global systems and governance - global systems

what are global systems?

environmental, political, legal, economic, financial and cultural systems that help to make the world

what is the core periphery model?

concept of a developed core surrounded by an underdeveloped periphery

• area of high growth/former growth becomes known as the core and the neighbouring area to the periphery

what are examples of the periphery and the core?

• core = North America, Western Europe and Australasia

• periphery = Africa and South America

what is the core?

highly developed, centrally located as prosperous urban-industrial areas

what is the periphery?

distant location with poor access to prosperous markets

what are the unequal flows of people?

migration occurs from low income countries to high income countries .

due to there being more opportunity in high income countries (better employment, more freedom etc.) → the flow of people globally is unequal.

More people leave low income countries than enter low income countries. On the contrary, more people enter higher income countries than they leave.

what are some benefits of unequal flows of people?

• Important contribution to workforce in host country. For example, 44% of the cleaning workforce in London is made up of ethnic minorities.

• Strong geopolitical ties with the diaspora’s country origin. E.g. the friendship between UK and India

• Workers send remittances back to their home country, helping their home economy to grow. Over 2 million Indian migrants live in the United Arab Emirates (30% of population). An estimate of $15 billion is returned to India annually as remittances.

what are some issues with unequal flows of people?

• Host countries may become dependent on the migrant workers, and this causes issues if there is a change in circumstances. For example, the reliance on Polish migrants on UK potato farms has caused issues with potato crops in Jersey.

• Unequal flows can cause overpopulation - countries experiencing large flows of people believe they suffer due to pressure on services such as healthcare, and social tension with migrants ‘taking’ jobs

• UK entered a recession in 2009. Many building projects were cancelled , meaning migrants working in construction industries lost their jobs and stopped sending remittances home. Estonia’s economy shrank by 13%

• “Brain drain”. Over 1 million NHS workers are foreign, meaning skilled workers have left other countries for an HIC.

• As many migrants are more desperate for work than nationals, they may be vulnerable to exploitation, such as poor working conditions and low wages. In Qatar, an estimated 1,200 migrant workers have died while building for the upcoming 2022 World Cup.

why are there unequal flows of money?

the majority of money flows are into low income countries. Foreign Direct Investment, aid, remittances all flow into low income countries, whereas the flows of money into high income countries are majorly repatriation of profits/product sales.

• flows of money bring both benefits and issues.

what are the benefits of unequal flows of money?

• FDI can improve quality of life as it provides an income, usually an income that is higher than other employment in low income countries.

• Aid and remittances can also help to improve quality of life, such as rebuilding after a disaster. For example, $US11.28 million in foreign aid was given to Fiji after the devastating Cyclone Winston (2016), the majority of which has been invested into the Help for Homes scheme.

• To the country sending money, there are also benefits. Richer countries can take advantage of lower labour costs, maximising their profits.

what are the issues with unequal flows of money?

• Companies in low income countries operating from high income countries can create dependencies for workers → dependent on the higher wages, meaning they must subject themselves to dangerous situations. Sweatshops with dangerous working conditions and low wages are set up by large companies. For example, the collapse of a garment factory - Rana Plaza - in 2013, killed 1134 people. The factory was known to provide clothing for well known brands such as Primark, Matalan, and Walmart.

• Foreign Aid can cause issues, as it can reduce incentive for governments to help their own countries.

• Companies can pressure governments to alleviate taxes or relax social and environmental laws so that TNCs will invest.

• TNCs have been criticised for profiting too much. The flows of money may be larger to low income countries, but the amount of profit that stays in the country is very small.

why are there unequal flows of ideas?

High income countries usually dictate ideas of how countries should be run, and how trade should be carried out. This is mostly down to these countries having more money, thus more power over less developed countries.

what are the benefits of unequal flows of ideas?

• HICs have introduced ideas of deregulation to developing countries and NEEs. For example, the long-distance telephone market in Chile has been deregulated, which has cut telephone rates by 50%.

• Free-trade has increased globally due to deregulation, allowing global markets to thrive and decreasing the risk of conflicts.

• Countries with successful strategies can educate low income countries on how to create economic growth or remove social injustice.

what are the issues of unequal flows of ideas?

• Privatisation allows large companies who buy originally state-owned industries to grow. Profits are massively concentrated within these companies, rather than nationalised industries → means low income countries may not benefit from privatisation as it is not growing their economy but is instead funding the company.

• Low income countries may feel forced to keep up with ideas of the wealthier countries, even if the ideas are not the most beneficial to these countries. E.g. it is a massive disadvantage to a country’s economy if they do not join trade agreements etc.

• Deregulation may lead to more relaxed social and environmental laws in low income countries, causing social injustice and environmental damage without proper government regulation.

• Ideas of multiculturalism and interdependency may be disputed by some people. Some citizens see an interdependent country as a threat to their nation’s sovereignty.

why are there unequal flows in technology?

In the past, the majority of flows of technology were within HICs , as there was virtually no demand for technology in lower income countries → Now, HICs and companies wish to invest in lower income countries due to the benefits they bring. This type of technology does not flow from LICs to HICs because there are less companies based in LICs that wish to invest in HICs.

In contrast, although design and research occurs in HICs, a lot of consumer technology is manufactured in lower income countries, only to be distributed to HICs.

tech products are mainly manufactured in lower income countries, then sold to HICs. This is slowly changing though, with a higher demand for consumer technology in newly emerging economies, such as China.

The EU, for example, receives 10x the amount of electrical imports from China than it exports to China.

what are the benefits of unequal flows of technology?

• economies of LICs can develop through technology investments, opening up factories and increasing employment. This also strengthens trade deals between HICs and LICs, which allows HICs to benefit from the exports

• Companies benefit from products being produced overseas, meaning they can maximise profits.

• concentration of technology innovation in HICs has led to the development of beneficial technological advancements. This leads to consumers getting better products.

what are the issues with unequal flows of technology?

• LICs cannot afford to purchase technology that will advance their economy and improve quality of life, meaning HICs can rapidly develop while LICs are left behind.

• can be considered an injustice that the employees that manufacture and assemble consumer technology such as computers, phones, and household appliances receive so little compared with what they are sold for.Companies make a large majority of profits, whereas those who do a lot of the work are left with little income, as well as often poor working conditions. These countries rarely even have the benefits of the product they are creating - China is the largest producer of smartphones, yet only 55% of the population has a smartphone, compared to 77% of the USA.

• Companies investing technology into LICs means that HIC manufacturing jobs are often lost. This can leave many out of work due to job losses, and those with relevant training in manufacturing technology often have nowhere to go.

how is FDI an example of unequal flows of money?

• In 2022, developed countries like the United States attracted $379 billion in FDI, while least developed countries (LDCs) collectively received only $22 billion, highlighting the stark imbalance.

• Africa accounted for just 5.2% of global FDI inflows, despite being home to 17% of the world’s population.

how is debt servicing an example of unequal flows of money?

Many developing nations spend a significant portion of their GDP on debt repayment. For example:

• Sri Lanka defaulted on its external debt in 2022, with $7 billion due in repayments while struggling with severe economic crises.

• In 2023, Zambia owed over $18 billion in external debt, diverting funds from health and education services.

how is the north-south divide in trade an example of unequal flows of trade?

North-South Divide in Trade:

• Low-income countries primarily export raw materials (e.g., cocoa, coffee) with low added value, while high-income countries export manufactured goods with higher profits.

• For example:

  • Côte d’Ivoire, a major cocoa exporter, earned just $3.5 billion from cocoa in 2022, while chocolate manufacturers in Europe generated over $100 billion from the processed product.

• Sub-Saharan Africa accounts for just 2% of global trade, reflecting trade marginalization.

how is the brain drain an example of unequal flows of labour?

• Skilled labor migrates from developing to developed countries, depleting talent pools in poorer nations. For instance:

  • India saw 6.5 million professionals migrate between 2010 and 2021, primarily to the United States and Gulf states.

  • Sub-Saharan Africa loses approximately 20,000 healthcare workers annually to migration, exacerbating shortages in countries like Malawi and Nigeria.

how is labour exploitation an example of unequal flows of labour?

• In global supply chains, workers in low-income countries often earn low wages. For example:

  • Bangladesh garment workers earn an average of $96 per month, producing clothing for Western markets where items sell for significantly higher prices.

• Migrant workers in Gulf countries like Qatar, many from South Asia, face exploitative conditions, with some earning less than $300 per month despite long hours and hazardous work.

how does the imf promote growth?

• Financial Support: The IMF provides financial assistance to countries facing balance-of-payments problems, enabling them to stabilize their economies and lay a foundation for growth.

• Policy Advice: The IMF advises on economic reforms aimed at creating an environment conducive to sustainable growth, such as tax reforms, improved governance, and investment in infrastructure.

however,

• Austerity Measures: IMF programs often include conditions like spending cuts and tax increases, which can suppress short-term economic growth and exacerbate unemployment and inequality.

• Growth Divergence: IMF-supported reforms sometimes prioritize macroeconomic stability over pro-growth policies, slowing recovery and long-term growth prospects.

to what extent does the IMF ensure stability?

• Crisis Management: It acts as a lender of last resort during crises, providing liquidity to stabilize financial systems and prevent contagion to other economies.

• Policy Coordination: The IMF facilitates cooperation among member countries to address global challenges, such as currency volatility or financial instability.

Critiques and Limitations:

• Overemphasis on Stabilization: IMF policies often prioritize immediate financial stability, potentially at the expense of long-term developmental goals.

• Moral Hazard: The availability of IMF support can create moral hazard, where countries or investors may take excessive risks, assuming they will be bailed out in a crisis.

to what extent does the IMF ensure development?

• Focus on Sustainable Development Goals (SDGs): The IMF increasingly aligns its policies with global development objectives, including addressing climate change and inequality.

• Debt Sustainability: The IMF helps countries manage debt to ensure they can invest in development without risking financial crises.

Critiques and Limitations:

• Short-Term Focus: Critics argue that the IMF’s primary focus on macroeconomic issues often overlooks the broader, long-term aspects of development, such as education and health.

• Uniform Policy Prescriptions: The "one-size-fits-all" nature of some IMF programs may not align with the unique development needs of different countries.

to what extent does the world bank promote economic growth?

• Funding Infrastructure Projects: The World Bank provides loans and grants to build infrastructure like roads, ports, and energy facilities. These projects enhance connectivity and productivity, boosting local economies.

  • Example: The construction of dams for hydroelectric power in Sub-Saharan Africa has improved energy access, stimulating industrial and agricultural growth.

• Encouraging Private Investment: Through initiatives like the International Finance Corporation (IFC), the World Bank attracts private sector investment in developing countries.

• Technical Assistance: The Bank advises governments on economic reforms, improving governance, and efficient use of resources to stimulate growth.

However: Large-scale projects can sometimes lead to environmental degradation or displacement of communities, raising concerns about sustainability and equitable growth.

to what extent does the world bank ensure stability?

• Post-Conflict Recovery: The Bank funds projects in regions emerging from conflict or crises, helping to rebuild infrastructure and provide jobs, reducing the likelihood of a relapse into instability.

  • Example: Post-war reconstruction efforts in Bosnia and Herzegovina and the Democratic Republic of Congo.

• Addressing Economic Shocks: Through mechanisms like the International Development Association (IDA), the Bank provides low-interest loans and grants to countries hit by financial crises, natural disasters, or pandemics.

However: Critics argue that structural adjustment programs (SAPs) tied to World Bank loans have, in some cases, led to reduced public spending on essential services, worsening inequality.

to what extent does the world bank facilitate development?

• Human Capital Development: Investments in education, health care, and skills training empower populations, creating a more productive workforce.

  • Example: Education for All initiative has helped increase literacy rates and school enrollment in low-income countries.

• Sustainable Development: The World Bank promotes environmentally sustainable projects, such as renewable energy and climate resilience programs.

  • Example: The Climate Investment Funds finance renewable energy projects to combat climate change in developing nations.

However: Some World Bank projects have faced criticism for prioritizing economic outcomes over social and environmental considerations, undermining long-term development goals.

what is interdependence?

the theory that nations depend on each other economically, politically, socially and environmentally.

Many contemporary societies are now classed as interdependent as they rely heavily on the decisions of other countries, meaning they would struggle and be detrimentally affected without them.

what are some of the issues associated with interdependence?

The global flows of people (labour), money (capital), ideas, and technology are not equal around the world, sometimes countries give more, sometimes countries receive more.

unequal flows can also cause inequalities, and in some cases can lead to injustice or conflict.

why can more developed countries influence global systems to their advantage?

are the more powerful countries → have more money and technology, as well as deeper relations with other countries

why do low income countries have less geopolitical influence?

lack money and technology have less influence

This is problematic for these countries, as they rely on the decisions made by richer countries, and only have the power to respond to the events rather than directly intervene.

what are examples of how unequal power relations affect global systems?

• The environment: Richer, powerful countries (and emerging economies especially) usually emit a lot of carbon dioxide. Some rich countries may be less likely to agree to global environmental protection if this may reduce CO2 emissions, even though they are likely to feel the effects of climate change less. Poorer, less powerful countries that are frequently affected by climate change induced natural disasters cannot do much to influence the ideas of these richer countries.

• Trade: Richer countries generally control trade agreements, as those who enter trade agreements with rich countries can benefit from the country’s wealth, whereas the richer countries will not benefit to the extent of the less wealthy countries. As richer countries have the upper hand, this means they can pressure low income countries into making more beneficial deals to the richer countries

to what extent does the wto promote growth?

• Encouraging Free Trade: The WTO reduces trade barriers (e.g., tariffs, quotas) and creates a predictable environment for trade. This fosters economic growth by allowing countries to specialize in the production of goods where they have a comparative advantage.

  • Example: Developing countries like Vietnam have seen rapid export-driven growth in sectors such as textiles and electronics due to WTO membership.

• Access to Global Markets: By opening up markets, the WTO provides opportunities for businesses to scale up, increasing GDP and employment.

However:

• Unequal Benefits: Larger, industrialized nations often benefit more than smaller economies, which may struggle to compete with advanced industries.

to what extent does the wto encourage stability?

• Dispute Resolution Mechanisms: The WTO provides a structured system to resolve trade disputes between countries. This prevents trade conflicts from escalating and undermining economic stability.

  • Example: The WTO helped manage disputes between the US and China over tariffs, ensuring some level of predictability.

• Standardized Rules: Its rules-based framework reduces uncertainty in trade relations, encouraging investment and planning.

However:

• Challenges to Multilateralism: Increasing protectionism and bilateral agreements outside the WTO’s framework (e.g., US-China trade war) undermine its role in ensuring stability.

to what extent does the wto encourage development?

• Support for Developing Countries: The WTO offers technical assistance and capacity-building programs to help developing nations participate in global trade.

  • Example: The Enhanced Integrated Framework (EIF) supports least-developed countries (LDCs) in improving their trade infrastructure.

• Improved Standards of Living: By promoting exports, the WTO can contribute to poverty reduction and improved living standards in member states.

However:

• Dependency and Vulnerability: Developing countries often become dependent on exporting raw materials, which are vulnerable to price fluctuations.

• Limited Influence of LDCs: Wealthier nations often dominate negotiations, sidelining the needs of poorer countries.