MODULE 2-3 CNTWRLD.docx

MODULE 2 | WEEK 3 AND 4 THE GLOAL ECONOMY

Bangladesh Garment Workers

The garment industry in Bangladesh makes clothes that are then shipped out across the world. It employs as many as four million people, but the average worker earns less in a month than a U.S. worker earns in a day.

•Not everything about globalization is beneficial.Any change has winners and losers, and the people living in communities that had been dependent on jobs outsourced elsewhere often suffer. Effectively, this means that workers in the developed world must compete with lower-cost markets for jobs; unions and workers may be unable to defend against the threat of corporations that offer the alternative between lower pay or losing jobs to a supplier in a less-expensive labor market.

•The situation is more complex in the developing world, where economies are undergoing rapid change. Indeed, the working conditions of people at some points in the supply chain are deplorable. The garment industry in Bangladesh, for instance, employs an estimated four million people, but the average worker earns less in a month than a U.S. worker earns in a day. In 2013, a textile factory building collapsed,

killing more than 1,100 workers.

•Studies also suggest that globalization may contribute to income disparity and inequality between the more-educated and less-educated members of a society. This means that unskilled workers may be affected by declining wages, which are under constant pressure from globalization.

BIGGEST EXPORT’S ON EVERY COUNTRY

FUEL TEXTILES

FOOD AND PRODUCE MEDICAL

TRANSPORTATION WEAPONS

ELECTRONICS N/A

METAL, MINERAL, B ORGANIC

ECONOMIC SYSTEMS

1. Capitalist Economies

Historically, these societies leverage market forces, such as supply and demand, with a strong motivation to earn a profit, to shape their economic models.

2. Socialist Economies

Basically, socialism is defined as an economic model where all citizens in a country, region or community each own the factors of production equally. Typically, equal economic outcomes are generated after the election of a democratically chosen government.

Pros of Socialism

1.Inclusive growth. Everyperson will have equal resources.

2.No monopoly of corporates.

3.Distribution of wealth

4. Reduce discrimination and also makes society classless.

5.Government controls the resource distribution

6.Less conflict in people.

7-It gives everyone an opportunity to pursue success.

8.It reduces the threat of economic cycles. (like great recession)

Cons of Socialism

1.Much control in the hands of government.

2. Research and technological development have less efficiency.

3.People have to give higher taxes.

4. Lack of motivation in citizens.

5.Low competitiveness in market

6.Results into spending of resources where government wants.

1. Buerocratic structure affects efficiency

3. Communist Economies

Communism is an economic model where the collective, governed by a centralize

government, owns any and all properties located in the collective. Communism is

modeled upon a classless society, where the work of the citizenry - the fruits of their labor - are taken by the government and distributed throughout the populace based on need.

CAPITALISM VS COMMUNISM

Philosophers Thomas hobbes Karl max

Ideas Hands off, faith in the Class struggles have and

Market Competition leads to have not;s gov Improvements regulations

Who determines people

the prices

Who determines people

supply

Who determines people

demand

4. Traditional Economy

This economy relies on tradition and culture to choose what goods and services will be

produced, how those goods and services will be produced, and how those goods and

services will be distributed throughout the populace.

Traditional Economy

Strengths
•Little environmental damage
•Consumption and waste minimized
•Focus on self reliance
•Control price and quantity
•FREEDOM

weakness
•Individualism discouraged
•No social improvement
•limited planning
•limited choice of products

ECONOMIC GLOBALIZATION AND ITS CONSEQUENCES

Economic globalization, broadly understood, is the growing global integration not only of markets but also of systems of finance, commerce, communication, technology, and law that bypass traditional national, cultural, ethnic, and social Boundaries

Proponents of economic globalization argue that it leads to more efficient division of labor, greater specialization, increased productivity, higher standards of living and wealth, and ultimately the end of poverty. Proponents also argue that recent economic growth has greatly contributed to the high standard of living enjoyed by many within the developed world and raised living standards of many people formerly living in abject poverty. Many others have not made such gains

Opponents argue that economic globalization detaches markets from essential regulations meant to protect national sovereignty, the democratic process, human rights, labor rights, and the environment. Opponents also argue that the policies and practices of industrialized countries and transnational corporations drive the market forces of economic globalization. There is no effective global regulatory system controlling economic globalization

The rules governing economic globalization have been created through trade agreements, international law, and institutions dominated by industrialized countries. These rules favor those with access to capital, legitimizing measures such as dropping tariffs, eliminating capital controls, enforcing intellectual property rights, privatizing public services, and weakening regulations that protect labor, health and safety, and the environment.

Economic globalization is increasingly perceived by the rest of the world as American

economic imperialism. Many Americans, accustomed to an individualistic and competitive culture, are insensitive to the realities of abject poverty, cultural erosion, and environmental degradation. As a result, systematic exploitation of labor and the environment goes unnoticed, as does coercive monopolistic pricing of goods and services, criminal evasion of local legal controls, growing debt among developing countries, widening economic disparities, and the devastation of traditional cultures.

3 PHASES OF GLOBALIZATION

•The Early Voyages of Exploration & Colonization (1492 – mid 19^th century) - The voyage of Christopher Columbus to the new world, and continues with later European voyages of exploration that eventually made possible the formation of Europe’s colonial empires.

•The Age of Transnational Integration (1830’s - 1914) - Western world experienced a dramatic intensification of international connectivity due to four advancing technologies – trains, steamships, the telegraph, and the postal system.

•The Modern Age of Globalization (1945 - present) - The third phase of globalization that began in 1945 was made possible by the long economic expansion that followed the end of the Second WorldWar. New global economic reforms agreed upon by the United States and its wartime allies in 1944 provided a new framework for international commerce and finance.

INTEGRATION OF ECONOMIES

Economic integration, the process in which two or more states in a broadly defined geographic area reduce a range of trade barriers to advance or protect a set of economic goals.

What are the benefits of trade?

✓Trade increases competition and lowers world prices.

✓Trade also breaks down domestic monopolies.

✓Trade will also encourage the transfer of technology between countries.

✓Trade is also likely to increase employment, given that employment is closely related to production.

What are the downsides of trade?

✓ Trade can lead to over-specialization, with workers at risk of losing

their jobs should world demand fall or when goods for domestic

consumption can be produced more cheaply abroad.

✓ Certain industries do not get a chance to grow because they face

competition from more established foreign firms, such as new infant

industries which may find it difficult to establish themselves.

✓ Local producers, who may supply a unique product tailored to meet the

needs of the domestic market, may suffer because cheaper imports

may destroy their market.

Multinational - have a centralized management system
Transnational - does not have a centralized management system

PROTECTIONISM AND TRADE LIBERALIZATION

Protectionism

• Means by which trade between countries is restricted in some way – normally through measures to reduce the number of imports coming into a country.

• Main means are:

– Tariffs: A tax on goods coming into a country. Increases the price of the good and makes it less competitive

– Quotas: Physical restriction on the number of goods coming into a country

– Non-Tariff Barriers: Any methods not covered by a tariff, most usually:

•Rules
• Regulations
• Voluntary Export Restraints (VERs)
• Legislation
• Exacting Standards or Specifications

Non-Tariff Barriers

• Examples include setting exacting standards on fuel emissions from cars, the documentation required to be able to sell drugs in different countries, the ingredients in products – some of which may be banned in the destination country

• NTBs are difficult to prove – when do you accuse a country of protectionism – could it be a legal or cultural issue?

• The main method involved in NTBs is not to prevent trade but to make the cost of doing so prohibitive to the potential exporter

Reasons for Protectionism

• Protect domestic industries

• Protect domestic employment

• Strategic reasons

• Political pressures

• Protect culture

• Prevent ‘Dumping’ – selling goods in the destination country below cost to break into that market

Trade Liberalization

• Aims to free up world trade and break down the barriers to international trade

• Basic philosophy rests on the principle of comparative advantage

• Talks to achieve trade liberalization have been ongoing for many years

• GATT (General Agreement on Tariffs and Trade) - first signed in 1947

• Uruguay Round 1994 - set up the World Trade Organization (WTO) as well as agreements covering a range of trade liberalization measures

• WTO provides the forum through which trade issues can be negotiated and works to help implement and police trade agreements

Potential benefits:

– Promotes international specialization and increases world output

– Promotes efficient use and allocation of world resources

– Allows developing countries access to the heavily protected markets of the developed world thus helping promote development

– Facilitates the working of the international market system and the working of price signals to ensure efficient allocation of resources, international competition and the associated benefits to all

How to make trades easier?

• Promoting free trade – the trading of goods and services between two or more countries without tariffs

• Creating trade blocs – an agreement between countries to reduce or eliminate trade barrier

• Outsourcing is the act of subcontracting work. This includes buying labor or parts from outside a company or business rather than using the company’s own staff or plant.

INSTITUTIONS OF GLOBALIZATION

•THE WORLD BANK

With 189 member countries, staff from more than 170 countries, and offices in over 130 locations, the World Bank Group is a unique global partnership: five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.

• IBRD -THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

• IDA -THE INTERNATIONAL DEVELOPMENT ASSOCIATION

• IFC -THE INTERNATIONAL FINANCE CORPORATION

• MIGA -THE MULTICULTURAL INVESTMENT GUARANTEE AGENCY

• ICSD -THE INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES

The World Bank Group has set two goals for the world to achieve by 2030:

• End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%

• Promote shared prosperity by fostering the income growth of the bottom 40% for every country

•Established in 1944, the World Bank Group is headquartered in Washington, D.C. They have more than 10,000 employees in more than 120 offices worldwide.

“The World Bank is a vital source of financial and technical assistance to developing countries around the world. We are not a bank in the ordinary sense but a unique partnership to reduce poverty and support development.”

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to ensure that trade flows as smoothly, predictably and freely as possible.

The WTO has many roles: it operates a global system of trade rules, it acts as a forum for negotiating trade agreements, it settles trade disputes between its members, and it supports the needs of developing countries.

All major decisions are made by the WTO's member governments: either by ministers (who usually meet at least every two years) or by their ambassadors or delegates (who meet regularly in Geneva).

The International Monetary Fund, or IMF, promotes international financial stability and monetary cooperation. It also facilitates international trade, promotes employment and sustainable economic growth, and helps to reduce global poverty. The IMF is governed by and accountable to its 190 member countries

Founding and mission:

The IMF was conceived in July 1944 at the United Nations Bretton Woods Conference in New Hampshire, United States. The 44 countries in attendance sought to build a framework for international economic cooperation and avoid repeating the competitive currency devaluations that contributed to the Great Depression of the 1930s. The IMF's primary mission is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to transact with each other

Sustainability and Sustainable Development

Sustainability refers to the degree to which the Earth can provide resources for human needs.

Sustainable Development is specifically developing the world in a way where the needs of the present generation are met while preserving resources for future generations

“Race to the Bottom”
• This phrase describes countries lowering their labor standards, including the protection of workers’ interests, to lure in foreign investors seeking high-profit margins at the lowest cost possible.

International economic integration is a central tenet of globalization–but, as a reminder, economics is just one window into the phenomenon of globalization. Nevertheless, much of globalization is anchored on changes in the economy.

MOD 3: GLOBAL GOVERNANCE

Terrorism

• 9-11 Attack

• 2002 Bali Bombing

• 2004 Madrid Bomb

Attack

• ISIS Attacks Thousands of death and injuries

PROLIFERATION OF WMD

(Weapons of Mass Destruction)

• NuclearWeapons

• Biological Weapons

• Chemical Weapons

What will happen if these weapons fall into the hands of terrorists?.

NATURAL DISASTERS

• 2004 Indian Ocean Tsunami

• 2010 Haiti Earthquake

• 2011 Japan Earthquake and Tsunami

• Typhoon Yolanda

TRANSNATIONAL CRIMES

• Arms Trafficking

• Drug Trafficking

• Sex Slavery

• Cybercrimes

PANDEMICS

• HIV/AIDS

• Malaria, TB

• COVID - 19

What is global governance?

“It is the sum of the many ways individuals and institutions, public and private, manage their common affairs…” (Commission on Global Governance)

•It is the sum of laws, norms, policies, and institutions that define, constitute, and mediate relations between citizens, societies, markets, and states in the international system

•It is the way in which global affairs are managed.

Global governance typically involves a range of actors including states, as well as regional and international organizations which are given lead roles on an issue.

ACTORS IN GLOBAL GOVERNANCE

INTERNATIONAL LAWS

SOURCES OF INTERNATIONAL LAW

▪ treaties or conventions

▪ customary practices

▪ writings of legal scholars

▪ judicial decisions

▪ general principles of the law

INTERNATIONAL NORMS OR SOFT LAW

This is not a binding document, but rather the standards of behaviors such as some human rights, labor rights, framework conventions on climate change.

INTERNATIONAL ORGANIZATIONS TYPES

▪Global: UN, WTO, WHO

▪Regional: ASEAN, EU

▪General Purpose: UN

▪Specialized: WTO, WHO

INTERNATIONAL ORGANIZATIONS FUNCTIONS

▪Informational: gather, analyze, disseminate data

▪Forum: exchange of views and decision-making

▪Normative: defining standards of behavior

▪Rule-Creation: drafting of treaties

▪Rule-Supervision: monitoring compliance

▪ Operational: actions to achieve goals

POWER OF CLASSIFICATION

IOs can invent and apply categories. They can also create powerful global standards.

UN High Commissioner for Refugees (UNHCR) provided the definition for refugee. Since states are required to accept refugees, this power to establish identity has concrete effects.

POWER TO FIX MEANINGS

States, organizations, and individuals view IOs as legitimate sources of information. As such, the meanings they create have effects on various policies.

UN recently defined ‘security’ as not just safety from military violence, but also safety from environmental harm

POWER TO DIFFUSE NORMS

Norms are accepted codes of conduct that may be strict law, but nevertheless, produce regularity in behavior.

IOs also spread their ideas across the world, thereby establishing global standards. World Bank economists are regarded as experts in development and thus carry some form of authority.

IOs have immense powers. They can be sources of great good and great harm.

NGOs

There are over 6,500 NGOs that have an international dimension either in terms of membership or commitment to conduct activities. These organizations advocate a particular cause such as human rights, peace, or environmental protection and they provide services such as disaster relief, humanitarian aid.

GLOBAL CONFERENCES

Through global conferences, governments are able to address urgently some of the world’s most pressing problems.

▪ The Summit for Children (New York, 1990)

▪ 4th World Conference on Women (1995)

▪ Copenhagen Conference on Climate Change

▪ SUSTAINABLE BLUE ECONOMY CONFERENCE; NAIROBI, KENYA. 26^TH-28^TH NOV, 2018

▪ PRESIDENCIA, REPUBLICA ORIENTAL DEL URUGUAY; MONTEVEDIO, URUGUAY 18-20, 2017

THE UNITED NATIONS

The most prominent IO in the contemporary world is the United Nations.

This resulted from the desire of countries to prevent another global war and to form a more lasting international league.

▪Established on October 24, 1945 to promote international cooperation

▪ A replacement for the ineffective League of Nations

▪ At its founding, it had 51 members. Today, it has 193.

▪Financed by voluntary contributions from its member states

OBJECTIVES

▪ Maintain International Peace and Security

▪Protect Human Rights

▪ Deliver Humanitarian Aid

▪ Promote Sustainable Development

▪ Uphold International Law

ORGANIZATIONAL STRUCTURE OF THE UN

MAIN ORGANS

▪ The General Assembly

▪ Security Council

▪ Economic and Social Council

▪ Trusteeship Council

▪ International Court of Justice

▪ Secretariat

GENERAL ASSEMBLY

▪Main deliberative policymaking and representative organ

▪ The only organ where every member-state is represented. It convenes annually during September.

▪ Members vote on important questions or recommendations on various issues (2/3 majority of votes)

CARLOS P. ROMULO - General Assembly President (1949-1950)

SECURITY COUNCIL
▪Many commentators view the SC to be the most powerful organ of the UN.

▪This consists of 15 member states. The GA elects 10 of these 15 to two-year terms. The other five (Permanent Five) are China, France, Russia, the United Kingdom, and the United States.

▪The SC takes the lead in determining the existence of a threat to the peace or an act of aggression.

▪States that seek to intervene militarily in another state need to obtain the approval of the SC. With the SC’s approval, military intervention may be deemed legal. This is an immense power.

ECONOMIC AND SOCIAL COUNCIL

This is the main body for coordination, policy review, policy dialogue, and recommendations on economic, social, and environmental issues, as well as the implementation of internationally agreed development goals.

INTERNATIONAL COURT OF JUSTICE

This is the principal judicial organ of the UN. Its main task is to settle, by international law, legal disputes submitted to it by states and to give advisory opinions referred to it by authorized UN organs and specialized agencies.

SECRETARIAT

It consists of the Secretary General and tens of thousands of international UN staff members who carry the day-today work of the UN.

PRINCIPLES OF THE UN

▪ All member states have sovereign equality.

▪ All member states must obey the charter.

▪ Countries must try to settle their differences by peaceful means.

▪ Countries must avoid using force or threatening to use force.

▪ The UN may not interfere in the domestic affairs of any country.

▪Countries should try to assist the UN.

CHALLENGES TO THE UN

▪ International Peacekeeping

▪ Protection of Human Rights

▪ International Disputes

▪ Eradication of Poverty

▪ Eradication of Anti-Social Elements in Different Parts of the World

• The United Nations is not a world government, and it functions primarily because of voluntary cooperation from states. If states refuse to cooperate, the influence of the UN can be severely restricted.