Transcript New Challenges of Economic Governance Problmes - UNI-NKE

New Challenges of Economic Governance
Problmes of Globalism
6th Lecture
Dr. habil. Maria Bordas
Professor
Corvinus University of Budapest
Faculty of Public Administration
Department of Public Administration
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Development of Globalism
After the 2nd World War -Europe
1945. Bretton Woods
– Stability of the financial market: integration of the currencysystem based on gold
-Financial support for the reconstruction in Western Europe
-Liberalization of the world trade market (GAAT)
-Nationalization in the public sector and the business sphere
-Welafe state: full employment, education, housing, health, social
allocations for the poor
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New International Institutions
 World Bank - Financed by the member states: new market
Activity:
-Finances projects based on economic policy
-Consultancy
-Technological and managerial knowledge
IMF (International Monetary Fund)
Activity:
-Supervises fiscal and monetary policy
-Gives credit based on financial plan, contract
-Expert
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Critics of the World Bank and the IMF
From the 1970-s
New areas:developing countries
New policy: to create market economy based on the principles of the
developed western countries –neoliberal economi policy
Critics:
 Support or credit based on conditions
 Strictly controls projects
 Does not fit the traditions or the economy of the country
 Does ot serve national economic interest, but the multinational
enterprises – market mechanisms
 Decreases welfare – encourages privatization
 Against environment protection
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New International Economic Processes
Effects of the neoliberal economiy policy of the World Bank
and the IMF
 Promoted international capital to be invested without limitation
 Decreased wages in the developed countries: strikes,
competition with the developing countries
Development of the electronics and infomatics
 Financial transactions and establishment of the firms beame
easy: increasing proportion of the international investments and
financila market
 Concentration in the world market: monopoly position of the
multinational enterprises
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Features of Globalism
The aim: influence on the national economies
 Business principles: maximum profit
 The least sate intervention in the economy
 Radical decrease of the welfare state
Interest of the national economy:
 Economic development
 Fair redistribution
 Welfare instituions
 Environment protection
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Results of the Globalism
Countries become vulnerable to the multinational enterprises
 Limited political power: influence on the political parties,
parliament, government in an informal way
 Limited economic governance:
-Multinational enterprises can easy go to other countries - lower
costs: wages, tax allowances, state subsidies
-Producing processes are divided in more countries
-Competition among the countries for the international capital
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Effects of Globalism
Disadvatageous situation of the countries:
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Taxes are paid in the home countries
More support than income
Profit increased 100%, wages 5 %
Worse competiveness: domestic firms pay more tax (bunkruptcy)
Unemployment: if the multinational enterprises withdraw
Monopoly positions in the market: agains the customer interest
Worse environment: the governments are weak to force multinational
enterprises to keep legal rules
Bad choices: high prices – adaptation – loosing power of economic
governance - uncontrolled multinational enterprises – worse welfare
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Globalism in Hungary
Privatization:
 At the beginning of the 1990-s: state-owned business
enterprises for the international firms.
 Reason - privatization policy: quickly by all means.
 From 1995: infrastructure services: - concession - energy sector
was sold
 From 2002: national product firms – privatization is unlimited
Critics:
 Strategic national property was lost – influence of the national
capital (e.g. energy prices – highways)
 Socialist-liberal governments served and protected globalism
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