AP CoGo Unit 5

Economic Globalization

Economic networks that are growing more interconnected (ex. worldwide markets)

International Monetary Fund (IMF) —189 members (all core)

works to foster global monetary cooperation and stability of international money system

World Bank —189 members (all core)

Provides financial and technological assistance for developing countries to reduce poverty and help economic development

World Trade Organization (WTO) —164 member (all core but Iran)

Helps develop trade rules between nations ensuring that trade flows smooth and free

Why join International Economic Orgs?

To increase trade (Russia & China in WTO), to be accepting into the International Community (Russia in WTO), to gain easier access to markets (all in WTO), to grow economically (Mexico in IMF, China in WTO)

How does membership in Economic Orgs influence policies?

Promotes economic liberalization policies, requires policy changes to be admitted (WTO for China & Russia), requires policy changes to receive financial aid (WB for Nigeria, IMF for Russia & Mexico)

Multinational Corporation (MNCs)

A corporation that has facilities and assets in at least one country other than it;s home country, increasingly dominate global markets

What MNCs do

Make conflicts over labor, pay, taxation, land rights, and environmental damage

Neoliberalism

Seeks to transfer the control of economics to private sector and reduce government involvement

What Neoliberalism does

Provokes protests, demands, arrests, and empowerment onto groups

China Policies Over Private Ownership

Special economic zones (SEZs) along Chinese coast

Mexico Policies Over Private Ownership

Privatization and increased competition in Mexico’s oil industry (PEMEX)

Nigeria Policies Over Private Ownership

State owned petroleum (NNPC) collaborating with foreign companies

Russia Policies Over Private Ownership

Renationalization of oil and natural gas industries and foreign investments limits

Privatization

Government owned industry transferred to private owned industry

Nationalization

Private ownership industry transferred to government owned industry

Reasons Governments respond to Global Market Forces

To improve domestic economic conditions, to respond to domestic demands, to control or influence domestic political debates, extend national influence

How Globalization challenges sovereignty

Foreign direction investment (Nigeria is dependent on oil investors), cultural influences provoke backlash (China has led to judicial reform), can cause environmental problems (China had pollution issues), economic pressure (Iran’s Uranium enrichment solutions)

Domestic Reforms

China’s economic and anti corruption reforms, Nigeria’s corruption in oil industry reforms

Control Domestic Policy Debates

UK leaving the EU, Iran’s response to protests

Extend Influence to deflect critics and improve conditions

Russia’s efforts to maintain relationships and influence with former Soviet states, Mexico’s participation in NAFTA

Economic Liberalization

When a government embraces a free market and elimates things like subsiding and tariffs, also opens the economy to foreign direct investment

Goals of Economic Liberalization Policies

Rising unemployment, reduced productivity, trade deficits, decreasing demand for raw materials

How we can measure success of Economic Liberalization Policies

GDP, Economic Growth Rate, HDI, GINI Index, CPI, etc

Neoliberal Economic Policies

Removal of Barrie’s and restrictions on what internal/external economic actors can do

Consequences of Neoliberal Economic Policies

Reduction in inflation, increase in wealth, political corruption, pollution, regional migration

MNCs

McDonalds, Starbucks, Apple, Coca-Cola, Samsung, Toyota, Google, Microsoft, Nestle, Amazon

Pros of Globalization

Shared ideas, more evolution, greater access to goods, economic growth, access to new markets, outsourcing

Cons of Globalization

Less individualism, unequal economic growth, loss of cultural identity, labor extension, bad for climate, job displacement

International Organization

Organization joined by member states with a common interest, it has rules and guidelines they must follow

Supranational Organization

Organization which member states give the governing organization sovereignty over policies

Import Substitution Industrialization Policies

Low rates help domestic economy

Iran Social Policies

Little women rights but they can vote and run in Marlies (heavily vetted), education rights have greatly expanded, women have to sit in segregated seats at sporting events

Mexico Social Policies

Gender quota law

Nigeria Social Policies

Unequal access for education for women in north compared to the south

Social Welfare Policies

Programs and services designed to improve the lives of citizens (ex. Public housing)

UK Welfare Policies

National Health Service, Public Housing, Education, programs for elders

Iran Welfare Policies

Poorly run—>NGOs are a big help because3 they actually help the less forunate

Industrialism

Increase in industry and manufacturing in an economy where industry is more dominant in an economy than agriculture

Environmentalism

Movement of rescuing, protecting, and preserving the environment

Austerity

Governments making budget cuts to programs or raising taxes to balance it’s budget and decrease debt

Governments Ignore Environment

For profit and economic success and corruption

How Governments Address Environment Issues

Protests, more people need health care, pressure from the international community (all have air pollution)

Solutions to Environmental Issues

Moving factories, protecting green energy, increase development of infrastructure and environmental regulations

Trade Liberalization

When a government reduces rules and regulations on foreign trade (making trade free from barriers like tariffs)

Affects of Trade Liberalization

Increase global trade, influences exchange rate, less government spending

What causes demographic changes

Growing/decreasing populations, changing land use, changing valves, changing opportunites

China Demographic Change

Rapid economic change which has caused people to want to move to cities for better jobs, urban benefits have more opportunities. Have a Hukou system which restricts where people can live.

Mexico Demographic Change

Fast economic change caused people to go to Mexico City and the northern states which have a major factory called Maquiladora Zones, also free trade with NAFTA has opened more opportunities

Migration

Movement of citizens within a country to resettle

Emigration

Citizens leaving their home country to live in another

Immigration

Citizens moving to a foreign country to live

Diaspora

When a group of people disperse in mass from their original homeland

Brain Drain

When the best and brightest emigrate from their homeland for political and economic reasons

Causes of Emigration

Poor economy, lack of jobs, lack of educational opportunities, persecution, authoritarian government

Iran Emigration Issues

History of brain drain and people frustrated with corruption in government

Nigeria Emigration Issues

History of brain drain and corruption, fear of violence from Book Haram has lead to Nigerian Disapora

Why Immigrate to UK

Democracy, stability, job opportunities, public programs, multiculturalism

Consequences of migration patterns

Increases in crimes, imbalance and inequality, demands and competition for jobs and housing, can threaten legitimacy

State responses to demographic pressures

Population stresses and religious minorites

Countries that promote discrimination

China, Iran, and Russia

Countries that discourage discrimination

UK, Mexico, and Nigeria

Rentier State

Large percent of government revenue comes from exporting oil and natural gas from leasing the resource to foreign countries

Resource Curse

Lack of economic diversification, volatile industry, imbalance in society, lack of innovation, less accountability

Iran Resources

Lots of natural gas and oil —> uses MNCs from China for oil extraction, controlled by theocracy with Revolutionary Guard having some control

Nigeria Resources

Huge oil reserves —> massive corruption with MNCs like Shell Oil having huge influence in government; controlled by NNPC but works with MNCs

Russia Resources

Has lots of oil, natural gas, and coal —> lots of corruption —> under Putin it nationalized; government controlled

Mexico Resources

State controlled PEMEX with returned focus to nationalization

China Resources

Most controlled by communist government