drought, heat, strokes, early frost
88
diet changes (challenge agricu)
- livestock ; we could feed much more people if we would be vegan - only 10% of calories gets to us)
89
Food wastes
- level of food waste ; 30-40% - agriculture ; 1 trillion waste (75%)
90
origins of food waste
developed ; peoblem = people (genre on panique à cause de la date de péremption) developing ; problem = post harvest
91
Most crops are not traded ; why?
1. Food is bulking (essential) 2. food is difficult to move around 3. limitation by tariffs, quotas, quality standards
92
A freer trade in agriculture would...
bring food prices down and affect the poor through their food security (obesity, diabetes, etc)
93
Why tariffs, quotas and standard quality ?
1. people are concerned with food security 2. to protect farming sector (good for economy) 3. don't want to depend on other countries 4. stabilize market cuz food prices are volatile
94
Global land rush
"the scramble of land in developing countries is accelerating as investors look for new place to grow food to export, produce, biofuel or simply making by speculating on land"
95
What changed in global land rush ?
1. the size and the frequency 2. new players ; Malaysia, china, india, uae 3. trying to promote small holder but hard to do 4. agrobusiness = vertical integration (are now moving further supply chain to secure supply food with processing, marketing and transport). no contact for farmers anymore since agribusiness move to farm itself 5. new crops ; biolfuels and carbon forest
96
carbon forest
using forest for reforestation and source of income not because of timber but for reduced emission
97
Global land rush ; drivers
1. High good prices (higher returns) 2. Land use : people are more concern about land than food, land are becoming scarce 3. low returns on other investments 4. good investments ; land provide income + appreciation value and is not correlated with equity market so less risky
98
Geography of land acquisition
1. media report overestimated the number of transacted land 2. international land coalition 3. 2/3 land acquisition in africa 4. acquisition for food production ; 34% non-food crops (ie rubber) : 26% flex-crops(food and biofuel) ; 23% multiple uses : 17%
99
Main actors of global land rush
1. national investor 2. regional foreign investors 3. global foreign investors
100
National investors
have citizenship, urban elite, no farmer, normally civil agent, traders or marchands
101
Regional foreign investors
in their countries and neighbour country
102
global foreign investors
pension funds wealth funds private company hedgefunds
103
Why is there a shift to a large scale ?
1. machinery production 2. quick processing 3. demanding product standard (expensive to get certified) 4. easier access to credit and insurance 5. new crops are expensive (gmos require research in R&D) 6. lack of available labour cuz mechanization 7. public policy bias : the state prefers dealing with one company instead of thousand little holders
104
Concern about global land rush
1. rich countries take land from poor and vulnerable people 2. food security because of displacement 3. limited employment opportunities (need higher skilled operators and mechanization 4. loss of smallholder farming 5. water grabbing with land
105
solution global land rush
1. land purchase restriction 2. better manage land registration 3. guideline for better practices 4. level playing field for smallholder farm
106
FOREST TRANSITION :
Over time, the deforestation is greater then stabilize, and then reforestation is greater than deforestation
107
proximate cause
human activities or immediate action at the local level, such as agriculture expansion, that originate from intended land use and directly impact forest cover the chainsaw
108
underlying drivers
fundamental social processes, such as human population dynamics or agriculture policies), that underpine the proximate causes and either operate on the local scale or have an indirect impact of the national or global level the guy with the chainsaw
109
environmental explanations
classic drivers. we interact with the nature, it is not a part of us, its up there, how does our actions and interactions impact the nature ?!
110
political economic explanation
nature is socially constructed and appropriated and power structure infleuence how we think about environment and how we use it
111
the "classic drivers" (4) of deforestation
1. population 2. inappropriate technologies 3. property right 4. incomplete markets 5. weak institutions
112
deforestation in brazilian amazon - date & facts
prior to 1964, the livestock industry was considered to be a marginal industry in the amazon, the cattle were mostly imported. after 1964, after military coup, cattle come big.
113
why does the cattle become big ?
1. enable to secure your frontiers (military ideology) 2. inflation was a serous problem and investing in land is good 3. urban food scarcity, cattle provide food 4. promotion of non-traditional export (coffee, sugar cane) 5 vent for surplus ; need a place to attract investor
114
vent for surplus
need a place to attract investor
115
incentive for investors ;
- tax exemptions - land grants - subsidies (credit) instrument to get access to land subsidies
116
new sector in Brazilian amazon
soy bean
117
why soybean
benefit from fall of anchovy shift in Europe from meat to plantbase
118
Prior to WWII, exchanges between countries were ;
bilateral
119
Acte sur plus de 20 000 produit importés menant à une riposte des partners d'échange
Smoot-Hawley Tariff Act 1930
120
bretton wood goal
stabiliser la situation financière international et rebatir les dommages de guerre.
121
3 institutions sont créées
1. International bank for Reconstruction and Development (1945) IBRD Later WB 2. International monetary fund (1945) 3. international trade organization (ITO) never saw light
122
ibrd/worldbank
International bank for reconstruction and development ; provide loans required to build infrastructure needed for economic & social activities
123
IMF
Responsible for monetary policies
124
ITO evolution + when
Become GATT in 1947 in Geneva
125
GATT
General agreements on tariff and trade 1947 23 countries Want to work together and reduce tariffs and trade barriers From bilateral to multilateral agreed that no one can rise tariff without the consent of other signatories, cannot leave by themselves
126
1964 + context
united nation conference on trade and development UNCTAD Encourage developing countries to sign context ; cold war, race against communism that would be an economic barrier for trade economy
127
Kennedy round
1963- 1967 instead of commodity by commodity, block tarriffs
128
Tokyo round
1973-1979 Subsidies creates controverse cuz unfair trade advantages provide competitive advantage for countries with subsidies
129
Uruguay round
1986-1994 From GATT to WTO (164countries)
130
difference WTO and GATT
1. From provisional agreement to formal institution 2. includes rules on trade in service 3. define intellectual property rights 4. Formal dispute settlement mechanism (tribunal)
131
Regional trade agreement
attempt to liberalize trade over smaller groups of countries ; 1. free-trade-agreement 2. custom union 3. common market
132
free trade agreement (FTA)
le moins complet - allow tariffs free trade between groups but country can decide to design its own policies with non-members - largest = nafta
133
custom union
Countries all ahve to be on the board if they want to agree on tariff ex ; MERCOSUR (argentina, brazil, parag, urug)
134
common market
- free movement of labour capitals among members - related between each other with same currency (if inflation, its for everybody) EU
135
nafta
north american free trade agreement - elimination of tariffs by 1999 - national treatment fereign investments - grandfathered trade restriction - sunset claud - some good remains subject to non-tariff trade
136
national treatment
government cannot discriminate in the basis of a firm nationality
137
grand fathered trade restriction
certain industrial sectors have protection (i.e. canada with lumber)
138
sunset clause
expire on a longer time horizon, certain activities goes beyond 5 years
139
some goods remains subject to non-trade profit (NAFTA)
cultural industry (ex 3/5 songs radio need to be canadian)
140
Latest regional agreement
CETA AND TPP
141
CETA
comprehensive economic and trade agreement - 98% of tariff to be eliminated - could surpass nafta - export canada us = 75% need diversification
142
TPP
Trans Pacific Partneship - 12 rim countries - would be larger FTA - 2016 ; Trump pulled out
143
Stock market
where stock are sold and bought
144
function of stock market
establish the value of corporate shares
145
stock
share of company (pointe de pizza)
146
virtual floorless trading system
method of simulated trading where beginners traders can practice investing without using real money
147
stock market prior to 1970
mostly national and oligo-monopolistic stock exchanges, mostly large and domestic scale
148
1971
end bretton wood area
149
1970 and after
globalization of finance systems ; new context ; hypermobility of capital flow, volume going up so as the velocity of transaction
150
Globalization of financial system include (4)
- increase of deregulation of financial activities - increase of competition between stock exchange - increase of MNCs that does more cross-listing on foreign exchanges - arrival of much more complex instruments, technologies ; difficult to keep up
151
Top 10 stock market
1. NYSE 2. NASDAQ 3. TOKYO 4. EURONEX (paris, lisbon, bruxelle, amsterdam) 5. LONDON SE 6. HONGKONG 7. SHANGAI SE 8. TORONTO 9. SHENZEN SE 10 FRANFURT SE
152
blue chip
nationally recognize, well established companies, that have withstood the test of time. coca cola, disney, mcdo, ibm
153
recession
categorized by two consecutive quarter of negative GDP growth
154
2007 ; china
still growing but at much more lower rates than before, (from 2 digits % to 3,5%)
155
Trigger of 2007 recession
collapse of us housing market (2006) : - easy credit conditions - subprime lending
156
subprime lending
consumers that would normally NOT meet those loans or mortgages now have access to them
157
2007 ; negative equity
situtation where the price of the mortgage is higher than the actual price of your house
158
other factors of 2007 recession
1. increase debt burden, diminished savings (households have hugh debt credit an no saving) 2. deregulation of banks and financial institution (take more risky choice) 3. imbalance in world trade 4. commodity bubble (oil 50$ in 2006 and 150$ in 2008
159
how does banks differs from each others ?
1. branch banking system 2. mortgage finance systems 3. regulatory regime
160
What makes recession different than other bubble that we saw in the past
1. the magnitude of volatility in housing prices is larger 2. involves more countries
161
Originate hold model
Buyer go to the repayment that goes to ; bank/mortgage instutution : LOCAL OR NATIONAL
162
globally distributed model
Buyer go to the repayment that goes to ; bank/mortgage instutution : NATIONAL or INTERNATIONAL
163
Why is the world not "flat" ? arguments against hyperglobalist view
1. national banking structure 2. local financial circuit DELOCALIZED (stretch) vs Globalize financial circuit LOCALIZED (compressed) 3. Glocalization ; local and global are interwoven 4. state level, city level ; signifiant variation with prices
164
Paradox of plenty
Refers to the irony of the curse to richness in natural resources. The resource curse itself generally occurs in resource-rich countries with slow growth, political instability, high poverty and high GDP. It is cause by being rich in easily appropriable resources, having state-owned resources and producing a resource that has a low production cost compared to the value.
165
The resource curse result in \_\_\_\_\_, _____ and \_\_\_\_\_\_\_
Income volatility rent seeking dutch disease
166
Income volatility
variation in commodity prices, and the subsequent variation in incomes.
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Dutch disease named after the Netherlands, which de-industrialized after discovering \_\_\_\_\_\_\_\_
natural gasses
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Rainforest is a safety net\*
\*
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HDI
Human development index
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Hapiness index (3 letters)
GNH index
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GPI
Genuine Progress Index
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economic globalization includes both spatial and temporal dimensions:
i. stretching (extension) of economic activities
ii. intensification (growing magnitude) of
transactions/interconnectedness
iii. speeding up (↑velocity) of transactions
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1965
Canada-US **Auto Pact**, elimination of trade tariffs
on cars, trucks and automotive parts
Canada - US linkages ‘unique’ in terms of volume
of bilateral trade and patterns of corporate
ownership
But is this ‘free’ trade? What region benefits? US
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Michael Porter (1985. 1990) emphasis on productivity growth and competitive advantage
DIAMOND FIGURE
Four pillard of competitive advantage : what determines factor production
**Factor conditions** (Labour, Land, Capital, technology, infrastructure)
**Demand** (market) conditions (how sophisticated is a market to the next, is it asking for better product, lattest gadget, consumers are pushing firms for better product)
**Supporting industries** (banking-accounting firms)
**Firm strategy**, structure, competition ( are we dealing with industrial intensive or small firms like pizza shop
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Four pillars of competitive advantage:
* Factor conditions (LLK, technology, infrastructure)
* Demand (market) conditions
* Supporting industries
* Firm strategy, structure, competition
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alternate development measures:
HDI, GNHI, GP
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Balance of trade
The balance of trade is the difference between the value of a country's imports and exports for a given period.
Not When the exports and imports of a country are in equilibrium and there is no trade surplus no trade deficit
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The world city hypothesis was developed by..... and when ?
Friedmann and Wolff between 1982 and 1986.
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The hypothesis identified world cities based on their “\_\_\_\_\_\_\_\_” into world economic activities,
degree of connectedness
i.e. how they are linked to the global economy. It involves notions of extension, intensity, and velocity.
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Friedmann and Wolff believed that the key agent of change in cities is....
the arrival of MNCs.
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This was the _____ effort to quantify world cities.
first
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GaWC (Globalization and World Cities Research Network).
The GaWC constructed a very detailed inventory of world cities using unprecedented means to gather data and measure the extent of networks linking different cities across the globe.
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According to the GaWC, ___________ innovations in corporate services and finance are integral to the recent restructuring of the world economy.
Post fordism
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\_\_\_\_\_\_\_\_\_\_lead to key economic activities, such as the dispersion of production, and the concentration of advanced producer services necessary to manage and organize the above dispersion.
Corporate services
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The key corporate services examined are
* legal services
* accountancy services
* advertising agencies
* financial services.
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Each city is ______ based on the number of different corporate service providers it has in each of the four sectors.
ranked
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Alpha cities
London, Paris, NYC, Tokyo, Chicago, Frankfurt, Hong Kong, Los Angeles, Milan, and Singapore.
189
beta
San Franciso, Sydney Toronto Mexico City, Seoul
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gamma
Amsterdam, Boston, BKK, Beijing, Montreal
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Between country inequality is \_\_\_\_\_\_, while within country inequality is \_\_\_\_\_\_.
Between country inequality is **declining**, while within country inequality is i**ncreasing**.
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Income inequality refers to
the distribution of income across populations or groups of individuals, either within countries or across countries.
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Maximum inequality
the condition wherein one person holds all income, and minimum inequality is the condition wherein wages are equally distributed.
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International inequality
Refers to the inequality between the median incomes of nations.
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Global inequality
refers to inequality between individuals in the world _regardless of their nation_, and measures inequality as if the entire world were one country.
196
Concept 1
Unweighted international inequality.
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Concept 1 Inequality refers to unweighted international inequality :
It is tracked by \_\_\_\_\_\_\_\_
GDI per capita.
Gross Domestic Income
is the totalincome received by all sectors of an economy within a state. It includes the sum of all wages, profits, and taxes, minus subsidies.
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The unit of observation is the country, and it **\_\_\_\_\_\_\_ account for each country’s population** (this is why it is said to be unweighted).
does not
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Concept 1 : The data comes from national accounts, and the currency measures are given
in PPP to control for currency differences.
200
Concept 1 inequality _____ within-country inequality
ignores
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Concept 2 Inequality refers to \_\_\_\_\_
weighted international inequality
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Concept 2 ; Does it takes into account the country's population ?
yes
203
Both concept 1 and 2 data comes from national accounts, and the currency measures are given in PPP and they ignore within-country inequality.
True or false ?
TRUE
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Concept 3
Inequality refers to global inequality.
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Concept 3 :The unit of observation is \_\_\_\_
an individual’s self-reported income level.
206
Concept 3 ; The data comes from \_\_\_\_\_\_\_\_\_\_
a household survey.
207
Concept 3 inequality controls for within-country inequality. : true or false
true
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The two most common measures of inequality are the ______ and the \_\_\_\_\_\_\_\_
The two most common measures of inequality are the **Gini coefficient** and the **Theil index.**
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The “elephant curve”, which measures ... (2)
level of income growth on the Y,
and distribution of world’s income on the X.
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In PPP terms, the top ____ of the world population controls _____ of total world income
5%
1/3
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Four types of economies
1. Traditional
2. Command
3. Market
4. Mixed
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3 key outcomes of 19th century trade boom
* economic growth
* market integration
* income divergence (with europe)
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Mercantilism countries sought to...
* accumulate gold and silver
* run trade surpluses
* promote import substitution
* protect their trade interests with a strong navy and military
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Allocative efficiency refers to...
The production of goods that match consumer's need
215
Behavioural considerations
When two business are located next to each other
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Doha round
2001
Goal is to reduce subsidize in developed countries for agriculture
Ngos starts to show their faces to influence
217
why cattles?
* convinient ; enable you to secure your frontiers
* inflation was a serious problem and what do you invest in inflation time ? land !
* rban food scarcity ; open up region with cattle being produce and provide food
* promote non traditional export than (coofee sugar cane) and cattle is good
* vent for surplus ; need brazilian military ; somewhere for entreprenor to go and invest their capital and the frontier were wide open.
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