Globalization &

Economics

What is Economic Globalization?

• Interrelations• Capital & technology trade

2 Types of Trade1. Merchandise trade• Primary goods• Manufactured goods

2. Service trade¤

Brief Economic History

Post- WW II• Bretton Woods Agreement (1944)• IMF, IBRD (WB), GATT ( WTO)

• US foreign investment• MNCs, military, IGO leadership

• End of Gold Standard fixed exchange rate (1971)

• Shift to neoliberal economic policies (1980s)• Remove gov’t from economy ¤

Brief Economic History

Post- Cold War• Int’l of trade & finance• MNCs• Economic IGOs¤

IGOs

Global Institutions• IMF• Monetary system• Structural adjustment programs (SAPs)• 1st time Mexico (1982)

• IBRD WB• Development

• GATT WTO• Trade system• Free trade

Regional IGOs• Differ from RTAs

¤

RTAsNot formal institutions- pacts• Bilateral• China- Switzerland• Canada-Japan• Canada-India

• Multilateral• Int’l, regional

Examples• GATT, NAFTA, CAFTA, Lome Agreement• TTIP (Transatlantic Trade & Investment Partnership), EU-US *• TPP (Trans-Pacific Partnership), Pacific Rim*¤

*Under negotiation

Discussion Questions1. How did trade and finance help to globalize the economic

system?• What criticisms are lodged against globalizing trade and

finance?

2. How did MNCs help to globalize the economic system?• What criticisms are lodged against MNCs?

3. How did/ do IGOs and RTAs help to globalize the economic system? • What benefits do RTAs offer?• What criticisms are lodged against globalizing IGOs and

relying on RTAs?

How did trade and finance help to globalize the economic system?

Seek single global market• Int’l organizations- IGOs• Regional IGOs• Free trade agreements • RTAs

Desire financial mobility• Deregulation

• Tariffs• Privatization • Foreign direct investment

• Technology• Moving money¤

What criticisms…against trade and finance?

• Global financial crisis Global economic crisis• Trade • Concentrates wealth• Lacks global standards• Labor• Environment

• Finance• High risk transactions• ‘Hedge funds’• Collateralized debt obligations

• More volatile• GS

¤

How did MNCs help to globalize the economic system?

• MNCs have $$$ = power • GN dominated

• Mobility• Influence jobs, development• Challenge state policies• Influence/ challenge norms • Transparency• Business practices• Cultural norms, values¤

What criticisms are lodged against MNCs?

• Profit-driven• ‘Race to the bottom’ • Exploitative of people, environment

• Concentrate wealth¤

How did/ do IGOs and RTAs help to globalize the economic system?

• Promote neoliberal economic system• Cooperation • Formal, informal pacts

• Push for policy coordination• Finance, trade, investment

• Push to open markets• Finance, trade, investment

• Challenge cultural norms• Challenge state sovereignty• Affect environment

¤

What benefits do RTAs offer?

Benefits of RTAs• In self-interest to make deals• Let GN establish rules• Make deals w/o EEs

RTAs might propel WTO• Revive Doha round- come to agreement• EEs fear losing out¤

What criticisms are lodged against globalizing IGOs and relying on RTAs?

• GN domination – esp. U.S. • Conditions on loans (SAPs)• Undermine social development with cuts

• Force to open economy• Neocolonialism• Develop ‘debtor’ countries

• Perpetuate GN/GS disparities¤

Recap

• Neoliberal economic model• Push for global governance• Regimes to set norms

• GN dominates in all sectors• Trade, investment, MNCs, in IGOs

• Sovereign interests influence decisions• Use RTAs• Push for/ resist free exchange

• Criticisms of neoliberalism• Global civil society¤