Regional Integration Free trade area – free trade within Customs union – free trade within + common external tariff Common market – customs union + free exchange of labor and capital Economic Union – Common market + common economic policies Economic Integration – Economic Union + common social policies and a supranational authority

Economic groupings

WTO Developed from GATT (General Agreement on Tariffs and Trade) –post WWII –Facilitate economic recovery through trade –Reduce tariffs, restrictions and subsidies –Fundamental principal – non-discrimination WTO evolved from GATT in 1994 –Primary change – enforcement –Mission: “to ensure that trade flows as smoothly, predictably and freely as possible"

WTO principles Nondiscrimination –Most-favored Nation –National Treatment Transparency

Advantages Important role in ensuring world peace Reduces rich country/poor country inequalities Gives poor countries a voice Makes goods and services cheaper and increases consumer choice Promotes trade that also raises incomes Stimulates trade to increase jobs Promotes good government

Critiques The WTO is undemocratic, and does not decrease conflict Big countries are bullies Fair trade lowers income for the poor Free trade causes unemployment when imports threaten jobs WTO focuses exclusively on trade – what about i) environment, ii) labor standards, iii) total employment

Structural Adjustment Programs Policies imposed by the IMG and WB as conditions for receiving loans The goal is to balance a nations books, through economic growth, income generation, balancing trade deficits and debt repayment. Conditions include privatization, regulation, reduction of trade barriers

Grameen Bank Micro-credit – extension of loans to entrepreneurs to small to qualify for traditional bank loans Prof. Yunus, Winner of 2006 Nobel Peace Prize problem not just lack of money, but lack of capital. Grameen means “village” Grameen bank target bottom 25% of the population Principal: turn social collateral/mutual insurance into capital

How it works Small loans: primarily to women Must have existing business, not farms Loan must capitalize that business Weekly payments and savings are required Money is loaned to a credit group, not to the individual Joint liability: The entire group is responsible for repayment Monitoring happens through peers and center staff

What activities? Weaving Goat fattening Handicrafts Cellular phones

Advantages Provides capital, freedom from usury Empowers women and the poor Encourages self-help and savings Reduces fertility Contributes to group solidarity

Disadvantages High interest rates: 20%, can be compounded to over 70%/year –Some communities may be in a debt trap Real winners are the corporations that sell goods to the borrowers Grameen is not transparent, but it is believed that it receives large subsidies, nor does it pay taxes –it is a form a social welfare, not a bank