Unit 5: Political and Economic Changes

Economic Globalization

economic networks that are growing more interconnected; worldwide market unconstrained by political borders; reduction in state control of economies

Multinational corporations (MNCs)

businesses with a large presence in different regions of the world; increasingly dominate global markets and challenge/conflict with domestic economic policy

Privatization

Transferring ownership of a business, enterprise, agency, public service or public property from the public to private sector

Nationalization

government takeover of private businesses

Foreign direct investment

money invested in private businesses by individuals or a corporation outside of the country; can challenge government's economic/political principles

Environmental degradation

environmental problems created by industrialization and other economic development

International organizations

organizations joined by member states with a common interest (eg. International Monetary Fund, World Bank, United Nations)

International Monetary Fund (IMF)

exerts influence through preconditions for financial assistance; countries often must agree to structural adjustment programs

Supranational Organization

Member states grant governing orgaganization sovereignty over policies like trade (eg. EU, WTO)

Structural adjustment programs

neoliberal reforms often required by international organization before granting emergency loans; for example: requiring privatization, reduced tariffs, and reduced gov't subsidies of domestic industries

Tariffs

taxes imposed by a government against imported goods

Subsidies

government funding made to support domestic industries against foreign competition or to shape economic behavior

Import substitution industrialization (ISI)

policies aimed at reducing foreign dependency by raising tariffs and encouraging local production of industrialized products

Austerity measures

gov't budget cuts or tax increases to decrease budget deficits and national debt; often required for IMF emergency loans

Gender equity

civil rights idea for women to be protected with equal treatment and to secure equal power as men

Maquiladora zones

areas of Norther Mexico's manufacturing industry; factories assemble parts from US for assembly (made possible from NAFTA); contributed to greater economic development in the north vs south

Rentier states

countries that obtain significant government revenue from oil and gas exports by leasing the resource to foreing countries; living standards raise and gov't programs have funding

Resource curse

countries that rely too heavily on the export of commodities face negative economic, political, and environment consequences

Economic diversification

when a country obtains economic balance between agriculture, manufacturing, and service without over-dependence on one commodity or sector