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G-20 Summit. Globalization Day 9 Mini Lesson. Objectives. Students will identify purpose of G-20. Students will explain issues surrounding currency wars and trade imbalances. Students will examine impact of PIGS on Eurozone . Students will evaluate successes and failures of latest summit.
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G-20 Summit Globalization Day 9 Mini Lesson
Objectives • Students will identify purpose of G-20. • Students will explain issues surrounding currency wars and trade imbalances. • Students will examine impact of PIGS on Eurozone. • Students will evaluate successes and failures of latest summit.
Warm Up • Name an international organization that oversees globalization issues. • IMF • World Bank • WTO • G7/G8 • G-20
G-20 Summit Less Than disaster • As you read the article, identify what questions you need answered to understand the recent G-20 summit. • http://www.nytimes.com/2010/11/13/world/asia/13assess.html?src=mv • What is the Group of 20? • What is the friction surrounding trade & currencies? • What real issue did these detract from? • Why isn’t Russia in the WTO? • Successes/Failures of Seoul summit?
What is the Group of 20? • Leaders of the world's major developed and developing countries as well as international institutions • Finance ministers of 19 nations & EU, leaders IMF and World Bank • UN, AU, ASEAN, WTO • G-20 economies comprise 85% of global GNP and 80% of world trade.
What’s the friction about? • Trade imbalances • US wants restrictions on the size of trade surpluses and deficits with one another • Currency wars • http://www.bbc.co.uk/news/business-11722578 • US wants China to float yuan / RMB • Set consistently lower than value of US $, keeping goods cheaper • http://www.onemint.com/2009/01/26/how-does-china-manipulate-its-currency/ • . • Allowing market to dictate value would shrink trade deficit by encouraging domestic sales, not exports • US position undermined by Fed’s $600b infusion • Weakens value of US dollar, importers make less (protectionist)
Why isn’t russia in the wto? • Largest economy outside of WTO • 20 yrs unsuccessful attempts • Issues with US (poultry, IPR & encryption) and EU (timber) • US will encourage Georgia not to use veto to block entry (political / border dispute)
PIGS – The Real Issue • European Sovereign Debt Crisis • Portugal, Ireland, Italy, Greece, Spain • Run large deficits • Default on loans = insolvency for Euro banks (can’t collect large amts of $ owed) • Ireland negotiations… • Crashing economy • Poor lending practices, stagnant econ, housing crash, lack EU regulations • Refusal to take European Central Bank rescue loan • Know can’t pay it back • Don’t want to give up econ/poly control
Successes/failures • IMF will investigate sources and consequences of imbalances. • Agreements on overhauling financial regulations. • Agreements on improving dvpt assistance for poor countries. • Agree to avoid competitive devaluation • US Failure to close free trade agreement with South Korea • Resistance from China & Germany over reducing trade surpluses.
Closure • What is role of G20 in global economy? • Deal with financial and economic crisis • Set policies for growth & stability • Combat terrorist financing