Unit 5: Political and Economic Changes and Development

Economic globalization

includes economic networks that are growing more interconnected, a worldwide market with actors unconstrained by political borders and a reduction in state control over economies* 

Multinational corporations (MNCs)

businesses with a significant presence in countries in different regions of the world world. MNCs increasingly dominate global markets and pose challenges to, and sometimes conflict with, domestic economic policies regarding labor, the environment, land rights, taxation, and the budget* 

Special economic zones

areas in China (particularly along China’s east coast) designated by the government as regions where private businesses could attract foreign direct investment 

Privatization

government-owned industries to businesses run with free-market forces that are owned and operated by private investors 

Nationalization

government-owned industries run without free-market forces 

Foreign direct investment

money invested in private businesses by individuals or a corporation outside of the a country that can challenge a government’s foundational economic and political ideas and principles. 

International organizations

organizations joined by member states with a common interest, such as the 

International Monetary Fund (IMF), the World Bank, and the United Nations. 

International Monetary Fund (IMF)

exerts significant influence through preconditions for financial assistance; countries that receive IMF assistance often must agree to structural adjustment programs requiring privatization of state-owned companies, reduced tariffs, and reduced governmental subsidies for domestic industries.

Supranational organizations

organizations in which member states grant the governing organization sovereignty over policies typically related to trade, such as the Economic Community of West African States (ECOWAS), the European Union (EU) and the World Trade Organization (WTO).

Structural adjustment programs

neoliberal reforms often required by international organizations granting emergency loans to countries that require privatization of state-owned companies, reduced tariffs, and reduced governmental 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 behaviors.

Import substitution industrialization (ISI)

policies aimed at reducing foreign dependency by raising tariffs and 

encouraging local production of industrialized products.

Austerity measures

funding cuts to state programs and tax increases intended to decrease budget deficits and national debt; often required for IMF emergency loans

Gender equity

civil rights ideal for women to be protected with equal treatment and to secure equal power as men in governing a country 

Maquiladora zones

areas of Mexico’s manufacturing industry primarily located in northern Mexico; factories established to assemble parts imported from the United States for assembly in Mexico were made more possible due to NAFTA. Contributed to more significant economic development in the north than in the south, and other regional disparities. 

Rentier states

countries that obtain a sizable percentage of total government revenue from the export of oil and gas or from leasing the resource to foreign countries, and have been able to raise standards of living and fund governmental programs based on their vast reserves.

Economic diversification

when a country can obtain an economic balance between agriculture, manufacturing, and service without over-dependence on one commodity or financial sector.