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Three Pillars of the Global Economy
- 1. Trade - Good and Services (WTO)
- 2. Monetary - Exchange rates, (Central Bank, IMF)
- 3. Development Finance - World Bank
Sovereignty at Bay
When a nation states independence and autonomy is eclipsed by the growth of international economies.
Not as self-contained as they once were.
Role of the MNC in Advancing Globalization and Diminishing National Sovereignty
- 1. Driving force of globalization
- 2. Increase profits
- 3. Access human and natural resources
- 4. Economices of Scale
- 5. Bypass increasing government ristrictions
- 6. Investment incentives and competitions
- 7. Exploit what is in the air (clustering)
- 8. 24 hour capacity (Follow the Sun)
- 9. Manufacture at peak capacity
Hegemonic Stability Theory
The idea/theory that the international system is more stable with a hegemon
What is a hegemon?
Dominance and leadership of one nation over others.
- Stability / Diplomacy
- Regime of free trade
- Global organizations (IMF, WTO)
- Currency for trade
- Lender of last resort
- Military overstretched
nations are best off when the state and market are joined in a partnership. The state protects domister firms which become richer and in turn increase state power.
Nations act in their own interest.
What is the "Invisable Hand"?
A natural phenomenon that guides free markets and capitalism through competition for scarce resouces.
Example of Nationalist impact on everyday business
- 1. Entry control and foreign direct investment
- 2. Ownership and equity restrictions
- 3. Local content requirements
- 4. Export performance requirements
- 5. Import controls
- 6. Builing and land ownership considerations
- 7. Intellectual property protection
- 8. Use of indeginous labor
- 1. Import quotas
- 2. Marketing and ad restrictions
- 3. Import licensing requirements
- 4. Customs procedures
- 5. Product quality standards
- 6. Safety and health requirements
The stages of the Marxist though process
- Class consciousness
- Social Revolution
What is the role of the World Bank?
Functions as an international organization that fights poverty by offering advice and training, loans / devlopment assistance.
What is the role of the IMF?
Oversees the IM System, monitors financial and economic policies of its members
Provides loans to hel countries restore macroeconomic stability.
Hegemonic Cycle Theory
- 1. War
- 2. Hegemon
- 3. Multipolar
- 4. Begin again
Whe two parties are in an agreement but each party could gain from acting contrary to the agreement.
Bretton Woods System
a meeting / conference held at the height of WWII where 44 allied nations met.
- 1) Formation of the IMF
- 2) Formation of the International bank for reconstruction and development
- 3) Introducition of an adjustable pegged foreign exchange rate system.
What is the Central Bank?
Oversees the monetary system for a nation.
What is GAAT?
General Agreemnt on Tariffs and Trade
What is the WTO?
World Trade Organization - The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade.
What is RTA?
Regional Trade Agreement?
What are IMF Quotas?
Each member country of the IMF is assigned a quota, based broadly on its relative position in the world economy.
A member country’s quota determines its maximum financial commitment to the IMF, its voting power, and has a bearing on its access to IMF financing.
What is an SDR?
Special Drawing Rights
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves.
Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies.
What is IMF Conditionality?
When a country borrows from the IMF, its government agrees to adjust its economic policies to overcome the problems that led it to seek financial aid from the international community.
These loan conditions also serve to ensure that the country will be able to repay the Fund so that the resources can be made available to other members in need.
What are six current events?
- Excess Trade Capacity China
- Wakum Village China
- Korean Free Trade Agreement
- EuroZone Crisis
- The Arab Spring
- Trans-Pacific Partnership - US, Vietnam, Austrailia, Japan, Maylasia, Peru
What is Petrodollar Recycling?
Petrodollar recycling refers to the phenomenon of major oil-producing states mainly from OPEC earning more money from the export of oil than they could usefully invest in their own economies. It was a phenomenon of the late 1970s and early 1980s with the peak years for petrodollar surpluses.
During this period, states such as Saudi Arabia, Kuwait and Qatar amassed large surpluses of petrodollarswhich they could not invest in their own countries. This was due to small populations or being at early stages of industrialization. These petrodollar surpluses can be defined as net US dollars earned by those nations which were in excess of the internal development needs of those nations.
What is SAP?
Structural Adjustment Policy
What is IMF Surveillance?
The IMF is mandated to oversee the international monetary system and monitor the economic and financial policies of its 187 member countries.
The IMF highlights possible risks to domestic and external stability and advises on needed policy adjustments.
What is Balance of Payments?
an accounting record of all monetary transactions between a country and the rest of the world."
What is Balance of Payments Financing / Balance of Payments Crisis?
Balance of payments difficulties can arise—and, in the worst case, build into crises—even in the face of strong prevention efforts.
The IMF assists countries in restoring economic stability by helping to devise programs of corrective policies and providing loans to support them."