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Globalization & Economics

Globalization & Economics. Discussion Questions. How did trade and finance help to globalize the economic system? What criticisms are lodged against globalizing trade and finance? How did MNCs help to globalize the economic system? What criticisms are lodged against MNCs?

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Globalization & Economics

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  1. Globalization & Economics

  2. Discussion Questions • How did trade and finance help to globalize the economic system? • What criticisms are lodged against globalizing trade and finance? • How did MNCs help to globalize the economic system? • What criticisms are lodged against MNCs? • How did/ do IGOs and RTAs help to globalize the economic system? • What criticisms are lodged against globalizing IGOs and relying on RTAs?

  3. Economic Globalization • Interrelations • Capital & technology  trade 2 Types of Trade • Merchandise trade • Primary goods • Manufactured goods • Service trade ¤

  4. Brief Economic History Post- WW II • Bretton Woods Agreement (1944) • IMF, IBRD (WB), GATT ( WTO) • End of Gold Standard fixed exchange rate (1971) • Shift to neoliberal economic policies (1980s) • Remove gov’t from economy ¤

  5. Brief Economic History Post- Cold War • Int’l of trade & finance • MNCs • Economic IGOs ¤

  6. Discussion Question 1 • How did trade and finance help to globalize the economic system?

  7. DQ 1: Trade & Finance Seek single global market • Int’l organizations- IGOs • Regional organizations – also IGOs • Free trade agreements Desire financial mobility • Deregulation • Tariffs • Privatization • Foreign direct investment • Technology • Moving money ¤

  8. Discussion Question 1b • What criticisms are lodged against globalizing trade and finance?

  9. Criticisms of Trade & Finance Globalization Trade • Concentrates wealth • Lacks global standards • Labor • Environment Finance • High risk transactions • ‘Hedge funds’ • More volatile • GS ¤

  10. Discussion Question 2 2. How did MNCs help to globalize the economic system?

  11. DQ 2: MNCs Characteristics of MNCs • $$$ = power • GN dominated • Royal Dutch Shell’s revenues in 2012 = $484.5 B GCP • 26th largest state economy • Mobility • Influence jobs, development • Challenge state policies • Influence/ challenge norms • Transparency • Business practices • Cultural norms, values ¤

  12. Discussion Question 2b 2. What criticisms are lodged against MNCs?

  13. Criticisms of MNCs • Profit-driven • ‘Race to the bottom’ • Exploitative of people, environment • Concentrate wealth ¤

  14. IGOs Global Institutions • IMF • Monetary system • Structural adjustment programs (SAPs) • 1st time Mexico (1982) • IBRD WB • Development • GATT WTO • Trade system • Free trade ¤

  15. Regional Trade Agreements • Bilateral • China- Switzerland, Canada-Japan, Canada-India • Multilateral • Int’l, regional • Differ from IGOs ¤

  16. RTAs Not formal institutions- pacts • Bilateral • China- Switzerland, Canada-Japan, Canada-India • Multilateral • Int’l, regional Examples • GATT, NAFTA, CAFTA, Lomé Agreement • TTIP (Transatlantic Trade & Investment Partnership), EU-US * • TPP (Trans-Pacific Partnership), Pacific Rim* ¤ *Under negotiation

  17. Discussion Question 3 3. How did/do IGOs and RTAs help to globalize the economic system?

  18. IGOs, RTAs, & Globalization • Promote neoliberal economic system • Cooperation • Formal, informal pacts • Push for policy coordination • Finance, trade, investment • Push to open markets • Finance, trade, investment • Challenge cultural norms • Challenge state sovereignty • Affect environment ¤

  19. IGOs, RTAs, & Globalization Benefits of RTAs • In self-interest to make deals • Let GN establish rules • Make deals w/o EEs RTAs might propel WTO • Revive Doha round- come to agreement • EEs fear losing out ¤

  20. Discussion Question 3b 3. What criticisms are lodged against globalizing IGOs and relying on RTAs?

  21. Criticisms of IGOs & RTAs • GN domination – esp. U.S. • Conditions on loans • Undermine social development with cuts • Force to open economy • Neocolonialism • Develop ‘debtor’ countries ¤

  22. Recap • Neoliberal economic model • Push for global governance • Regimes to set norms • GN dominates in all sectors • Trade, investment, MNCs, in IGOs • Sovereign interests influence decisions • Use RTAs • Push for/ resist free exchange • Criticisms of neoliberalism • Global civil society ¤

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