AP Computational Government: Political and Economic Changes and Development

Economic Globalization:How have external economic forces affected the governments of our case study countries(China, UK, Iran, Mexico, Nigeria, and Russia)?

But first, what even is globalization? —>

  • Characteristics of economic globalization include…

    • Economic networks of varying nations are growing more interconnected

    • The creation of worldwide markets

    • Economic actors (consumers & businesses) are unconstrained by political borders

    • A reduction in state control over the economy

    • Deepened cross-national connections among workers, goods, and capital

    • A spreading of ideas, technology, and information across international borders

    • Jobs spread across international borders

What are international and Supranational Organizations?

  • International Organizations: An organizations joined by member nations with a common interest (example: UN)

    • How does membership in an international organization influence economic policies within a course country?

      • Promotes economic liberalization policies (which reduce government influence over the economy)

      • Requires standards to be admitted

      • Could require policy changes to receive financial assistance

  • Supranational Organizations: An organization in which member states grant the governing organizations sovereignty over some policies related to the economy and trade (example: the EU or ECOWAS)

    • International and supranational organization support economic liberalization policies, meaning they work to enact policies that reduce the role of government in the economy, support the free market, and reduce trade barriers

    • Organizations oppose import substitution industrialization (ISI) or programs designed to reduce a country’s dependence on other countries such as government subsidies, high tariffs, and quotas

    • Instead, countries that receive loans from international organizations need to agree to structural adjustment programs (SAPs) which require

      • 1. Privatization of state-owned companies

      • 2. Reduction or eliminate tariffs to stimulate free trade

      • 3. Reducing government subsidies of domestic industries (to encourage additional foreign trade and investment)

  • International Organizations (all 6 of the course countries are apart of these organizations)

    • The UN: Committed to maintaining international peace & security, developing friendly relations among nations, & promoting social progress, better living standards and human rights

    • The IMF: Works to foster global monetary cooperation and the stability of the international monetary system

    • The World Bank: Provides financial and technical assistance for developing countries to reduce poverty & support economic development

  • Positives of International Organizations:

    • Increased global trade

    • Opportunity to build relationships with other countries

    • can help provide internal security and stability

      • Mexico switched from import substitution industrialization to economic liberalization that reduces government influence

      • Nigeria adopted structural adjustment programs to reduce tariffs and privatize industries as a condition of IMF loans

  • Complaints about International Organizations

    • Conditions attached to loans may not address country specific needs

    • Some countries continue to receive loans without addressing violations

    • Projects supported by international orgs. may lead to environmental degradation or create social conflicts

  • Supranational Organizations

    • The EU: An economic and political union of 27 European nations with a single market & currency and abolition of border controls(No case study countries are apart of this organization)

    • The WTO(world trade organization): Helps develop rules of trade between nations with the goal of ensuring that trade flows smoothly and freely(All case study countries except for Iran are apart of this organization)

    • ECOWAS: 15 member countries with the goal of promoting economic cooperation in order to raise living standards and promote economic development(Nigeria is apart of this organization)

  • Positives of Supranational Organizations:

    • Encourage cooperation between member states

    • Can prevent future conflicts between member states

    • More influence in world affairs as part of supranational organization than as individual state

  • Negatives of Supranational Organizations:

    • Give up sovereignty

    • Pressure on leaders and political parties to meet the demands of supranational organizations

    • Policies of supranational organizations do not always align with local wants and needs

What is Economic Liberalization?: A broad set of economic policies that support the free market and reduce trade barriers

  • Examples of Economic Liberalization:

    • China: Special economic zones along the coast that are designated by the government as regions where private businesses can attract direct foreign investment(Began in 1970s)

    • Mexico: Privatization and increased competition in the oil industry

      • PEMEX was a state owned oil company but the government approved privatization reforms that allowed partnerships with foreign MNCs starting in 2015 (Mexico is not a rentier state anymore)

    • Nigeria: State owned Nigerian National Petroleum Corporation (NNPC) collaborates with foreign companies in joint ventures to extract and produce oil. The NNPC often partners with MNCs like Shell and BP

    • UK: PM Margaret Thatcher (1979) promised that she would liberalize the economy by dismantling the welfare state (program known as Thatcherism)

    • Russia: (they actually go in the reverse direction) Putin re-nationalized the oil and natural gas industries and placed limits on foreign investment.

      • The government prosecuted Yukos Oil (privately owned) & forced the company to be sold at auction to an energy company owned by the government   

      • Partnerships with MNCs are allowed, but international sanctions have been limiting

  • Problems with Economic Liberalization:

    • Can cause conflicts within states: income inequality, environmental degradation, gentrification, & limited access to natural resources

    • These conflicts can result in civil protests and uprisings

    • Examples where groups blame globalizations for changes in national culture

      • Zapatista uprising in Mexico

      • Scottish independence movement in the UK during Brexit

      • Boko Haram in Northern Nigeria

  • Globalization can challenge regimes sovereignty

    • Mexico: President Lopez Obrador won election in 2018 partially due to his pledge to reduce the influence of MNCs and globalization in Mexico

    • UK: PM Theresa May resigned in 2019 over her failure to negotiate an exit from the EU, a decision fueled largely by the EU open trade & borders policies

  • Globalization can cause environmental degradation

    • The deterioration of the environment through the depletion of resources (air, water, soil), destruction of ecosystems, and extinction of wildlife

      • Solutions: physically moving factories, implementing green technologies with subsidies for industry compliance, engaging in increased infrastructure development, environmental regulations to address air and water pollution

  • How do you measure the impact of economic liberalization policies:

    • Human Development Index (HDI): measures income, health, and average years of schooling to establish an overall standard of living (0-1 range, the closer to 1, the higher the HDI)

    • Gross Domestic Product (GDP): total market value of all goods and services produced in an economy in a year), GDP percentage growth, and GDP per capita.

    • The GINI Index: shows income inequality with a country(0-100 range, the closer to 0, the more equality)

Globalization and Social Policy change

  • In response to political, cultural, and economic changes, governments create new social policies. Social policies include programs to promote gender equity and provide access to education and health care.

  • Governments enact social welfare programs to alleviate poverty and make people healthier, thereby decreasing the likelihood of unrest and instability which increases their legitimacy.

  • These are the specific things social policy changes: Poverty, Education, Gender, Health, Hunger, Climate, Justice

What are the types of Social Policies?—> Social welfare programs are usually funded by taxes

  • Universal programs are available to all citizens(Example: public education)

  • Social-Insurance programs are for workers who have contributed funds(Example: disability, pension)

  • Means-tested programs are for those who fall below a specific income level)

  • Examples of these programs

    • Mexico’s Prospera program is a means-tested program in which families receive cash assistance in exchange for a promise to send children to school

    • The National Health System (NHS) in the UK into which all citizens pay. However, leaders are 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(China, Russia, Iran, and Nigeria have adopted versions of the NHS system)

    • China’s One Child Policy(1979-2015) was a strict population-control program that restricted most couples to a single child to curb population growth, limiting over 1 billion people (1979 - 2015)

    • NGOs (Non-governmental Organization) worldwide advocate equal status for women with regard to education, property ownership, and child custody. This has been achieved in almost all democracies, but not hybrid or authoritarian regimes.

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

      • Mexico requires political parties to run 50 percent female candidates

      • Unequal gender access to education in the north and south of Nigeria

How can Globalization affect economic freedoms?

  • The Heritage Foundations (a U.S. NGO) publishes an annual index of economic freedom. The UK ranks as the 28th most free whereas Iran is 169 (out of 176).

  • Austerity measures: a set of economic policies, usually consisting of tax increases, spending cuts, or a combination of the two, used by governments to reduce budget deficits.

How can Globalization affect demographic change?

  • Growing populations

  • Changing land use and values

  • Economic opportunities which motivate internal and external population movements (including when populations shift from rural to urban areas or when net migration rates change)

  • Examples of Demographic change:

    • China’s shifting emphasis from agriculture to industry, the creation of special economic zones, the encouragement of foreign direct investment have led to migration from rural to urban areas and west to east (interior to coast), creating a growing population whose rising incomes allow them to pursue work and educational opportunities abroad.

    • 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

    • 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

    • A positive net migration of immigrants into countries like the United Kingdom prior to leaving the EU in 2020 resulted in social and political tensions

  • What are the effects of Demographic change?

    • Increased crime and strains on social services 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

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

    • 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

What are the impacts of Natural resources?

  • Natural resource endowments can have positive and negative effects on political stability and economic development.

  • The “Resource Curse” of the Rentier States (Iran, Nigeria, and Russia)

  • Problems—> No incentives to diversify economically–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 increasing disparity between rich and poor

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

    • Increased governmental corruption & lack of accountability to the citizens