AP Comp Gov Unit 5

Political economic systems

  1. Liberalism (LF, capitalism)

  • Both

  1. Communism

  2. Socialism

a) Command economy (centrally planned, communism)

b) Market economy

Impact of Global Economic and Technological Forces

Globalization: spread of products, tech, info, and jobs across national borders/cultures → interdependence of nations fostered through free trade

  • Caused challenges for regimes wit issues of sovereignty and stability

Economic Liberalization: States allow for less state control of economy, allowing more free trade, privatization, etc. (Process of becoming ore open)

  • Privatizing government owned industries (privatization vs nationalization), opening economy to foreign direct investment (FDI)

    • FDI - investors/capital coming from outside the country into the country

      • Cheaper to invest in another country than their own

      • If you import more than export, rebalance with FDI

  • International organizations (WB, IMF, WTO) have led to economic liberalization

    • Loss of sovereignty for countries to join

    • WB: Big infrastructure loans (long term loans)

    • IMF: Exchange rates, emergency loans (everything is burning, give me money loans), establish stability

    • WTO: Opens trade to benefit everyone (even communist regimes have joined, eg China and Russia)

  • Multinational Corporations (Transnational Corporations, TNCs)

    • Corporations that are increasingly dominant in global markets and sometimes pose challenges to domestic economic policies regarding labour, environment, land rights, taxation, and budget

    • Aid in “sharing the wealth” in underdeveloped countries but can do it on own terms → have monopsony power (one employer controlling the job market)

  • Foundation of neoliberalism

Neoliberalism

  • Believe in removal of barriers/restrictions on what internal/external economic actors

  • Ignores structural inequalities (poverty, racism, etc) - believes that it’s the fault of the individual

  • Pros    

    • Increased consumption

  • Cons

    • Exacerbates wealth inequality

    • Governments under pressure to benefit private corporations over citizens/public industries (no ability to monitor corporations)

    • Environmental pollution

    • Poor infrastructure and lack of government regulation

    • Regional migration/ inequalities (think Mexico North and South, China West and East)

Problems with globalization/neoliberalism can provoke conflicts within states such as

  • Increased demands placed on governments by civil society groups

  • Protests by students/disenfranchised

  • Arrests of protesters/imposition of social media restrictions

  • Empowerment of once-marginal nationalists/populist groups that blame government for changes in culture/economic conditions

Responses to Global Market Forces (in the AP 6)

  • All countries have diff ways to increase/decrease control of TNCs

    • Improve domestic economic conditions

    • Respond to domestic demand

    • Control/influence political debates to maintain/increase power

    • Extend national influence regionally and internationally

UK - allows most privatization, China - least privatization

China

  • Special Economic Zones (SEZs) along coast of China

Mexico

  • Privatization/increased competition in Mexico’s oil industry (Pemex - state owned oil company that’s undergoing increased privatization)

Nigeria

  • Working with foreign companies to extract and produce oil

Russia

  • Re-nationalization of oil/natural gas industries and imposition of foreign investment limitations

  • Gazprom - state owned natural gas company, Rosneft - state owned oil

Challenges from Globalization

Regime Sovereignty

  • Foreign direct investment and TNCs

    • Pose challenge to government’s foundational economic/political ideas and principles

  • Cultural influences (typically been Western)

    • Accompany investment/trade with a given regime can promote domestic backlash

  • Environmental degradation

    • Increased economic development can cause environmental/health issues that alienate citizens

  • Foreign political and economic pressures (sanctions, tariffs)

    • Powerful countries put pressure on less powerful countries whose actions may “offend” them

Policies and Economic Liberalization

International Organizations (careful, NOT consistent with GH20 definitions, CG def: Can’t be joined by regular people)

  • Int. Orgs: Countries choose to join and DO NOT relinquish sovereignty to join

  • IMF

    • Desperation loans

    • Structural Adjustment Plans/Programs - requires privatization of state-owned companies, reduced tariffs (encourage FDI), and reduced governmental subsidies of domestic industries to get a loan

      • Can dramatically decrease legitimacy of governments

      • less common now

  • WB

Developing Countries

  • Import Substitution Industrialization Policies: Reducing foreign dependency by raising tariffs and encouraging local production of industrialized products

    • Response to SAPs from IMF

    • Making domestic goods cheaper than world goods

Supranational Organizations: HAVE TO give up some sovereignty to join. Have sovereign powers over the national governments that are member states and can apply pressure on policymakers to reduce tariffs and otherwise liberalize trade. Has social, political, and economic integration

DO NOT write about NATO or UN (by CG standards it’s iffy, it’s also just asking to be wrong)

  • Economic Community of West African States (ECOWAS)

  • EU

  • WTO

Social Policies

Govs create new social policies in response to political, cultural, and economic changes (including gender, healthcare, and education pollicies)

  • Iran: Gender equity issue: Women can vote/run for Majles and can be member of cabinet BUT dress, religious leadership, access to education, freedom to attend certain events is limited

    • Eg Morality police

  • Mexico: Gender quotas →

  • Nigeria: Unequal gender access to education in the north/south

    • Kidnappings from girls schools by Boko Haram (much lower access to education in the North as a result)

  • Abortion access, reproductive care, etc as examples of gender inequality

Social welfare policies

  • Governments implement policies to reduce poverty, improve literacy/public health/lives, and maintain political legitimacy

    • Often out of self-interest of the government (it’s expensive to recover from an unhealthy population than prevent the unhealthy population)

Impacts of Industrialization and Economic Development

  • Rapid industrialization and increasing dependence on energy from fossil fuels have created environmental/political problems → gov must address to protect citizens

  • Post materialism: Response to consequences of rapid industrialization (eg looking to protect the environment)

Solutions:

  • Moving factories, implementing green technology with subsidies for compliance, engaging in increase infrastructure development and environmental regulation

  • Passing laws to address air pollution problems in major cities from auto/industrial emissions

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

Trade Liberalization

  • Affects growth of domestic/foreign business

Austerity

  • Governments concerned with budget deficits resulting from world market fluctuations often must adopt austerity measures → results in funding cuts to state programs

  • Economic policies undertaken to control public sector debt by a government

  • Aims to reduce government spending through policies such as cuts on public spending and tax increases (cutting health care and education spending)

  • Tightens belt rather than grows stomach

  • UK - led to big protests

  • WILDLY unpopular from citizens, hurts the middle class/bottom the most

    • Disproportional in who is impacted

Stimulus (opposite of austerity)

  • Action taken by government to increase economic activity by taking party in fiscal policy as well as specific expansionary monetary policies

  • Attempts to stimulate economic growth through fiscal monetary policies