SECTION 5 FLASHCARD TERMS FINAL

The resource curse

The difficulties faced by resource-rich developing countries, including dependence on exporting one or a few commodities whose prices fluctuate, as well as potentials for corruption and inequality

Paradox of the plenty

Countries with lots of natural resources should have good public service. However, they also often have fragile governments/ corruption. Foreign investment can leave the country/ citizens do not benefit

Economic "rent"

difference between the cost of production and the market value of the good

Political economy of rent seeking

people organise their behaviour/ activities where rent will be higher

Dutch disease

1960s Netherlands → booming resource sector, inflation/ currency appreciation, withering agricultural sector. Concentrated all investment on that 1 sector

Resource allocation effect

drawing resources out of less rent-filled sectors into the booming sector

Spending effect

people will spend on overseas goods bc/ the domestic currency is stronger, so domestic manufacturers suffer, exports decrease. Rent/prices increase

Total factor productivity

the ratio of total commodity output to total inputs used in production

Proximate drivers

cause close to locus of deforestation - e.g., guy with chainsaw

Underlying drivers

what triggers proximate drivers - e.g., roads, policies

Free trade area

least comprehensive agreement. Allows for tariff-free trade among member countries, leaving each country free to design own policies for non-member countries (e.g., NAFTA)

NAFTA

largest FTA. Governed by "national treatment".

National treatment

governments cannot discriminate on the basis of a firm's nationality

Customs union

FTA area where the member countries agree to establish a common trade policy with the rest of the world (e.g., Mercosur - Brazil, Argentina, Paraguay, Uruguay)

Common market

customs union with a free movement of labour and capital amongst members (e.g., EU)

Comprehensive Economic and Trade Agreement (CETA)

FTA between Canada and EU (since 2017) - 98% tariffs between Canada and EU to be eliminated.

Trans-pacific partnership (TPP)

FTA between 12 Pacific Rim countries (since 2016). Lower trade and investment barriers, dispute settlement mechanism, US withdraw with Trump

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

Canada + the 10 remaining TPP countries.

Regional Comprehensive Economic Partnership (RCEP)

since 2020, ASEAN + regional partners, world's largest FTA. China's influence!

Stock market (or exchange)

Where stocks (i.e. companies' shares) are sold and bought. Where share values are established.

Common stocks/ common shares

When you're purchasing these stocks, you get a say in how the company is run.

Bonds

A type of equity paid out at fixed interest rates.

Virtual trading floors

Electronic stock exchange, technically all the trading is occurring online.

Hyper-mobility of capital flows

Trading activity is always occurring across the world because of timezones.

Recession

2 consecutive quarters of economic decline/ no growth

"dialectical movement of globalisation"

opposite movements/ with a tension between them.

Glocalisation

local and global processes become interwoven

"Dialectical movement of globalisation"

Opposite movements/ with a tension between them.

Negative equity

mortgage value> home value

"locally-originate, locally-hold model"

Front end activities: Local home buyer goes to local bank and gets mortgage. Back end: Those funds were raised locally based on funds of all the customers

"Locally-originate, globally-distributed model"

Front end: Same as before. Back end: delocalised funding of mortgages; financial instruments have become more sophisticated, more complex, and more GLOBAL. Have mortgage backed security: repackaged mortgages from different banks, investors purchase, traded on markets.

Hyper-mobility of capital flows

Think of the 24-hour stock market clock - you have North American markets, when they close, the Asian ones open, etc. Think space-time compression

Valuation of nature

a price is set for units of a given natural material through market exchange (the laws of supply and demand)

Immediate purchases/ spot or cash trades

A type of commodity exchange where trades are made on the spot, and everyone agrees on an immediate price/ delivery

Future contracts

Deliveries at a guaranteed price in the future, standardised contracts between different parties.

Commodification of nature

harnessing and incorporation of nature for economic purposes

Actor-network theory

thinking about objects as part of social networks (endogenous v. exogenous)

2006-2007

Tipping point where over half of the world population lived in an urban area

Dialectical

Opposing forces

Degree of enmeshment

how linked cities are into the global economy - think: extensity, intensity, and velocity

GaWC

Globalisation and World Cities Research Network, Loughborough. Constructed a very detailed inventory of world cities using novel means to gather data/ measure the extent of networks linking different cities across the globe.

World cityness

global connectedness in terms of different types of corporate services

Prime/ Alpha

5+ firms, 3 points

Major/ Beta

3-4 firms, 2 points

Minor/ Gamma

1-2 firms, 1 point

Income inequality

Measures disparity between % of population and % of income received by that population. Inequality increases when the disparity increases.

Maximum inequality

one person holds all the income

Minimum inequality

All persons hold same % of income.

International inequality

Inequality between the mean incomes of nations

Global inequality

Inequality between individuals in the world regardless of their country (looks at the world as if it were 1 country)

"Inequality transition"

19th century boom (industrial revolution) led to increased inequality across nations (rich vs. poor countries). In the late 20th century, several emerging economies industrialised faster than rich countries.

Equalising force

Between-country inequality - China & India's rapid economic expansion

Disequalisaing force

Increased national inequality. Particularly for the urban/rural gap and in other advanced economies.

Rodrik's political trilemma

We cannot have all three with democracy, national sovereignty, and global integration.