World Politics EXAM 3

Tarriff

tax on specific kinds of imports or exports.

Quota

amount of a certain good that can be imported by a country.

GATTs

The General Agreement on Tariffs and Trade

the foundational agreement reached between many countries after World War II to reduce tariffs, quotas, and other barriers to trade - restrictions on trade between countries.

What did GATTs do for trade?

• more global trade as time went on.

  • more countries signing onto international trade agreements.

• most agreements reduced or cut tariffs.

  • global tariffs rates (especially in the US) greatly decreased

• several country’s GDP greatly increased—almost 2-5 times more.

Uruguay Round

A series of multilateral trade negotiations that took place within GATT from 1986 to 1994.

What did the Uruguay Round do?

• trade expansion

  • lowered tariffs again

  • included goods and services:

    • textiles

    • intellectual property

    • more agricultural products

  • more countries signed on

• enforcement

  • created the World Trade Org (WTO)

    • WTO included dispute resolution process so countries could sue each other for trades violating GATT.

      • 621+ disputes and 350 rulings at this point.

      • US has brought 150 and defended against 150 disputes.

150

How many disputes as the US defended against and brought to the WTO?

621+, 350

Since the WTO’s inception, ____ disputes and ___ rulings have been brought.

Doha Round

Most recent GATT round under the WTO beginning in Nov 2001, and still considered a failure.

Failures of the Doha round?

failure to:

• expand on Intellectual property

• make free-er trades, less subsidies on agriculture

• include environmental goods: solar panels, turbines, etc.

• give better market access to services.

• make fewer, non-tariffs barriers

France

US top cosmetic IMPORTER

China, Taiwan, and Germany.

Top 3 Bike EXPORTERS

East Asia: Taiwan, China, Cambodia, etc.

Where does the US IMPORT their bikes from?

United States

Who IMPORTS the most bikes?

Others bought the Russia oil, mostly India and China because it was cheaper now.

When the US stopped buying Russian oil, why didn’t it hurt the Russian economy?

Components of Economic Development

1. Capital

2. Labor

3. Infrastructure

4. Government

5. Trade

6. Resources

Agrarian

agriculture based

Capital Developement

• moving from agrarian economy → manufacturing economy → high tech info economy

  • new products and better production

  • needs investments and efficient equipment

  • business - upward or downward spiral

Where do developing countries get their capital?

• IGOs (intergovernmental)

  • World Bank (International Devel. Asso. - IDA)

  • IMF

  • regional funds

• NGOs (non-governmental)

  • microloans/aid

  • direct aid from other countries

  • multinational corps

  • investors (big and small)

  • remittances

  • exporting

What does the World Bank do?

• gives loans at good terms with delayed payback to developing countries.

• allows them to leverage resources

• mainly gives money for projects

What does the IMF do?

• loans money to countries with economic instability

  • stabilizes currencies and provide foreign currency

  • debt and economic shocks

• guidance: standards, transparency

• STRINGS ATTACHED: ex. debt, market liberalization, tax raises, and wage cuts (IMF is not well liked because of these strings)

Who gets World bank loans?

• relatively poor countries

  • Gross national income per Capita must be below and established threshold that changes each year.

    • ex. in 20221 it was $1,185.

• countries with low creditworthiness

  • they can’t borrow on market terms and therefore have need for concessional resources to finance the country’s Development program.

Labor Development

• # of people in workforce

• skills of people in workforce relies on:

  • education level

  • skill proficiency

• health & welfare: increased health = increased productivity

• brain drain: good workers move away to make more money = labor force decreases

Infrastructure Development

for good business operation

• transport: roads, ports, airports, rails.

• energy & energy grids

• water & waste removal

• communications: phone, mail, internet, delivery.

Government Development

political & economic security

• political stability

  • lack of unrest

  • lack of social issues

    • thievery

    • violence

  • lack of corruption

  • trust in gov. (transparency)

  • bureaucratic efficiency (system of administration that is the most efficient way to organize human activity)

• economic stability

  • stable monetary policy

  • stable currency

Trade Development

• access to trade → max efficiency

• access to other markets

• access to resources for value added

• access to products for inputs

Resource Development

access to:

• water

• food

• land

• clean air

• minerals (oil, metal, coal, etc)

• good geography & climate

  • ex. landlocked, mountainous, 7—its hard to import/export under these conditions.

Levels of Economic Intergration

1. Free Trade Area

2. Customs Union

3. Common Marker

4. Internal Market

5. Monetary Union

Free Trade Area

characteristics:

• no tariffs

• no quotas

• only specific goods/services

• ex.

  • CAFTA (US + Central America)

  • US + SA

  • US + Mid-East (Israel, Bahrain, Jordan, ect.)

  • US + Asia (Australia, Korea, Singapore)

  • US + Africa (+Morocco)

  • European Union

  • ASEAN

• little sovereignty given up

Customs Union

characteristics:

• all characteristics of free trade plus-

• common external trade policy

• negotiates as one entity

• all have same trade policy w/ other countries

• little more sovereignty given up

Common Market

characteristics:

• 4 freedoms—these elements can move freely across borders without significant restrictions between member countries.

  • Goods

  • Services

  • People (Labor)

  • Capital (business, land, etc.)

• moderate sovereignty given up

Internal Market

characteristics:

• common market characteristics, plus -

• common policies

  • business regulations

  • workplace safety

  • labor laws

  • standards

  • environmental

  • agricultural, etc.

• gets rid of NTBs (non-tariff barriers)

• majority of sovereignty given up

Monetary Union

characteristics:

• same currency

• one central bank—decides interest rates

• same monetary policy

• almost all sovereignty given up

Quota

fixed amount of a good that a country can import or exports in a specific time frame.

Less sovereignty.

More economic integration equals ____.

more economic prosperity

Arguably, more economic integration leads to ____.

Different areas of globalization?

• trade and service

• Economic investment, capital, and tech.

• People: labor and tourism

• environmental

• security

• health

• information

Trade and Service globalization pros and cons

Pros:

• more efficient specialization

• product variety

• more competition = more advancement

• get more for cheaper and/or better quality at same price.

Cons:

• cost adjustments

• prisoners dilemma (labor /social policy is not as organized

• keeping up is stressful.

Economic investment, capital, and tech globalization

Pros:

• max efficiency + wealth

• help devolpe countries economically

• innovation

Cons:

• investment instability

• corporate influence

• money being moved in and out of the country

People: labor and tourism globalization

Pros:

• econ boost

• more jobs

• joy of travel

• cultural appreciation and education

Cons:

• brain drain

• congestion

• price inflation

• loss of culture and identity

environmental globalization

Pros:

• international agreements

• tech to solve issues

• pressure changes bad behavior

Cons:

• hard to address issues bc no global gov

• more production = worse environmental health

security globalization

Pros:

• less likely conflicts

• global pressure for peace

• global cooperation easier

Cons:

• international terrorism

• arms trade

• international crime

• vulnerabilities