Transcript Chapter 12 Global Economic Competition and Cooperation

Chapter 12
Global Economic Competition
and Cooperation
National Economic Power:
Assets and Utilization
Economic Incentives
Mixed success rate
Highly contentious
Economic Sanctions: Effectiveness
More effective in certain circumstances
Mixed
Modest goal
Target politically unstable and weak
Sender and target friendly and trade with each
other
Imposed quickly and decisively
Sender avoids high cost to itself
Drawbacks of sanctions
Unintended victims
Hurt the country imposing sanctions
Used by EDCs to maintain dominance over
LDCs
Harm relations with countries not supporting
sanctions
Harm those whom you seek to assist
The North and the
International Political
Economy
The Economies of the North
High GDP
Slowing growth rate
Postindustrial economy
High technology means fewer workers
Downsizing
National Economic Issues and
Policies of the North
Decline in economic fortunes
End of cold war
Lessened need for strategic cooperation
Trade disputes among trilateral
countries
Decline of central direction
Group of Seven (G-7)
Group of Eight (G-8)
Disputes in general
Free trade
NAFTA
WTO
Protectionism
Economic disputes among the EDCs
U.S.-Japan dispute
The South and the
International Political
Economy
Status
Disparity between countries
Disparity within countries
Economic class, race, ethnicity
Modernization
Explosive population growth
Rapid urbanization
Industrial and environmental dangers
Capital Needs: Hard Currency
Loans: Government and private
Slowing global economy means fewer
exports and dropping prices
Debt crisis
• Brady Plan
Private investment
Foreign direct investment and foreign
portfolio investment
Trade: Export earnings
Product instability
Market and price weaknesses
Foreign aid
Bilateral
Multilateral
Factors that reduce impact
Political considerations
Military content
Measuring recipient per capita aid, rather than
gross aid
Measuring donor aid relative to wealth
The way aid is applied
LDC Perspectives and Policies
Expectations rising
Nationalism
Increased moral rhetoric
Transnational ideology
Development of the LDC
movement
Political nonalignment
Group of 77 (G-77)
United Nations Conference on Trade and
Development (UNCTAD)
LDC demands
New International Economic Order
(NIEO)
Trade reforms
Monetary reforms
Industrialization
Economic sovereignty
Economic aid
LDC action
Cartels
Protection of domestic industries from
foreign competition
The Future of National
Economic Policy
Barriers to Merchandise Trade
Tariffs
Nontariff barriers
Quotas
Pricing limits
Technical restrictions
Subsidization
Dumping
Debate on Free Trade
Global Economic Cooperation
UN and Economic Development
of the South
Pragmatic factors
Decreased international violence
Increased economic prosperity
Response of North
Programs
UN Development Programme (UNDP)
UN Industrial Development Organization
(UNIDO)
UN Conference on Trade and Development
(UNCTAD)
• Group of 77 (G-77)
General Economic Cooperation:
Other IGOs and Processes
Organization for Economic Cooperation
and Development (OECD)
Group of 7 (G-7)
Some CITs
Trade Cooperation
GATT/WTO
Uruguay Round
• Arguments for and against
• Tariff reductions
Structure of WTO
Power to enforce provisions of GATT
Assess trade penalties
Countries can withdraw
Three-judge panel hears trade violation
complaints
Sanctions
Each country has one vote
Imposed by 2/3 vote
The future of GATT and WTO
What if a country rejects WTO rules?
Strengthening of movement against
globalization
Monetary Cooperation
Early monetary regulation
Bretton Woods
IMF
Helps maintain exchange-rate stability
• Special Drawing Rights
• Efforts in the 1990s
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Stabilize economies of LDCs
Aid CIT reorientation to market economy
Asian financial crisis
Russian financial crisis
Controversy: IMF
Voting based on member contribution
Conditionality
Interferes with sovereignty
Destabilizes countries
Maintains dependency of LDCs
Capitalism and social justice
Development cooperation:
The World Bank Group
International Bank for Reconstruction and
Development (similar to commercial bank)
International Development Association (focuses on
loans to poorest countries)
International Finance Cooperation (loans to LDCs and
guarantees private investment promoting privatesector development
Multilateral Investment Guarantee Agency (promotes
flow of private development capital to LDCs through
guarantees)
Controversy: World Bank
Dominated by North
Too little funding
No understanding of the needs of South
Terms of loans violate sovereignty, damage
economies
Not enough attention to human and
environmental impacts of projects
Promote market economies, foreign direct
investment, and other aspects of capitalism
Regional Economic Integration
Bilateral or Multilateral Economic
Cooperation
Economic Integration: Surrender
Some Sovereignty
Levels
Free trade area
Customs union
Economic union
Monetary union
The Western Hemisphere
The North American Free Trade
Agreement
The evolution of NAFTA
The impact of NAFTA
• Economic and nationalistic problems of NAFTA
The Free Trade Area of the
Americas
The origins of FTAA
The Summit of the Americas
The future of FTAA
The Southern Common Market
(Mercosur)
Asia, the Pacific, and Elsewhere
Association of Southeast Asian Nations
(ASEAN)
Asia-Pacific Economic Cooperation
(APEC)
Slow progress
The Future of Regionalism
Integration versus revival of regionalism