C1 Relative influence of Actors on Economy

What can states do

• trade regulation

  • restrict imports through tariffs, NTBs

  • promote exports through tapping into global markets

• FDI strategies

  • states attract inward investment by TNCs (through tax incentives, workforce characteristics etc)

• Industry strategies

  • implement policies to stimulate certain areas of economic activity, eg knowledge clusters like silicon valley

• labour market strategies

  • states make labour markets more flexible to better meet the needs of TNCs through skill development, workfare culture

types of states + degree of influence

• authoritarian: very high influence over economy (china russia)

• developmental: high influence, state involved in economic activities of state by creating comparative advantages and influencing labour characteristics (most NIEs)

• welfare: moderate influence, where labour unions play a more direct role in corporate governance (most EU countries)

• neo-liberal states: minimal influence, main role is establishing market rules via legislation and enforcing them through regulatory capacity (most white ahh countries)

what can labour do

location specific factor or production that influence TNC’s locational decisions through

• knowledge and skills (the more the better)

• wage costs (the lower the better)

• labour productivity (the more the better)

• labour controllability (the quieter the better)

what can labour unions do

• influence TNCs via negotiating issues to ensure worker’s fair treatment, engage in protests boycotts and strikes

• influence states by influencing union members to vote for certain political leaders, organise strikes that impose stress on state, engage in lobbying to influence authorities to change policies etc

• HOWEVER if tnc dont like can js leave

what can multilateral institutions do

achieve collective objectives that otherwise cannot be achieved individually

ASEAN (association of southeast asian nations)

• ASEAN FTA

  • creates a larger market for ASEAN members to expand trade opps with each other, can help attract more FDI internationally as a whole

• Challenges

  • ASEAN’s principle of consensus based decision making can slow down progress

  • substantial NTBs still present

  • no strong legal support for growth of TNCs

  • domestic opposition, need regional cooperation

case study: automobile industry ASEAN has one of the top

WTO world trade organisation

• main role is to promote trade openness through negotiation and a platform for trade disputes to be managed

• through Multilateral Trade Agreements

  • Uruguay Round 1986-1994

  • Doha Round 2001

• Criticisms

  • WTO favour CHLDs as their policies are unfair to CLLDs

  • differing interests of CHLDs (equality) and CLLDs (equity)

  • increased uneven development (diff countries benefit from free trade)

  • free VS fair trade (even if free trade, CLLDs suffer from exploitation of their natural resources)

world bank

• main role is to provide money through loans to member states, provide expertise and financial help to CLLDs

• through Initiatives such as

  • heavily indebted poor countries (HIPC) initiative — provided crucial finance to low and middle income countries, keep their economies afloat and improve on infrastructure

  • cash transfers programme (CCT) — where millions of cash is invested into children’s education and health

• criticisms

  • underrepresentation of CLLDs, play little role in decision making processes and WB imposes strict conditions on loans

  • humans rights abuse and lack of sustainability, funds projects that have been found to violate human rights / given to governments that end up mismanaging them

  • favouring CHLDs, CLLDs have to comply with strict rules that mainly benefit CHLDs in order to get help from WB