POLS 2401 Edition 1Outline of Previous LectureImmigration and Its Economic ImpactI. Global Migration A. Nothing newII. Examples of Global Migration A. Economically driven migration: Filipinos B. Politically driven migration: Burma and ThailandIII. Waves of Immigration in the USIV. Other patterns of Migration in USV. Opposition of ImmigrationVI. The Rosier View of ImmigrationOutline of Current LectureInternational Financial Institutions (IFI) and Multinational Corporations•International Financial Institutions (IFIs)•World Bank (est.1944, Bretton Woods)–Set up originally to aid countries in Europe recovering from the war•International Monetary Fund (IMF) (est.1944, Bretton Woods)–Set up originally to maintain a stable international monetary system, help countries with exchange rates and with balance of payment problems•World Bank•1940-50s: Focus on European countries and reconstruction•1960s: Focus on developing countries and modernization•1970s-80s: Focus on developing countries and poverty reduction•1980s- now: Focus on developing countries and poverty reduction, environment, gender, HIV/AIDS, etc.•The World Bank Group•International Bank for Reconstruction and Development (IBRD)–Provides low-interest loans–Mainly for higher-income developing countries, providing lower interest rates than commercialinterest rates and longer time to repay loans; in fiscal year 2013, gave out $15.2 billion in new loans (usually lower; average for 2005-2008 was $13.5 billion)•International Development Association (IDA)–Provides interest free loans and credit, and grant financing–Mainly for low-income developing countries; in 2013, gave out $16.3 billion; currently 82 countries qualify for borrowing•International Finance Corporation (IFC)–Promotes private sector investment•Multilateral Investment Guarantee Agency (MIGA)–Provides political risk insurance to investors in and lenders to developing countries•International Center for Settlement of Investment Disputes (ICSID)–Settles investment disputes between foreign investors and their host countries•International Monetary Fund (IMF)•Early years (1945-71), played an important role in maintaining stable exchange rates; focus on stability for industrialized countries•After 1970s, less focus on industrialized countries and more on developing countries, especially those facing balance of payment problems and financial crises–IMF Programs for developing countries: concessional loans, debt relief, special crisis loan “packages”•Critics of IFIs•Critics of the World Bank’s Policies and Projects–Environmentally destructive–Socially destructive•E.g. Dam construction and displacement of indigenous populations–Nondemocratic•Little input or participation from affected societal actors•World Bank and IMF Structural Adjustment Programs (SAP)•“conditionality”: economic policies which countries must follow in order to qualify for new World Bank and IMF loans and funds; from the 1980s, they were generally referred to as structural adjustment programs (SAP). Although SAP has been officially discontinued, similar policies are often still in effect (poverty reduction strategy papers, etc.).•General Characteristics of SAP:–Balance budget, mainly through sharp spending cuts–Privatization of state-owned enterprises–Trade and investment liberalization•Criticisms of Conditionality•Budget balancing and deficit reduction ® cuts in social spending (education, health, etc.) and layoffs ® no social safety net for citizens and higher unemployment•Privatization ® mass layoffs, reduction of public services for higher prices, foreign investors taking over national assets•Trade Liberalization ® domestic industries forced to reduce costs by lowering wages or laying off workers•Investment Liberalization ® Foreign companies move in•Other measures:–Higher interest rates to combat inflation ® harder for domestic investors–Currency devaluation ® together with removal of price controls ® huge hike in prices•Summary of Criticism•Conditionality/SAP hurt the poor the most–Higher unemployment, higher prices, fewer social services•Conditionality/SAP benefit foreign investors the most•Conditionality/SAP strips the state of sovereignty and control of its domestic policies•Multinational Corporations (MNCs)•Huge growth of very large MNCs part of the globalization debate•MNCs have benefited from World Bank and IMF policies toward developing countries•With growth of power, growing criticism•Critics: MNCs Exploit Developing Countries•Labor violations and human rights problems–Low wages, child labor, HR violations against women, poor working conditions, suppression of labor unions•Environmental degradation•Profit incentive possibly harmful to national interests (neoimperialism, loss of national control)•Proponents: MNCs are good for developing countries•MNCs provide jobs and capital–Wages usually higher, conditions usually better than local firms•MNCs provide other business–Local parts suppliers, contractors, real estate•MNCs provide new skills and technology transfer•Some MNCs are good corporate citizens