Unit 5 AP Comparative: Political and Economic Changes and Development

Economic Globalization

economic networks that are growing more interconnected

International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO)

State membership in these organizations has promoted economic liberalization

economic liberalization

the process of limiting the power of the state over private property and market forces

Impact of economic liberalization: China and Nigeria

recent studies have said that they expect children in their countries to be better off than their parents.

Impact of economic liberalization: Mexico

the number of people in the middle class has grown.

Challenges of Multinational corporations (MNCs)

dominate global markets and pose challenges to and sometimes conflict with, domestic economic policies

Neoliberalism

A strategy for economic development that calls for free markets, balanced budgets, privatization, free trade, and minimal government intervention in the economy.

Globalization and neoliberalism effects

Increased demands being placed on governments by groups including protests

Globalization and neoliberalism social changes

nationalist and populist groups that blame the government for changes in culture

policies regarding private ownership of industry and capital: China

Special economic zones along the coast

policies regarding private ownership of industry and capital: Mexico

Privatization and increased competition in oil industry (Pemex)

policies regarding private ownership of industry and capital: Nigeria

state-owned Petroleum Corporation (NNPC) collaborating with foreign companies in joint ventures to extract and produce oil

policies regarding private ownership of industry and capital: Russia

re-nationalization of oil/natural gas industries and imposition of foreign investment limitations

control of natural resources:

United Kingdom allowing the most private control of and China allowing the least

globalization challenges to regime sovereignty: Foreign Direct Investment

from originating regimes can pose a challenge to a government's foundational economic and political ideas and principles.

globalization challenges to regime sovereignty: cultural influences

influences (often Western) that accompany investment and trade with a given regime can provoke a domestic backlash.

globalization challenges to regime sovereignty: increased economic development

can cause environmental degradation and accompanying health issues that alienate citizens.

globalization challenges to regime sovereignty: Foreign governments political and economic pressures

(treaty reversals, public condemnation at intergovernmental organizations like the United Nations, and economic sanctions sanctions) on countries whose actions (including human rights violations) offend them.

Economic liberalization

occurs when a state reduces its economic role and embraces free market mechanisms such as eliminating subsidies and tariffs, privatizing government-owned industries, and opening the economy to foreign direct investment.

economic liberalization policies' goals: domestic

remedying undesirable circumstances, such as rising unemployment and reduced productivity

economic liberalization policies' goals: foreign

remedying situations such as trade deficits with other states and decreasing demand for raw materials like petroleum, natural gas, and rare-earth metal.

Neoliberal economic policies

the removal of barriers and restrictions on what internal/external economic actors can do

Neoliberal economic policies: benefits

including reduction in inflation and increases in national income; economic freedom

Neoliberal economic policies: political harms

persistent political corruption, and the exacerbation of existing social tensions; poor infrastructure and a lack of government regulation

Neoliberal economic policies: economic harms

growing inequality in wealth distribution; uneven economic development;

Neoliberal economic policies: environmental harms

pollution; urban sprawl; increased consumption and use of automobiles and other engines using fossil fuels

Economic migration within countries: Mexico

people moving to the industrialized northern part of the country from the rural south seeking jobs

Economic migration within countries: China

people moving to the industrialized eastern/coastal part of the country from the rural western/interior seeking jobs

International Monetary Fund (IMF) and the World Bank

International organizations that exert great influence through structural adjustment preconditions for financial assistance

structural adjustment preconditions

privatization of state-owned companies, reduced tariffs, and reduced governmental subsidies of domestic industries.

Import Substitution Industrialization (ISI)

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

Examples of supranational organizations

Economic Community of West African States (ECOWAS), the European Union (EU),

and the World Trade Organization (WTO)

role of supranational organizations

have sovereign powers over the national governments that are member states and can apply pressure on policymakers to reduce tariffs and otherwise liberalize trade.

gender equity issues: Iran

rules with voting, the election of Majles, and appointment to cabinet positions; disputes about female access to certain university degree programs and attendance at and participation in sporting events

gender equity issues: Mexico

Varied abortion policies in Mexico's local and state governments; gender quotas in Mexico

gender equity issues: Nigeria

Unequal gender access to education in the north and south

Reasons governments implement social welfare policies

to reduce poverty, increase literacy, and improve public health, both to improve citizens' lives and to maintain or bolster political legitimacy.

Environmental solutions: industry

Physically moving factories, implementing green technologies with subsidies for industry compliance, and engaging in increased infrastructure development and environmental regulation

Environmental solutions: automobiles

Passing laws that require nationwide conversion to hybrid and battery-powered autos to address air pollution problems in major cities from auto and industrial emissions

Environmental solutions: health

Developing infrastructure and other mechanisms to respond to health crises related to systemic pollution

Trade liberalization: effects

the growth of domestic and foreign business, the amount of direct foreign investment, foreign exchange rates, population movement, and often the quality of the environment.

advantages and disadvantages of reducing tariffs

may lower consumer costs at the expense of domestic industry, while increasing them may protect domestic industry against foreign imports but at the expense of higher consumer prices.

austerity measures

Governments concerned with budget deficits resulting from world market fluctuations often must adopt these , which result in funding cuts to state programs.

causes of internal and external population movements

Growing populations, changing land use and values, and economic opportunities; Government policies and employment opportunities can draw workers to different geographic regions

population movements: China

migration from rural to urban areas and west to east (interior to coast); rising incomes allow them to pursue work and educational opportunities abroad.

population movements: Nigeria and Iran

Highly skilled or well-educated individuals have left to escape government policies or practices that are perceived as limiting, corrupt, or repressive.

population movements: Mexico

from southern to northern , and contributed to greater economic development in the north than in the south,as well as other regional disparities.

economic liberalization: Mexico

The North American Free Trade Agreement (NAFTA) and other economic liberalization policies (such as removing agricultural subsidies), maquiladora zones, and foreign direct investment

economic liberalization: China

shifting emphasis from agriculture to industry, the creation of special economic zones, the encouragement of foreign direct investment, and fewer government restrictions and regulations of the economy

population movements: United Kingdom

positive net migration of immigrants into the country has resulted in social and political tensions.

Maquiladora

in Mexico, a manufacturing plant owned by a foreign company; typically found in the northern part of the country

social consequences of shifting migration patterns

Increased crime stemming from higher population density; the concentration of highly skilled individuals in certain areas and their absence in other areas; increased use of existing infrastructure and housing and demands for new and expanded infrastructure and housing

political consequences of shifting migration patterns

The growth of new political parties that stand against immigration and supranational organizations that challenge the government's legitimacy

health care challenges: United Kingdom

demands to reduce the rising costs exacerbated by an aging population; a declining working-age population faced with increased tax burdens to fund the universal health care system.

states responses to demographic pressures

policies that influence citizen behavior, including policies encouraging or discouraging the birth of children or actions promoting or discouraging discrimination against religious minorities.

rentier state definition

country that obtains a sizable percentage of total government revenue from the export of oil and gas or from leasing the resource to foreign countries

rentier states: examples

Iran, Nigeria, and Russia

rentier states: advantages

able to raise standards of living and fund governmental programs based on their huge reserves.

rentier states: government disadvantages

Increased governmental corruption; a lack of governmental accountability to citizens when not relying on citizens for taxes; the absence of democracy

Resource Curse

the paradox that countries (particularly developing countries) with an abundance of resources (especially petroleum) tend to have lower economic growth and more unemployment than countries with fewer natural resources

rentier states: domestic economy disadvantages

Lack of economic diversification; Concentration of governmental resources on developing the one profitable export industry to the exclusion of other types of industries; the increasing disparity between rich and poor

rentier states: trade disadvantages

Severe revenue fluctuations based on world market pricing; the overvaluation of currency and trade imbalances; A lack of incentive to modernize the economy or cooperate with international judicial bodies

Countries that nationalize resources:

China, Iran, Mexico, Nigeria, and Russia

Reasons to nationalize resources

to provide government revenue, consolidate government control, and reduce political influence of foreign governments and multinational corporations (MNCs), all of which can reinforce political legitimacy.

Lack of control over resources: Mexico

government's decision to allow private investment in the state-owned oil company Pemex

Lack of control over resources: Nigeria

The political control exercised by foreign MNCs (multinational corporations) that underwrite the country's oil production

Impact of increased control over resources: Russia

wealth concentration in this country

Privatized ownership of natural resources

decreases government control, increases wealth inequality, and results in the potential loss of sovereignty.