Globalization & Economics. What is Economic Globalization? Interrelations Capital & technology  trade 2 Types of Trade 1.Merchandise trade Primary goods.

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Presentation transcript:

Globalization & Economics

What is Economic Globalization? Interrelations Capital & technology  trade 2 Types of Trade 1.Merchandise trade Primary goods Manufactured goods 2.Service trade ¤

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

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

IGOs Global Institutions IMF Monetary system Structural adjustment programs (SAPs) 1 st time Mexico (1982) IBRD  WB Development GATT  WTO Trade system Free trade Regional IGOs Differ from RTAs ¤

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

Discussion Questions 1.How did trade and finance help to globalize the economic system? What criticisms are lodged against globalizing trade and finance? 2.How did MNCs help to globalize the economic system? What criticisms are lodged against MNCs? 3.How did/ do IGOs and RTAs help to globalize the economic system? What benefits do RTAs offer? What criticisms are lodged against globalizing IGOs and relying on RTAs?

How did trade and finance help to globalize the economic system? Seek single global market Int’l organizations- IGOs Regional IGOs Free trade agreements RTAs Desire financial mobility Deregulation Tariffs Privatization Foreign direct investment Technology Moving money ¤

What criticisms…against trade and finance? Global financial crisis  Global economic crisis Trade Concentrates wealth Lacks global standards Labor Environment Finance High risk transactions ‘Hedge funds’ Collateralized debt obligations More volatile GS ¤

How did MNCs help to globalize the economic system? MNCs have $$$ = power GN dominated Mobility Influence jobs, development Challenge state policies Influence/ challenge norms Transparency Business practices Cultural norms, values ¤

What criticisms are lodged against MNCs? Profit-driven ‘Race to the bottom’ Exploitative of people, environment Concentrate wealth ¤

How did/ do IGOs and RTAs help to globalize the economic system? 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 ¤

What benefits do RTAs offer? 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 ¤

What criticisms are lodged against globalizing IGOs and relying on RTAs? GN domination – esp. U.S. Conditions on loans (SAPs) Undermine social development with cuts Force to open economy Neocolonialism Develop ‘debtor’ countries Perpetuate GN/GS disparities ¤

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 ¤