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Chapter 12

Chapter 12. Global Economic Competition and Cooperation. National Economic Power: Assets and Utilization. Economic Incentives. Mixed success rate Highly contentious. Economic Sanctions: Effectiveness. More effective in certain circumstances Mixed Modest goal

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Chapter 12

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  1. Chapter 12 Global Economic Competition and Cooperation

  2. National Economic Power: Assets and Utilization

  3. Economic Incentives • Mixed success rate • Highly contentious

  4. Economic Sanctions: Effectiveness • More effective in certain circumstances • Mixed • Modest goal • Target politically unstable and weak • Sender and target friendly and trade with each other • Imposed quickly and decisively • Sender avoids high cost to itself

  5. Drawbacks of sanctions • Unintended victims • Hurt the country imposing sanctions • Used by EDCs to maintain dominance over LDCs • Harm relations with countries not supporting sanctions • Harm those whom you seek to assist

  6. The North and the International Political Economy

  7. The Economies of the North • High GDP • Slowing growth rate • Postindustrial economy • High technology means fewer workers • Downsizing

  8. National Economic Issues and Policies of the North • Decline in economic fortunes

  9. End of cold war • Lessened need for strategic cooperation • Trade disputes among trilateral countries

  10. Decline of central direction • Group of Seven (G-7) • Group of Eight (G-8) • Disputes in general • Free trade • NAFTA • WTO • Protectionism • Economic disputes among the EDCs • U.S.-Japan dispute

  11. The South and the International Political Economy

  12. Status • Disparity between countries • Disparity within countries • Economic class, race, ethnicity

  13. Modernization • Explosive population growth • Rapid urbanization • Industrial and environmental dangers

  14. Capital Needs: Hard Currency • Loans: Government and private • Slowing global economy means fewer exports and dropping prices • Debt crisis • Brady Plan

  15. Private investment • Foreign direct investment and foreign portfolio investment

  16. Trade: Export earnings • Product instability • Market and price weaknesses

  17. Foreign aid • Bilateral • Multilateral • Factors that reduce impact • Political considerations • Military content • Measuring recipient per capita aid, rather than gross aid • Measuring donor aid relative to wealth • The way aid is applied

  18. LDC Perspectives and Policies • Expectations rising • Nationalism • Increased moral rhetoric • Transnational ideology

  19. Development of the LDC movement • Political nonalignment • Group of 77 (G-77) • United Nations Conference on Trade and Development (UNCTAD)

  20. LDC demands • New International Economic Order (NIEO) • Trade reforms • Monetary reforms • Industrialization • Economic sovereignty • Economic aid

  21. LDC action • Cartels • Protection of domestic industries from foreign competition

  22. The Future of National Economic Policy

  23. Barriers to Merchandise Trade • Tariffs • Nontariff barriers • Quotas • Pricing limits • Technical restrictions • Subsidization • Dumping • Debate on Free Trade

  24. Global Economic Cooperation

  25. UN and Economic Development of the South • Pragmatic factors • Decreased international violence • Increased economic prosperity

  26. Response of North • Programs • UN Development Programme (UNDP) • UN Industrial Development Organization (UNIDO) • UN Conference on Trade and Development (UNCTAD) • Group of 77 (G-77)

  27. General Economic Cooperation: Other IGOs and Processes • Organization for Economic Cooperation and Development (OECD) • Group of 7 (G-7) • Some CITs

  28. Trade Cooperation • GATT/WTO • Uruguay Round • Arguments for and against • Tariff reductions

  29. Structure of WTO • Power to enforce provisions of GATT • Assess trade penalties • Countries can withdraw • Three-judge panel hears trade violation complaints • Sanctions • Each country has one vote • Imposed by 2/3 vote

  30. The future of GATT and WTO • What if a country rejects WTO rules? • Strengthening of movement against globalization

  31. Monetary Cooperation • Early monetary regulation • Bretton Woods

  32. IMF • Helps maintain exchange-rate stability • Special Drawing Rights • Efforts in the 1990s • Stabilize economies of LDCs • Aid CIT reorientation to market economy • Asian financial crisis • Russian financial crisis

  33. Controversy: IMF • Voting based on member contribution • Conditionality • Interferes with sovereignty • Destabilizes countries • Maintains dependency of LDCs • Capitalism and social justice

  34. Development cooperation: The World Bank Group • International Bank for Reconstruction and Development (similar to commercial bank) • International Development Association (focuses on loans to poorest countries) • International Finance Cooperation (loans to LDCs and guarantees private investment promoting private-sector development • Multilateral Investment Guarantee Agency (promotes flow of private development capital to LDCs through guarantees)

  35. Controversy: World Bank • Dominated by North • Too little funding • No understanding of the needs of South • Terms of loans violate sovereignty, damage economies • Not enough attention to human and environmental impacts of projects • Promote market economies, foreign direct investment, and other aspects of capitalism

  36. Regional Economic Integration • Bilateral or Multilateral Economic Cooperation

  37. Economic Integration: Surrender Some Sovereignty • Levels • Free trade area • Customs union • Economic union • Monetary union

  38. The Western Hemisphere

  39. The North American Free Trade Agreement • The evolution of NAFTA • The impact of NAFTA • Economic and nationalistic problems of NAFTA

  40. The Free Trade Area of the Americas • The origins of FTAA • The Summit of the Americas • The future of FTAA • The Southern Common Market (Mercosur)

  41. Asia, the Pacific, and Elsewhere • Association of Southeast Asian Nations (ASEAN) • Asia-Pacific Economic Cooperation (APEC) • Slow progress

  42. The Future of Regionalism • Integration versus revival of regionalism

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