Unit 5: Political & Economic Changes & Developments

Economic Globaliztion

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. These 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

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

Privatization

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

Nationalization

When government-owned industries run without free-market forces

Foreign Direct Investment

Money invested in private businesses by individuals or a corporation outside of 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), World Bank, and the United Nations.

International Monetary Fund (IMF)

An international organization that exerts significant influences through preconditions for financial assistance; countries that receive assistance from this organization 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 that are 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 increase 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

Ares of Mexico’s manufacturing industry primarily located in Northern Mexico; factories established to assemble parts imported from the US 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 resources.

Economic Diversification

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