AP Comp Gov Unit 5

Globalization

Refers to the integration of economies, societies, and cultures across the world through the exchange of goods, services, ideas, and people. It is driven by advancements in technology, transportation, and communication.

Economic Liberalization

Refers to the process of removing government regulations and restrictions on economic activities, such as trade, investment, and production. It is aimed at promoting free market principles and increasing economic efficiency.

Globalization + Economic Liberalization

The two concepts are closely related, as globalization often requires economic liberalization to facilitate the flow of goods, services, and capital across borders.

Proponents of Globalization and Economic Liberalization argue…

Proponents of globalization and economic liberalization argue that they lead to increased economic growth, job creation, and higher standards of living. They also promote competition, innovation, and efficiency.

Critics of Globalization and Economic Liberalization argue…

Critics, however, argue that globalization and economic liberalization can lead to job losses, income inequality, and environmental degradation. They also argue that they can undermine national sovereignty and cultural diversity.

Conflicts of Globalization and Economic Liberalization - Job Losses

The removal of trade barriers has led to the outsourcing of jobs to countries with lower labor costs, resulting in job losses in developed countries.

Conflicts of Globalization and Economic Liberalization - Income Inequality

Globalization has led to the concentration of wealth in the hands of a few, leading to income inequality.

Conflicts of Globalization and Economic Liberalization - Environmental Degradation

The pursuit of economic growth has led to environmental degradation, including climate change, deforestation, and pollution.

Conflicts of Globalization and Economic Liberalization - Cultural Homogenization

Globalization has led to the spread of Western culture, resulting in the loss of cultural diversity.

Conflicts of Globalization and Economic Liberalization - Political Instability

Economic liberalization has led to the weakening of state control over the economy, resulting in political instability in some countries.

International Monetary Fund (IMF)

• Works to foster global monetary cooperation and the stability of the international monetary system

• 189 members (UK, Russia, China, Mexico, Nigeria, Iran)

The World Bank

• Provides a financial and technical assistance for developing countries to reduce poverty and support economic development

• 189 members (UK, Russia, China, Mexico, Nigeria, Iran)

The World Trade Organization (WTO)

• Helps develop rules of trade between nations with the goal of insuring that trade flows smoothly and freely

• 164 members (UK, Russia, China, Mexico, Nigeria)

Why do countries choose to join these international economic organizations?

• To increase access to global trade → WTO for Russia and China

• To be accepted into the international community → WTO for Russia

• To gain easier access to markets → WTO for all member countries

• To grow their economy/grow per capita GDP → IMF for Mexico and WTO for China

Multinational Corporations (MNCs)

• A corporation that has facilities and assets in at least one country other than its home country

• Increasingly dominate global markets

What challenges or conflicts do MNCs create for course countries?

• Conflict over labor and pay

• Challenges with environmental damage

• Conflict over land rights

• Conflict over taxation

Neoliberalism

Seeks to transfer the control of economic factors from the public sector to the private sector by reducing government involvement in the economy and promoting free-market capitalism

What conflicts does neoliberalism provoke within states?

• Increased demands on government by civil society groups

• Protests by students and disenfranchised groups

• Arrests of protestors and impositions of social media restrictions

• Empowerment of once-marginal nationalist and populist groups that blame the government for changes in culture and economic conditions

Global Market Forces

* This refer to the economic and financial factors that affect the world economy.
* The increasing globalization of the world economy has led to the emergence of global market forces.
* Political responses to global market forces refer to the actions taken by governments to regulate and manage the impact of these forces on their economies.

Types of Political Responses - Protectionism

This involves the use of trade barriers such as tariffs, quotas, and subsidies to protect domestic industries from foreign competition.

Types of Political Responses - Deregulation

This involves the removal of government regulations and restrictions on businesses to promote competition and efficiency.

Types of Political Responses - Fiscal Policy

This involves the use of government spending and taxation to influence the economy.

Types of Political Responses - Monetary Policy

This involves the use of interest rates and money supply to influence the economy.

Types of Political Responses - International Cooperation

This involves the collaboration between governments to manage the impact of global market forces on their economies.

Examples of Political Responses

• The United States' imposition of tariffs on Chinese goods to protect domestic industries.

• The European Union's regulations on data privacy to protect consumers and promote competition.

• Japan's monetary policy to stimulate economic growth.

• The G20's cooperation to manage the impact of the 2008 financial crisis.

Purpose of Government Response to Market Forces

• The government has a crucial role in regulating and responding to market forces to ensure that the economy functions efficiently and effectively.

• The main purpose of government response to market forces is to achieve economic stability and social welfare.

How the Government Can Respond to Market Forces

• Fiscal policy - the use of government spending and taxation to influence the economy. For example, during a recession, the government may increase spending to stimulate demand and boost economic growth.

• Monetary policy - the use of interest rates and money supply to influence the economy. For example, the central bank may lower interest rates to encourage borrowing and investment.

• Regulation - the use of laws and regulations to control market forces. For example, the government may regulate monopolies to prevent them from abusing their market power.

Handling of Market Forces - UK

Although the UK has a mixed economy, the private sector plays a vital role in the nation's economy. In contrast to other course countries, the UK is the country that most privatizes its national resources although there is a certain level of regulation.

Handling of Market Forces - China

In comparison to other nation, China is the country that least privatizes its natural resources. In China there are Special Economic Zones (SEZs) which are regions along its east coast that have a more "liberal" handling of the economy. That means that government regulations in those areas are looser because the government wants to promote growth there.

Handling of Market Forces - Mexico

Mexico's economy relies on its abundance of oil. One of the largest companies of the country is the oil company PEXEM, which stands for *Petróleos Mexicanos.* In recent years the government has made efforts to privatize sectors of the company to increase competition within the Mexican oil and natural gas market.

Handling of Market Forces - Nigeria

In the 1970s a great amount of oil was found in Nigeria leading to the creation of the Nigerian National Petroleum Corporation (NNPC). This is a state-owned company and it is crucial for Nigeria's economy. Although it is controlled by the government, the NNPC has engaged in joint activities with other nations to extract and produce oil. There is still space for the Nigerian government to fulfill its national goals, but contributing with other countries has also led to economic growth.

Handling of Market Forces - Russia

Under the government of Vladmir Putin there have been some instances of nationalization or re-nationalization. For instance, Yukos, an oil company, was integrated into the state-owned company Rosneft, after the company's founder was accused of fraud and corruption. Putin has also limited foreign direct investment in the country.

Handling of Market Forces - Iran

The lack of transparency of state-owned enterprises in Iran is detrimental to its economy. The country is still reliant on oil as its main economic activity, but it its trying to stray away from it. Nevertheless, its struggle to integrate in the International market after the imposition of sanctions only furthers its economic challenged.

Reasons that Governments Respond to Global Market Forces

• To improve domestic economic conditions

• To respond to domestic demands

• To control or influence domestic political debates in order to maintain or increase their own power

• To extend national influence regionally or internationally

How has the economic ideology of the Chinese Communist Party (CCP) changed since 1979?

• Expanding the socialist market economy

• Expanding privatization

• Expanding foreign direct investment

• Incorporating legal protections for private property

• Expanding global international influence

Why has the CCP changed its ideology?

• To maximize economic growth

• To reduce income inequality and poverty

• To balance economic development

• To deal with a slowing economy

• To ensure legitimacy of CCP

• To exercise greater international influence

• To reduce social unrest

How has the Mexican government responded to economic globalization?

• Participation in NAFTA (regional bilateral trade agreement)

• Liberalization of the economy

• Privatization of industries

• Legislation that is more friendly to foreign business

• Diversification of the economy

• Creation of maquiladoras and export promotion zones

How have Mexican citizens responded to economic globalization?

• Chiapas movement in southern Mexico

• Teacher protests in Oaxaca over PAN’s pro-business policy in 2006

• Election of pro-business party PAN in 2000 and 2006

• Creation of international unions

Economic Interdependence

Globalization has led to increased economic interdependence among nations. This has made it difficult for nation-states to control their economies and protect their domestic industries. The rise of multinational corporations has also made it difficult for governments to regulate their activities.

Loss of Control over Borders

Globalization has led to the free movement of goods, services, capital, and people across borders. This has made it difficult for nation-states to control their borders and regulate the flow of people and goods. This has led to concerns about national security and the ability of governments to protect their citizens.

Emergence of Global Governance

Globalization has led to the emergence of global governance institutions such as the World Trade Organization, International Monetary Fund, and World Bank. These institutions have the power to influence the policies of nation-states and limit their sovereignty.

Cultural Homogenization

Globalization has led to the spread of Western culture and values around the world. This has led to concerns about the loss of cultural diversity and the erosion of traditional values and beliefs.

Environmental Challenges

Globalization has led to increased environmental challenges such as climate change, deforestation, and pollution. These challenges require global cooperation and coordination, which can limit the sovereignty of nation-states.

Responses to Globalization Challenges - Government Policies

• Governments can respond to globalization challenges by implementing policies that protect their economies and citizens.

• For instance, they can impose tariffs and quotas on imported goods to protect local industries and jobs.

• They can also regulate the flow of capital and labor to prevent exploitation and ensure fair competition.

Responses to Globalization Challenges - International Cooperation

• Globalization challenges require international cooperation to address them effectively.

• Countries can work together to establish global standards and regulations that promote fair trade, protect the environment, and ensure social justice.

• International organizations such as the United Nations, World Trade Organization, and International Labor Organization play a crucial role in facilitating such cooperation.

Responses to Globalization Challenges - Corporate Responsibility

• Corporations can respond to globalization challenges by adopting responsible business practices that promote sustainable development and social responsibility.

• They can ensure that their operations do not harm the environment, respect human rights, and promote fair labor practices.

• They can also invest in local communities and support social development programs.

Responses to Globalization Challenges - Civil Society Activism

• Civil society organizations such as non-governmental organizations, labor unions, and consumer groups can respond to globalization challenges by advocating for social justice, environmental protection, and human rights.

• They can raise awareness about the negative impacts of globalization and pressure governments and corporations to adopt responsible policies and practices.

Responses to Globalization Challenges - Individual Actions

• Individuals can respond to globalization challenges by making conscious choices about their consumption patterns and lifestyles.

• They can support local businesses and products, reduce their carbon footprint, and promote social justice by supporting fair trade and ethical products.

Economic Liberalization

* This refers to the process of removing government regulations and restrictions on economic activities.
* It involves reducing the role of the state in the economy and allowing the market to operate freely.
* The main objective of economic liberalization is to promote economic growth, increase efficiency, and improve the standard of living.

Features of Economic Liberalization - Deregulation

The removal of government regulations and restrictions on economic activities.

Features of Economic Liberalization - Privatization

The transfer of ownership and control of state-owned enterprises to private individuals or companies.

Features of Economic Liberalization - Trade Liberalization

dThe removal of trade barriers such as tariffs, quotas, and other restrictions on imports and exports.

Features of Economic Liberalization - Fiscal Discipline

The reduction of government spending and the implementation of sound fiscal policies to control inflation and stabilize the economy.

Features of Economic Liberalization - Financial Liberalization

The removal of restrictions on the flow of capital and the liberalization of financial markets.

Advantages of Economic Liberalization - Increased Competition

Economic liberalization promotes competition, which leads to increased efficiency, innovation, and productivity.

Advantages of Economic Liberalization - Foreign Investment

Economic liberalization attracts foreign investment, which can help to finance economic growth and development.

Advantages of Economic Liberalization - Consumer Choice

Economic liberalization provides consumers with a wider range of goods and services to choose from, at lower prices.

Advantages of Economic Liberalization - Economic Growth

Economic liberalization can lead to increased economic growth, which can create jobs and improve the standard of living.

Disadvantages of Economic Liberalization - Inequality

Economic liberalization can lead to increased inequality, as some individuals and companies may benefit more than others.

Disadvantages of Economic Liberalization - Unemployment

Economic liberalization can lead to job losses in certain sectors, as companies may move production to countries with lower labor costs.

Disadvantages of Economic Liberalization - Environmental Degradation

Economic liberalization can lead to environmental degradation, as companies may prioritize profits over environmental concerns.

Disadvantages of Economic Liberalization - Economic Instability

Economic liberalization can lead to economic instability, as financial markets become more volatile and susceptible to crises.

Goals of Economic Liberalization

• To remedy undesirable economic circumstances → rising unemployment or reduced productivity

• To remedy undesirable external situations → Trade deficits (importing more than they’re exporting) or decreasing demand for raw materials like petroleum and natural gas

Neoliberal Economic Policies

Removal of barriers and restrictions on what internal and external actors can do

Consequences of Neoliberal Economic Policies

• Reduction in inflation

• Increase in national income

• Growing inequality in wealth distribution

• Political corruption (Nigeria)

• Environmental pollution (China)

• Urban sprawl

• Uneven economic development

• Poor infrastructure

• Regional migration (Mexico: South/North, and Rural/Urban; China: East/West and Rural/Urban)

International Organizations

These are created by multiple countries to promote cooperation and address global issues.

United Nations (UN)

The UN is an intergovernmental organization that was established in 1945 to promote international cooperation and prevent conflicts between countries. It has 193 member states and is headquartered in New York City.

World Trade Organization (WTO)

The WTO is an international organization that was established in 1995 to promote free trade and reduce barriers to international commerce. It has 164 member countries and is headquartered in Geneva, Switzerland.

International Monetary Fund (IMF)

The IMF is an international organization that was established in 1944 to promote international monetary cooperation and facilitate international trade. It has 190 member countries and is headquartered in Washington, D.C.

Supranational Organizations

These are created by multiple countries to delegate some of their sovereignty to a higher authority. These organizations have the power to make decisions that are binding on their member states.

European Union (EU)

The EU is a political and economic union of 27 member states located primarily in Europe. It was established in 1993 and has its own institutions and decision-making processes.

African Union (AU)

The AU is a continental union of 55 member states located in Africa. It was established in 2002 and has its own institutions and decision-making processes.

North Atlantic Treaty Organization (NATO)

NATO is a military alliance of 30 member countries located primarily in North America and Europe. It was established in 1949 to provide collective defense against potential security threats.

UKs Adaptation of Social Policies

• The UK has a welfare state system that provides social security to its citizens.

• The government provides benefits such as healthcare, education, and housing to those in need.

• The UK has adapted its social policies to address issues such as poverty, unemployment, and inequality.

• The government has implemented policies such as the National Living Wage and Universal Credit to support low-income families.

Russia’s Adaptation of Social Policies

• Russia has a social welfare system that provides benefits such as healthcare, education, and pensions to its citizens.

• The government has implemented policies to address issues such as poverty and unemployment.

• The government has also implemented policies to support families, such as the Maternity Capital program which provides financial support to families with children.

China’s Adaptation of Social Policies

• China has a social welfare system that provides benefits such as healthcare, education, and pensions to its citizens.

• The government has implemented policies to address issues such as poverty and inequality.

• The government has also implemented policies to support families, such as the Two-Child Policy which allows families to have two children instead of one.

Iran’s Adaptation of Social Policies

• Iran has a social welfare system that provides benefits such as healthcare, education, and pensions to its citizens.

• The government has implemented policies to address issues such as poverty and unemployment.

• The government has also implemented policies to support families, such as the Family Support Law which provides financial support to families with children.

Mexico’s Adaptation of Social Policies

• Mexico has a social welfare system that provides benefits such as healthcare, education, and pensions to its citizens.

• The government has implemented policies to address issues such as poverty and inequality.

• The government has also implemented policies to support families, such as the Prospera program which provides financial support to families in need.

Nigeria’s Adaptation of Social Policies

• Nigeria has a social welfare system that provides benefits such as healthcare, education, and pensions to its citizens.

• The government has implemented policies to address issues such as poverty and unemployment.

• The government has also implemented policies to support families, such as the Conditional Cash Transfer program which provides financial support to families in need.

What are Social Welfare Policies?

• Government policies that provide programs or services designed to improve the lives of citizens

• Many social welfare policies are focused on helping citizens who are at or below the poverty line

• Provide an economic and societal safety net for the public

• To provide programs, government revenue needs to be spend. Typically the more social welfare programs offered, the greater the tax burden

• Can help promote regime legitimacy to show government cares for citizens and provides them with necessary services

Social Welfare Examples

• Direct relief via cash payments

• Public schools and education programs to improve literacy and access

• Public health care and programs

• Public housing

• Food distribution

• Support for elderly

• Pension plans

Social Welfare Policies in the UK

National Health Service (NHS)

• Key part of social welfare system of the UK

• Great civic pride in the NHS

• Debate point between Conservative and Labour

Public Housing

• Increased urbanization has created more of a demand for public housing assistance

Education

• More emphasis on publicly funded schools in changing economy. Citizens used to not need as much school to get a union or manual labor job. As those jobs have dried up, more need to compete for 21st century jobs

Programs for Elderly

• Pensions programs for elderly and retirees are important because of the aging population of the UK

• Politicians who threaten to reduce these plans could face major loss of votes because of the large elderly and soon-to-be elderly population

Social Welfare Policies in Iran

Social welfare programs in Iran are poorly run and are very inefficient

• Iran does not tax its citizens very much because the massive oil revenues allow the government to operate its budget

• The oil revenue being connected to the government causes major corruption and contributes to the poor social services

• Fluctuating oil market can create inconsistent government revenue and prevent the government from providing high-level services

NGOs in Iran contribute to social welfare programs

• One common type are bonyads

• These are charitable organizations often designed to help the less fortune

• They receive oil money to carry out their services and are often sponsored by the most powerful families in Iran

• Lack of oversight has led to many bonyads being corrupt and not helping citizens as much as they could

Impact of Industrialization and Economic Development - Increased Productivity

Industrialization has led to increased productivity through the use of machinery and technology. This has allowed for the production of goods on a larger scale and at a faster rate.

Impact of Industrialization and Economic Development - Urbanization

Industrialization has led to the growth of cities as people moved from rural areas to urban centers in search of work. This has led to the development of new industries and the growth of service sectors.

Impact of Industrialization and Economic Development - Improved Living Standards

Economic development has led to improved living standards for many people around the world. This includes access to better healthcare, education, and housing.

Impact of Industrialization and Economic Development - Environmental Impact

Industrialization and economic development have also had a negative impact on the environment. This includes pollution, deforestation, and the depletion of natural resources.

Impact of Industrialization and Economic Development - Globalization

Economic development has led to increased globalization as countries trade goods and services with each other. This has led to increased competition and the growth of multinational corporations.

Impact of Industrialization and Economic Development - Inequality

Economic development has also led to increased inequality within and between countries. This includes income inequality, access to education and healthcare, and the concentration of wealth in the hands of a few.

Solutions to the Impacts of Industrialization - Implementing Sustainable Practices

One solution to the negative impacts of industrialization is to implement sustainable practices. This includes reducing waste, conserving energy, and using renewable resources. Companies can adopt sustainable practices by investing in green technologies, such as solar panels and wind turbines, and by implementing recycling programs.

Solutions to the Impacts of Industrialization - Regulating Industrial Activities

Governments can regulate industrial activities to ensure that companies are not harming the environment or human health. This can be done through laws and regulations that limit pollution and require companies to follow certain standards. Governments can also provide incentives for companies that adopt sustainable practices.

Solutions to the Impacts of Industrialization - Educating the Public

Educating the public about the impacts of industrialization can help to raise awareness and encourage people to take action. This can be done through public campaigns, school programs, and community events. By educating people about the importance of sustainability, we can create a culture of environmental responsibility.

Solutions to the Impacts of Industrialization - Investing in Research and Development

Investing in research and development can lead to new technologies and innovations that can help to mitigate the negative impacts of industrialization. This includes developing new materials that are more sustainable, creating new methods for reducing waste, and finding new ways to conserve energy.

Solutions to the Impacts of Industrialization - Encouraging Collaboration

Collaboration between governments, companies, and communities can help to address the negative impacts of industrialization. By working together, we can develop solutions that are effective and sustainable. This can include partnerships between companies and local communities, as well as collaborations between governments and non-governmental organizations.

Environmental Issues in China

Air pollution due to heavy use of coal, smog in cities, river system pollution, soil contamination

Environmental Issues in Iran

Air pollution, smog in Tehran, oil pollution in Persian Gulf

Environmental Issues in Mexico

Air pollution, smog in Mexico City, deforestation

Environmental Issues in Nigeria

Oil spills in Niger River Delta, deforestation, air pollution, lack of clean water

Environmental Issues in Russia

Air pollution, water pollution, nuclear waste

Environmental Issues in the UK

Air pollution, soil contamination, pollution to coastal waters and marine life