Test 3 Flashcards
Globalization
• “…a set of processes that are widening, deepening, and accelerating the interconnectedness among societies.” (pg. 244) • Types of Globalization o Economic o Cultural o Political o Technological
Economic Globalization
o The global integration of trade and finance leading towards the emergence of a single world economy
Cultural Globalization
o Diffusion and integration of cultures worldwide, including ideas, literature, movies, music, fashion, food, etc
• Political Globalization
o Creation of new international institutions for coordinating decision making.
o Interdependence
A condition in which the actions and events in one part of the world effect people elsewhere
• Technological Globalization
o New technologies eliminate traditional barrier between countries and the people within them.
• Benefits of Globalization
o Promotes economic growth through free trade and trade specialization.
o Economic growth necessary to reduce poverty in developing countries.
o May contribute to peace by providing the point of view that all humans share a common fate.
• Negatives of Globalization
o Benefits of globalization are uneven, increasing inequality between the wealthy and poor.
o Encourages the exploitation of workers in developing countries.
o Exploitation of the environment
o Loss of jobs in the Global North
o Threatens local traditions and culture
• Negatives/Positives
o Reduces the ability of states to exercise control over their territory and people
International Political Economy (IPE)
• The study of the interaction between politics and economics
• Mercantilism
o Objective: increase the relative wealth and power of the state by creating a balance of payment surplus (more coming in than going out), realism
o Method: tariffs and nontariff barriers (i.e. protectionism)
• Commercial Liberalism
o Objective: maximize economic gains throughout the entire economic systems (i.e. market efficiency), Adam Smith
o Method: free markets and removal of barriers to trade (laissez faire)
• Keynesianism (John Maynard Keynes)
o Objective: market efficiency
o Method: government intervention is needed to correct market inefficiencies, particularly during economic crisis.
Bretton Woods (1994)
- World Bank (IGO)
- International Monetary Fund (IMF)
- Dollar Convertibility
• World Bank (IGO)
o Provides development loans to Global South countries
o Helps to finance large capital projects in support of economic development
o President of World Bank has always been U.S. citizen (Jim Yong Kim)
o Board of Governors sets the overall policy of the World Bank
o Voting rights based on each state’s financial contributions
• International Monetary Fund (IMF)
o Provides short term loans to member states with financial problems.
o Money paid into the IMF by member states; amount based on each state’s economic wealth.
o Determines how much each state can borrow and its voting rights.
o IMF currency used only for financial transactions between members called Special Drawing Rights
o Value of SDR’s tied to the Euro, Dollar, Yen, and British Pound Sterling.
o Managing Director of the IMF has always been European, Christine Lagarde
o Board of Governors sets overall policy of IMF.
Voting rights based on each state’s quota.
• Dollar Convertibility
o After WWII, the U.S. dollar emerged as the world’s global currency
o U.S. dollar tied to gold at a fixed exchange rate.
o All other currency values tied to the U.S. dollar at relatively fixed rates and regulated by the IMF.
o End of Dollar Convertibility
President Richard Nixon ended dollar convertibility in 1971.
o Floating Exchange Rate
Currency values set by the market
China only country with fixed exchange rate tied to the U.S. dollar
General Agreement on Tariffs and Trade (Liberalism)
• Objective: promote global trade by reducing tariffs
• Most Favored Nation
o “…tariff preferences granted to one state must be granted to all others exporting the same product.”
• GATT Weaknesses
o Several types of goods exempted from GATT rules
E.g. textiles/clothing, agricultural products
o Did not include services
E.g. banking, insurance, delivery, telecom munitions, tourism
o Did not address intellectual property
E.g. patents, copyrights, trademarks
o Difficulties reaching agreements on nontariff barriers
o Lacked enforcement mechanism
Marrakesh Agreem
• Created the World trade Organization (WTO)
• Expanded trade rules to cover
o Textiles/clothing
o Services
o Intellectual Property
o Nontariff barriers
• Created new institutions for dispute settlement and enforcement of WTO rules
Doha Round
• Expanded to include agriculture
Group of 20 (G-20)
- Meeting of finance ministers and central bank governors from 19 countries, plus the EU.
- Purpose: coordinate international economic policy
- G-20 agreements are voluntary
- Has no permanent organizational structure. Chair rotates between member states (currently Russia)
Global Commons
• Resources that exist outside of state boundaries or are shared by several states
o E.g. atmosphere, outer space, oceans
