The Contemporary World Midterm

Global Economy

Referring to the global economic system which includes all economic activities which are conducted both within and between nations, including production, consumption, economic management, work in general, exchange of financial values and trade of goods and services.

Why do nations trade?

First, countries trade because they are different from each other.

Second, countries trade to achieve economies of scale in production.

History of Global Market Integration

Before the rise of modern economy, people only produced for their family. Nowadays, economy demands the different sectors to work together in order to produce, distribute, and exchange products and services.

International Financial Institutions (IFI’s)

Are financial institutions that have been established by more than one country, and hence are subjects for international law.

International Financial Institutions focuses on two broad areas:

• The international financial system’s policy framework, function and stability

• Economic development

Many of the funds used by the banks are borrowed in international capital
markets

Different International Financial Institutions

❑ African Development Bank
❑ Asian Development Bank
❑ Caribbean Development Bank
❑ European Bank for Reconstruction &
Development
❑ Inter-American Development Bank
❑ World Bank

IMF Year Started

1944 at the Bretton Woods Conference

History of IMF

IMF is an organization of 186 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
• Creates structural adjustment programs (SAP) in less developed nations across the globe.

World Bank

is an international financial institution that provides loans and grants to the government of poorer countries.
➢ Founded in 1944
➢ Consists of 189 member countries

World Bank Functions

➢ promotes long-term economic development and poverty reduction
➢ provides technical and financial support to help countries reform certain sectors
➢ implements specific projects—such as building schools and health centers, providing water and electricity, fighting disease, and protecting the environment.

The World Trade Organization (WTO)

Is the only global international organization dealing with the rules of trade between nations.
• Established on January 1, 1995 and is headquartered in Geneva, Switzerland
• It is made up of 153 countries.

WTO Functions

❑ Administering WTO trade agreements Forum for trade negotiations
❑ Handling trade disputes
❑ Monitoring national trade policies Technical assistance and training for developing countries
❑ Cooperation with other international organizations

TRADE POLICY DEVELOPMENTS

PHILIPPINES:
❑ Continues to hold with importance its membership in the WTO and recognizes the value of the WTO’s achievements in fostering a competitive environment.
❑ With its membership in 1955, the Philippines made substantial commitments on market access and plans to seek technical assistance programs from its donor agencies and bilateral partners to assist in the compliance of Trade Facilitation commitments.

Historical Overview of IFI’s

Bretton Woods System
▪ Inaugurated in 1944 to prevent the catastrophes of the early decades of the century from reoccurring and affecting international ties.
▪ Created two financial institutions:
✓ International Bank for Reconstruction and Development (IBRD or World Bank)
✓ International Monetary Fund (IMF)

General Agreement on Tariffs and Trade (GATT)

✓ is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.
✓ Signed on Oct. 30, 1947
✓ signed by 23 founding members; Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, China, Cuba, Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, United Kingdom and the United States.

The Asian Development Bank (ADB)

➢ is a multilateral development bank dedicated to reducing poverty in the Asia-Pacific region by means of sustainable economic growth, social development and good governance.
➢ Established in 1966
➢ Owned by 67 member countries, mostly from the region.
➢ The ___ main financial instruments are loans, technical assistance and grants. Most lending is in the public sector, primarily for large infrastructure projects.

African Development Bank (Banque Africaine de Développement)

➢ is a multilateral development finance institution headquartered in Abidjan, Ivory Coast, since September 2014.
➢ Founded in 1964
➢ Consists of 81 countries
➢ The___ is a financial provider to African governments and private companies investing in the regional member countries (RMC).

African Development Bank (Banque Africaine de Développement) Mission

❑To fight poverty
❑To improve the living conditions on thecontinent through promoting theinvestment of public and private capital in projects and programs that are likely to contribute to the economic and socialdevelopment of the region.

African Development Bank (Banque Africaine de Développement) Functions

❑ To make loans and equity investments for the socio-economic advancement of the RMC.
❑ To provide technical assistance for development projects and programs.
❑ To promote investment of public and private capital for development.
❑ To assist in organizing the development policies of RMCs.

Region

“a group of countries located in the same geographically specified area” or are “an amalgamation of two regions [or] a combination of more than two regions” organized to regulate and “oversee flows and policy choices.”

Regionalization

regional concentration of economic flows

Regionalism

a political process characterized by economic policy cooperation and coordination among countries.

Countries respond economically and politically to globalization in various ways

Some are large enough and have a lot of resources to dictate how they participate in processes of global integration. Ex. China

Other countries make up for their small size by taking advantage of their lack of resources by turning themselves into financial and banking hubs. Ex. Singapore and Switzerland

Regional Alliance

In most cases, countries form a ____ ____ for – as the saying goes – there is strength in numbers

NATO (North Atlantic Treaty Organization)

Military defense, several Western countries plus the United States agreed to protect Europe against the threat of the Soviet Union.

WARSAW PACT

Military Defense consisting of the Eastern European countries under Soviet domination.

OPEC (Organization of the Petroleum Exporting Countries)

Countries also form regional organizations to pool their resources, get better returns for their export, as well as expand their leverage against trading partners.

Non –Aligned Movement (NAM)

Was created in 1961. Countries that form regional blocs to protect their independence from the pressures of superpower politics.

ASEAN

Economic crisis compels countries to come together.

Countries in Asean

Thailand, Vietnam, Cambodia, Singapore, Laos, Indonesia, Myanmar, Malaysia, Brunei, Philippines, Timor-Leste (unofficial).

Non-State Regionalism

Tiny associations that include no more than a few actors and focus on a single issue, or huge continental unions that address a multitude of common problems from territorial defense security.

New regionalism

identified with reformists who share the same “ values, norms, institutions and system that exist outside of the traditional, established mainstream institutions and systems.

Other Regional Organizations dedicate themselves to specialized causes

• Rainforest Foundation
• Regional Interfaith Youth Networks
• Migrant Forum in Asia

Rainforest Foundation

To protect indigenous peoples and the rainforests in Brazil, Guyana, Panama and Peru.

Regional Interfaith Youth Networks

Aims to promote “conflict prevention, resolution, peace education, and sustainable development.

Migrant Forum in Asia

Aims to protect and promote the rights and welfare of migrant workers.

Contemporary Challenges to Regionalism

• Resurgence of militant nationalism and populism
➢Relationship of US with NATO
• UK voting to leave the EU in a move the media has termed the “Brexit”
• ASEAN member countries to disagree over the extent to which member countries should sacrifice their sovereignty for the sake of regional stability.

Differing visions of what regionalism should be for: Western governments

▪ economic formations
▪ political democratizations.

Differing visions of what regionalism should be for: Non-western and developing societies

▪ Globalization
▪ Development
▪ democracy

Internationalization

explores the deepening of interactions between states

Globalization

stresses the concept of worldwide flow of economy, ideas, technology, culture, etc

1st Attribute of World Politics

There are countries or states that are independent and govern themselves

2nd Attribute of World Politics

These countries interact with each other through diplomacy.

3rd Attribute of World Politics

There are international organizations like the United Nations (UN), that facilitate these interactions.

4th Attribute of World Politics

Beyond simply facilitating meetings between states, international organizations also take on lives of their own.

State

An institution that creates warfare and sets economic policies for a country. In layman’s terms, refers to a country and its government.

1st Attribute of State

A state exercises authority over a specific population

2nd Attribute of State

Governs a specific territory

3rd Attribute of State

Has a structure of government that crafts various rules that people (society) follow

4th Attribute of State

Has sovereignty over its territory

Nation

Is an “imagined community” – Benedict Anderson
It is limited because it does not go beyond a given “official boundary”, and because rights and responsibilities are mainly the privilege and concern of the citizens of that nation. The nation has its boundaries

Nation-state is composed of two non-
interchangeable terms.

“Not all states are nations and not all nation are states.”

“If there are states with multiple nations, there are also single nations with multiple states.”

The Relevance of State amid Globalization

● Nation-states continue to be the major players on the global stage (Gilpin, 2001).
● They retain at least some power in the face of globalization
● The role of the state is enduring – and even increasing – in advanced industrial societies.

Institutions that Govern International Relations

● United Nations
● International Court of Justice (ICJ)
● NAFTA
● NATO

Power of International Organizations

● have the power of classification
● Have the power to fix meanings
● Have the power to diffuse norms

International Organizations can be a sources of

Great good and great harm because of its immense powers

UNITED NATIONS

Is one of the leading political organizations in the world where nation-states meet and deliberate. Its operations began on October 24, 1945. Started with 50 representatives from different countries.

Functions of UN

❖ Military issues
❖ Economic issues
❖ Environmental issues
❖ Human protection

Active Organs of UN

● The General Assembly
● Security Council
● Economic and Social Council
● Trusteeship Council
● International Court of Justice
● Secretariat

GENERAL ASSEMBLY

Is the main deliberative, policymaking and representative organ of the UN.

Carlos P. Romulo

He was elected as the GA President from 1949-1950.

Security Council

has primary responsibility, under the UN Charter, for the maintenance of international peace and security.

5 Permanent Members of Security Council

China, France, Russian Federation, the United Kingdom, and the United States.

10 Non-permanent Members of Security Council

Elected for two-year terms by the General Assembly (with end of term year):

● Belgium (2020)
● Dominican
Republic (2020)
● Estonia (2021)
● Germany (2020)
● Indonesia (2020)
● Niger (2021)
● Saint Vincent and the
Grenadines (2021)
● South Africa (2020)
● Tunisia (2021)
● Viet Nam (2021)

Economic and Social Council

is the principal body for coordination, policy review, policy dialogue and recommendations on economic, social and environmental issues, as well as implementation of internationally agreed development goals.
● Has 54 members elected for three-year terms.

Trusteeship Council

was established in 1945 by the UN Charter, under Chapter XIII, to provide international supervision for 11 Trust Territories that had been placed under the administration of seven Member States, and ensure that adequate steps were taken to prepare the Territories for self-government and independence.

11 Trust Territories

● Western Samoa
● Tanganyika
● Rwanda-Urundi
● Cameroons under British administration
● Cameroons under French administration
● Togoland under British administration
● Togoland under French administration
● New Guinea
● Nauru
● Strategic Trust Territory/Trust territory of the Pacific Islands
● Italian Somaliland

International Court of Justice

● is the principal judicial organ of the United Nations.
● Its seat is at the Peace Palace in the Hague (Netherlands)
● to settle, in accordance with international law, legal disputes submitted to it by States and to give advisory opinions on legal questions referred to it by authorized United Nations organs and specialized agencies.

Secretariat

comprises the Secretary-General and tens of thousands of international UN staff members who carry out the day-to day work of the UN as mandated by the General Assembly and the Organization's other principal organs.

Globalization

The emergence of a complex web of interconnectedness that means that our lives are increasingly shaped by events that occur, and decisions that are made at a great distance from us

Expansion

refers to "both the creation of new social networks and the multiplication of existing connections that cut across traditional political, economic, cultural, and geographic boundaries.

Intensification

Refers to the expansion, stretching, and acceleration of these networks.
For example, there has always been a strong financial market connecting London and New York.

Aspects of Globalization

Trade and Transactions

Capital and Investment Movements

Migration and Movement of People

Dissemination of Knowledge

Identified the Aspects of Globalization

International Monetary Fund (IMF) 2000

Types of Globalization

Economic Globalization

Political Globalization

Cultural Globalization

Technological Globalization

Economic Globalization

Is characterized by increasing integration of economies around the world through the movement of goods, services, and capital across borders.

Political Globalization

Refers to the intensification and expansion of political interrelations across the globe.

4 Key Attributes of World Politics

1.There are countries or states that are independent and govern themselves
2. These countries interact with each other through diplomacy
3. There are international organizations, like the United Nations (UN) that facilitate these interactions
4. Beyond simply facilitating meetings between states, international organizations also take on lives of their own.

Cultural Globalization

Refers to the rapid movement of ideas, attitudes, meanings, values and cultural products across national borders.

Technological Globalization

Refers to the spread of technology across border.