Unit 3 - Globalization Flashcards
What is the European Union (EU)?
An economic union that evolved through various types of trade agreements, from a customs union to a full economic and monetary union.
The EU includes 27 member states and features shared policies and a common currency, the euro, adopted by 20 member states.
What was the Treaty of Rome?
The treaty established the European Economic Community (EEC) in 1957, marking the beginning of the EU’s development.
The EEC aimed to foster economic cooperation among European countries.
What is a Free Trade Agreement (FTA)?
An agreement where EU members eliminated tariffs and quotas on trade between member states, boosting intra-European trade.
This fosters economic integration and enhances competitiveness.
Define Customs Union.
A trade agreement where member countries establish a common external tariff for trade with non-member countries.
This ensures a unified trade policy among member states.
What is a Single Market?
A market where there is freedom of movement for goods, services, capital, and labor among member states.
This integration enhances competition and economic efficiency.
What are the key features of an Economic Union?
Harmonized policies on agriculture, fisheries, and regional development, with centralized monetary policy for eurozone countries.
This aims to create deeper economic integration among member states.
What percentage of global GDP does the EU account for?
Nearly 14%.
This positions the EU as a major economic powerhouse.
What major challenge did Brexit highlight?
Tensions between national sovereignty and collective decision-making.
Brexit raised questions about the balance of power between member states and EU institutions.
What characterized India’s protectionist model before 1991?
High tariffs, import quotas, and licensing requirements to promote self-reliance.
This was formalized under the Industrial Policy Resolution of 1956.
What is the License Raj?
A system where companies required government licenses to produce, expand, or import goods.
This stifled competition and innovation in the Indian economy.
What were the positive outcomes of India’s protectionist policies?
Creation of a robust industrial base and development of indigenous industries like steel and pharmaceuticals.
However, this also led to inefficiency due to lack of competition.
What were the negative outcomes of India’s protectionist policies?
Inefficiency and limited foreign exchange reserves, leading to a balance of payments crisis by 1991.
This crisis prompted the liberalization of the Indian economy.
Free trade example - What led to Vietnam’s coffee boom?
Liberalization of its economy in the late 1980s (Doi Moi reforms) prioritizing unrestricted trade and export-led growth.
This strategy enabled Vietnam to become the world’s second-largest coffee exporter.
Free trade example - What was one economic outcome of Vietnam’s coffee boom?
Coffee exports accounted for nearly 10% of Vietnam’s GDP, lifting millions out of poverty.
This demonstrates the impact of free trade on economic growth.
Free trade example - What are some challenges faced by Vietnamese coffee farmers?
Price volatility, environmental degradation, and farmer exploitation.
These issues highlight the complexities of free trade.
What is the focus of fair trade policies?
Equity and farmer welfare.
Fair trade aims to ensure stable incomes and promote sustainable practices.
What were the outcomes of fair trade for Ethiopian coffee farmers?
Stable income and additional premiums for community development.
This included building schools and health clinics.
What is a key challenge for fair trade coffee in Ethiopia?
Limited market reach and high retail prices.
This reduces competitiveness against conventional coffee.
What was the Marshall Plan?
An initiative by the U.S. to aid Western Europe in rebuilding economies and infrastructure after World War II.
It was implemented from 1948 to 1952.
What were the objectives of the Marshall Plan?
Rebuild war-torn economies, prevent the spread of communism, and strengthen trade relations with Europe.
Economic stability was seen as crucial for political stability.
What was the total funding of the Marshall Plan?
$13 billion (approximately $150 billion today).
Funds were provided to 16 European countries.
What were some outcomes of the Marshall Plan?
Economic growth of 15-25%, restored production levels, and stabilized democratic governments.
It also increased U.S. influence in Western Europe.
What are some criticisms of the Marshall Plan?
Selective aid and dependency risks.
It excluded Eastern European countries and raised concerns about long-term reliance.
What factors contributed to the failure of foreign aid in Haiti?
Weak governance, political instability, dependency on aid, ineffective aid coordination, and natural disasters.
These factors created significant challenges for effective aid delivery.
