POLS 241 1st Edition Final Exam Study Guide Lectures 8 23 Lecture 8 February 26 Globalization Its Proponents and Its Discontents Globalizations Expansion unity trade diversity exploitation Types Economic globalization money multinational corportations Social and cultural globalization people and traditions Political and military globalization policy expansion Environmental globalization climates land pollution etc Economic Globalization Definition the increasing integration of economies around the world particularly through the movement of goods services and capital across borders IMF 2008 Economic Globalization Trade 1200 growth in global trade in last half of the 20th century in 2012 world merchandise trade was 36 trillion World trade as a of World GDP increased greatly 1950 7 1980 42 2007 62 Trade Patterns stratified with Industrialized states dominate trade U S Europe and China big influence 1950 64 of world exports merchandise trade 1970 75 of world exports In the 1990s early 2000s between 70 75 of world exports Recent growth of trade for developing countries but industrialized states still dominant Developing countries of total world trade increases from 16 in 1991 to 32 in 2011 much of this growth is in East Asia region Economic Globalization Finance International bank lending of world output went up from 1 in 1964 to 8 in 1980 and 16 in 1991 International equities stock markets Cross border equity flows of 1 trillion in late 1980s and 2 5 trillion in the mid 1990s to 11 8 trillion in 2007 International money markets Foreign exchange market largest international market of any kind Annual turnover increase from 17 5 trillion in 1979 to 300 trillion in late 1990s and now 2013 5 3 trillion a day Most currency trading is US euro yen but emerging economies now also traded Mexican peso and Chinese renminbi part of the top ten for first time in 2013 rising economies Financial Crisis of 2008 Huge rise and fall of international capital flows 2002 2007 annual gross international capital flows rise from 5 to 17 of world GDP 2008 flows plummet to just 1 of world GDP during the start of the 2008 financial crisis Flows are now recovering but not as high as pre crisis levels Economic Globalization Investment MNCs and Global Production Networks Multinational Corporations MNCs 2002 over 63 000 worldwide with 861 000 subsidiaries employing 90 million 20 million in developing countries 2007 78 000 worldwide 2011 US MNCs alone employed 34 5 million 23 million in the US and had sales of 10 7 trillion Top 1000 MNCs account for 80 of world industrial output MNCs account for about 2 3 of world trade MNCs account of 80 of technology trade and the majority of research and development Global production networks stretching of corporate activities and business networks across the globe Globalization The Proponents Neoliberal economists free trade and free markets finance investment benefit all Open borders and globalization creates growth which raises prosperity and well being Trade stimulates economic growth MNCs and foreign investment bring capital technology jobs and new skills Seen backlash The Anti globalization Movement Economic globalization has gone too far The state market balance of power has shifted and corporations have too much power Globalization compromises national sovereignty Too much power to international organizations globalization reduces transparency and accountability shifting power from elected national and local officials to non elected bureaucrats and international officials Labor is cheaper in the developing world Corporations have too much power Developing worlds have lost their powers Lecture 9 March 3 Free Trade and the WTO Theory of Free Trade Background First defenders of free trade Adam Smith 1723 1790 David Ricardo 1772 1823 Counter theory to free trade Mercantilism Set of trade policies designed by the state to increase exports and use trade to enrich the nation industrial policy Trade as a means to power Theory of Free Trade Basic Concepts Division of Labor People companies countries produce a good service and trade it for other goods services Comparative Advantage People nations should specialize in the production of goods services that they can produce most efficiently and cheaply and trade these good services with others who specialize in other areas Free trade allows people to get the best product at the best price focus on the consumer GATT WTO and the Postwar Global Trade Regime General Agreements on Tariffs and Trade GATT Trade Rounds Reducing Barriers to Trade The Dillon Round 1960 61 tariffs 26 countries The Kennedy Round 1964 67 tariffs anti dumping measures 62 countries The Tokyo Round 1973 1979 tariffs and non tariff barriers 102 countries The Uruguay Round 1986 1994 tariffs non tariff measures services intellectual property dispute settlement textiles agriculture creation of WTO 123 countries World Trade Organization WTO Set up in 1995 created by the Uruguay Trade Round negotiations 159 countries are members of WTO Headquartered in Geneva Switzerland Functions Administer WTO trade agreements Provide a forum for trade negotiations Handle trade disputes Monitor national trade policies Provide technical assistance and training for developing countries WTO Dispute Settlement Process Dispute Settlement Body includes all WTO members adopts decisions A country accuses another country of unfair trade practices and violation of WTO rules Countries must first try to settle the problem through consultation and mediation If that fails the complaining country can ask the DSB to set up a panel composed of trade experts to investigate and write up a report The report of the panel is usually adopted by the DSB and if a country is found to be breaking WTO rules it must change its policies practices or possibly face trade sanctions Clash of Sovereignty and World Trade Rules Food safety issues Beef hormones genetically modified organisms invasive species Environmental issues Endangered species environmental laws and initiatives Challenges for developing countries seeking to build new industries The Doha Development Agenda Doha Development Program Help developing countries deal with problems of implementing trade agreements Doha Trade Round Next round of trade negotiations started in Doha Qatar in 2001 Very complex involving many sectors issues agriculture non agricultural market access services intellectual property etc Negotiations are stalled and have passed the