Topic 5.1

• Economic globalization—including economic networks that are growing more interconnected, a worldwide market with actors unconstrained by political borders, and a reduction in state control over economies—has deepened cross-national connections among workers, goods, and capital and has caused challenges for regime and cultural stability.

  • Opening an economy

• State membership in the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) has promoted economic liberalization policies.

  • IMF and WTO form the Bretton Woods Institutions following WW2 (League of Nations —> United Nations) the world thought they needed a financial body to regulate

  • China and Nigeria have enacted economic liberalization policies and a majority of respondents in recent studies have said that they expect children in their countries to be better off than their parents. 

  • In Mexico, in part as a result of these policies, the number of people in the middle class has grown

  • Historically, countries that didn’t have economic liberalization would have an upper and lower class (lower class would work for the upper class)

• Multinational corporations (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.

  • Small countries that has a wealth of natural resources or some other product/good/service that is desirable, MNCs will try to exploit these countries

• Globalization and neoliberalism can provoke conflicts within states, including:

  • Increased demands being placed on governments by civil society groups 

  • Protests by students and disenfranchised groups 

  • Arrests of protesters and imposition of social media restrictions 

  • Empowerment of once-marginal, nationalist, and populist groups that blame the government for changes in culture and economic conditions (i.e. resurgence of right wing populist groups in Europe)

Topic 5.2

• In response to market forces, course countries continue to experiment with policies regarding private ownership of industry and capital, including (privatization vs. nationalization):

  • Special economic zones along the coast of China (areas in China designed to attract high levels of foreign investment)

  • Privatization and increased competition in Mexico’s oil industry (Pemex)

    • Pemex is the national oil company in Mexico 

  • Nigeria’s state-owned Nigerian National Petroleum Corporation (NNPC) collaborating with foreign companies in joint ventures to extract and produce oil 

  • Putin’s re-nationalization of oil/natural gas industries and imposition of foreign investment limitations

• Course countries allow varying degrees of private control of natural resources, with the United Kingdom allowing the most private control of natural resources and China allowing the least.

  • Nationalization: country owns, brings in the proceeds, people who work there are government employees, profit isn’t taxed

  • Privatization: full control, makes profit, profit is taxed

• Governments respond to global market forces in order to:

  • Improve domestic economic conditions (stimulus or subsidization, borrowing or lending, interest rates, price controls to deter inflation)

  • Respond to domestic demands (government’s goal is to be representative of the people (and what the people want; true in authoritarian systems as well)

  • Control or influence domestic political debates to maintain or increase their own power  

  • Extend national influence regionally and internationally (to have the ability to make domestic policy to improve their standing internationally or expand influence in their own region)

    • Regionally powerful states would be Saudi Arabia, Germany, France, UK, Russia, Iran, India, US, Mexico, Brazil

Topic 5.3

• Many aspects of globalization can challenge regime sovereignty, including:

  • Foreign direct investment and multinational corporations from originating regimes can pose a challenge to a government’s foundational economic and political ideas and principles. 

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

    • West: US, Canada, Western Europe

  • Increased economic development can cause environmental degradation and accompanying health issues that alienate citizens. 

    • Coal is typically used in manufacturing in developing countries

    • natural resources (oil, natural gas, mining, timber, etc.)

    • Smog (popular example is Beijing)

  • Foreign governments can bring political and economic pressures (including treaty reversals, public condemnation at intergovernmental organizations like the United Nations, and economic sanctions) to bear on countries whose actions (including human rights violations) offend them.

    • Coercive Diplomacy: let’s negotiate, if you don’t agree we will do xyz (carrot and the stick)

• In response to global market forces, governments frequently strive to respond to internal demands for domestic reform. Governments also work to control domestic policy debates and attempt to extend their influence regionally to deflect criticism and improve economic conditions.

Topic 5.4

• 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.

  • Mexico’s Economic Liberalization: approval of NAFTA, joining the WTO, privatization of telecommunications and airline industries, cutting of subsidies to farms

  • Russia’s Economic Liberalization: shock therapy (sudden switch to a free market economy in the 1990s), legalization of private property, invitations for foreign direct investment, privatization of state-owned industries

    • Gorbachev: perestroika and glasnost (1990s)

• Political-economic systems in the course countries can be compared by measuring levels of economic development, economic growth, human development, wealth, and inequality

• Course countries of all regime types adopt economic liberalization policies with the goals of remedying undesirable domestic circumstances, such as rising unemployment and reduced productivity, and undesirable external situations, such as trade deficits with other states and decreasing demand for raw materials like petroleum, natural gas, and rare-earth metal.

  • Everyone country to some extent will adopt economic liberalization policies

  • Democratic regimes, it is part of their political culture and believe in economic liberalization as party of their political culture

  • Authoritarian regimes will embrace economic liberalization as a political tool

• Neoliberal economic policies (referring to the removal of barriers and restrictions on what internal/external economic actors can do) have had mixed effects, including reduction in inflation and increases in national income, as well as growing inequality in wealth distribution, persistent political corruption, and the exacerbation of existing social tensions as governments attempt to balance economic freedom with policies that promote economic and political equality.

  • Governments try to strike this key balance (you want economic development because you want wealth, but with wealth comes consequences)

  • Poorer countries have low corruption levels

  • Wealth will never be distributed equally (nature of commerce)

• Economic prosperity tied to liberalization policies has affected the power of ruling political parties among course country political systems.

  • The political parties that are making more money, people are more likely to vote for them

  • In countries that have this western divide between conservative and liberal, economic liberalization tend to be more common in conservative political parties (lifting tariffs, ending subsidies, free market play a bigger role are associated with a conservative perspective)

• While often stimulating growth, economic liberalization has contributed to environmental pollution, urban sprawl, and uneven economic development in course countries, as a result of:

  • Increased consumption and use of automobiles and other engines using fossil fuels 

    • Southeast and South Asia

    • South America

  • Poor infrastructure and lack of government regulation 

  • Regional migration patterns

    • east/west in China (rural —> urban)

    • north/south in Mexico (rural —> urban)

• Economic liberalization policies will benefit the country or the whole, but will be more quickly and dramatically felt in areas with high level of development

Topic 5.5

• International organizations like the International Monetary Fund (IMF) and the World Bank exert great 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 of domestic industries.

  • In 2008 the Great Recession, number of countries (Europe; Greece, Spain, Portugal, Ireland, etc.) were on the brink of collapse and sought IMF loans

    • The IMF forces austerity measures (measures to cut spending; social spending) in return for loans/economic stability

    • Structural Adjustment Programs: mandated by the IMF and World Bank to reform the structure of economies/liberalize economies (i.e. privatizing corporations)

• To bolster their own developing industries, some countries pass import substitution industrialization (ISI) policies aimed at reducing foreign dependency by raising tariffs and encouraging local production of industrialized products.

  • Tariffs on products that stem from international sources —> encourages domestic production

• Supranational organizations such as the Economic Community of West African States (ECOWAS), the European Union (EU), and the World Trade Organization (WTO) have sovereign powers over the national governments that are member states and can apply pressure on policymakers to reduce tariffs and otherwise liberalize trade.

  • Association of South East Asian Nations (ASEAN)

  • African Union

  • Supranational organizations requires governments to seed part of their sovereignty to the organization (doesn’t always happen under international organizations)

• International organizations are largely useless unless countries agree to their success

  • They only have coercive power if countries are buying into the message

Topic 5.6

• In response to political, cultural, and economic changes, governments create new social policies, including gender equity, health care, and education policies, as represented by (exists in authoritarian and democratic systems; democratic are more acceptable to changes while authoritarian regimes act as a release valve):

  • Gender equity rules in Iran with voting, the election of Majles, and appointment to cabinet positions 

  • Disputes in Iran about female access to certain university degree programs and attendance at and participation in sporting events 

  • Varied abortion policies in Mexico’s local and state governments (Mexico has strong Catholic connection; trying to embrace “contemporary” views against traditional views)

  • Gender quotas in Mexico (roughly 50% of the legislator is female)

  • Unequal gender access to education in the north and south of Nigeria (in recent years, this issue is more predominant in the north)

• Social welfare policies: support given to the people who are economically disadvantaged

  • Governments baselines are different,

  • Baselines are established for what people need to survive

    • Some guarantee healthcare, education, basic income, some countries don’t

    • If someone falls below that threshold, that is when social welfare kicks in

  • Government funded programs for things like healthcare, housing, education, basic necessities

  • Next step of these policies are to enhance people’s lives (social security, retirement benefits, etc.)

  • In general, social welfare programs are predominately in more developed countries or wealthy ones

    • Ex: Saudi Arabia is in between developed and not, but the oil wealth has allowed them to implement fabulous development programs

    • China has extensive social welfare programs (China’s anti-poverty program is the best example in history)

    • More entrenched programs is like the UK’s National Health Service (NHS)

Topic 5.7

• Rapid industrialization and increasing dependence on energy from fossil fuels have created a variety of environmental and political problems that governments must address to protect citizens. Such government solutions include:

• Industrialization: creating an industry; instead of small business that act in isolation, society becomes industrialized (group of people begin advocating and the government pays attention to it as a single entity, streamline supply chain)

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

    • factories close to waterways —> water pollution

    • Using green energy for subsidization

    • Government does a better job of deciding what the rules are

  • 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 

    • Transportation as a sector makes a small portion of emissions

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

    • Clean air and water

• Trade liberalization affects 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. Reducing tariffs may lower consumer costs at the expense of domestic industry, while increasing tariffs may protect domestic industry against foreign imports but at the expense of higher consumer prices.

  • Liberalization: less regulation, tariffs, simply less barriers

  • Rationale behind tariffs is to increase domestic production

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

Topic 5.8

• Growing populations, changing land use and values, and economic opportunities motivate internal and external population movements (including when populations shift from rural to urban areas or when net migration rates change) and the corresponding demographic changes pose significant challenges to governmental resources.

  • Internal population movement: moving from Missouri to North Carolina

  • External population movement: moving from Missouri to Vietnam

  • The way a government represents and provides for people’s needs depends whether the majority of the people live in a farm community in a small town or in a few major coastal cities in a high rise where cost of living is 3x higher

• Government policies and employment opportunities can draw workers to different geographic regions or influence positive or negative migration rates, often deepening preexisting class and regional differences and taxing government resources:

  • China’s 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 have led to migration from rural to urban areas and west to east (interior/west to coast/east), creating a growing population whose rising incomes allow them to pursue work and educational opportunities abroad.

    • Largely underlined the massive poverty uplifting program

    • Societies don’t really go urban to rural

  • Highly skilled or well-educated individuals have left home countries such as Iran and Nigeria to escape government policies or practices that are perceived as limiting, corrupt, or repressive

    • Brain drain is when highly skilled or educated people leave a country due to economic or governmental scenarios

  • The North American Free Trade Agreement (NAFTA) and other economic liberalization policies (such as removing agricultural subsidies), maquiladora zones, and foreign direct investment patterns prompted migration from rural to urban areas and from southern to northern Mexico, and contributed to greater economic development in the north than in the south, as well as other regional disparities. 

    • USMCA replaced NAFTA

    • Any trade agreement falls under economic liberalization

    • Maquiladora zones: industrialized areas near the US-Mexico border; big transit hub

  • A positive net migration of immigrants into countries like the United Kingdom has resulted in social and political tensions.

    • Positive net migration: more people are coming into the country compared to leaving

    • Diaspora: as a population moves away from their place of origin

      • The UK has very large southeast and south Asian populations

• Shifting migration patterns have political and social consequences, including:

  • 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 (wear and tear)

  • The growth of new political parties that stand against immigration and supranational organizations that challenge the government’s legitimacy (large social change —> chance for political party to adopt more of a nationalist or populist message)

• The political leadership of the United Kingdom is facing increasing constituent demands to reduce the rising costs of healthcare, exacerbated by an aging population and a declining working-age population faced with increased tax burdens to fund the universal health care system.

  • Scandinavian countries handle this much better

• States respond to demographic pressures with different actions or policies that influence citizen behavior, including policies encouraging or discouraging the birth of children or actions promoting or discouraging discrimination against religious minorities.

  • China’s 1 child policy

  • Some give tax credits for having children (i.e. the US)

Topic 5.9

• Rentier states (including Iran, Nigeria, and Russia) that obtain a sizable percentage of total government revenue from the export of oil and gas or from leasing the resource to foreign countries, have been able to raise standards of living and fund governmental programs based on their huge reserves.

• Political and economic outcomes related to rentier state status, often referred to as the “resource curse” when petroleum is involved, include:

  • Lack of economic diversification 

  • Concentration of governmental resources on developing the one profitable export industry to the exclusion of other types of industries 

  • Severe revenue fluctuations based on world market pricing 

  • The overvaluation of currency and trade imbalances 

  • The increasing disparity between rich and poor

  • A lack of incentive to modernize the economy or cooperate with international judicial bodies 

  • Increased governmental corruption 

  • A lack of governmental accountability to citizens when not relying on citizens for taxes 

  • The absence of democracy