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Economic Globalization
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| Date | 19.02.2017 | | Size | 14.7 Kb. |
| - Sociology 2, Class 9
- Copyright © 2010 by Evan Schofer
- Do not copy or distribute without permission
Announcements - Announcements
- Midterm in one week: Feb 9
- Midterm review sheet handed out previously
- Available on the course website
- NO SECTION during week of midterm!!!
- No section meetings Feb 8-12
- One week 5 reading won’t be on the exam:
- Brawley, Mark R. 2003. “Globalization and Domestic Politics” Pp. 107-130 (Chapter 5) in The Politics of Globalization. Toronto, Ontario: Broadview.
- Agenda
- Today: Taking stock: Consequences of globalization
- Thursday: governance & more midterm review.
Midterm Info - Topic coverage:
- All class lecture material
- Lecture notes on course website
- All readings up through Week 5
- Commanding Heights video, Episodes 1 & 3
- Available via course web page…
- Exam Format:
- Closed book / closed notes
- Mix of short answer/multiple choice, medium length, and perhaps one short essay question.
Review: Barriers to Trade - Strategies for protectionism
- 1. Tariffs – taxes on imported goods and services
- 2. Quotas – a government-imposed numeric limit on imports
- 3. “Non-tariff” barriers – A government regulation that indirectly limits trade or makes it more expensive
- Example: Agricultural subsidies.
Review: Barriers to Investment - Strategies for protectionism (continued)
- 4. “Foreign ownership” laws – laws that limit the ability of foreigners to buy companies
- Example: US government could require owners of corporations to be US citizens
- 5. “Capital controls” – laws designed to prevent the rapid withdrawal of capital/investment
- Example: Law requiring invested capital to remain in the country for one year
- Thus, preventing rapid flows in and out.
Review: Problems With Trade Agreements - Rich/powerful countries have numerous advantages in negotiating trade agreements
- 1. Advantages of rich/powerful countries are biggest in bi-lateral trade negotiations
- Example: US vs. a small Latin American country
- US can bully, bring great pressure…
- Often, those turn out worse for poor countries than large multilateral agreements.
Review: Problems With Trade Agreements - 2. Rich/powerful countries disproportionately control the agenda of agreements
- Topics addressed by FTAs benefit rich countries
- 3. Government trade negotiators are often influenced by powerful groups
- Rather than negotiating for terms that will benefit everyone in a country, negotiators may cater to big corporations.
Stiglitz: Making Trade Fair - Stiglitz, Chapter 3: Recommendations
- 1. Developing countries should be treated differently from wealthy countries
- Previously, most trade agreements focused on equal treatment, but poor countries can’t really compete…
- 1. A. So, rich countries should simply open their economies to the poorest countries
- This would have a much bigger effect than providing direct aid
- NOTE: Europe has started moving in this direction
- 1. B. Poor countries should be allowed to use subsidies to support “infant industries”
- Rich countries have little to lose… but benefits are big.
Stiglitz: Recommendations: - 2. Rich countries should stop MASSIVE agricultural subsidies
- Rich countries give huge amounts of money to (mainly) industrial farms
- Norway: two-thirds of farm income is from subsidies
- EU spends 80 billion US$; US spends
- Consequences:
- Farmers in rich countries can sell food at LOW prices and still make a profit
- Often below the cost of farmers in poor countries
- Farmers in poor countries can’t compete… go broke.
Stiglitz: Recommendations - 3. Escalating tariffs should be ended
- Escalating tariffs: taxing manufactured products at higher rates than raw materials
- Ex: Having no tariffs on raw agricultural goods, but high tariffs on higher-value processed goods
- No tax on apples; high tax on applesauce
- Issue: This prevents poor countries from industrializing
- They are stuck farming
- While rich countries have cheap source of produce for their high-value industries.
Stiglitz: Recommendations - 4. Remove barriers to unskilled services & migration
- Rich countries have pushed to remove barriers for high-tech services (banking, accounting, software)
- Barriers remain in low-skill services
- Example: Shipping/trucking. Foreign companies aren’t allowed
- This is one area that poor countries could actually compete…
- Also, allowing more labor flows would provide a huge benefit to poor countries.
Stiglitz: Recommendations - 5. Restrict the use of non-tariff barriers
- There are legitimate reasons for having them…
- BUT, more often they are used by rich countries to protect their own markets
- Despite claims of supporting free trade
- 6. Restrict bi-lateral agreements
- They are rarely advantageous to poor countries
- Due to asymmetry in power between negotiators
- And, they tend to undermine multilateral agreements
Stiglitz: Recommendations - 7. Reform governance
- Change the rules of organizations like the WTO
- Issues (p. 97):
- How decisions get made
- What gets put on the agenda
- How disagreements are resolved
- How rules are enforced
- Currently, rules sometimes favor rich countries
- System should be more open/transparent, more democratic, with better enforcement for small countries.
- Taking stock… what are the consequences of economic globalization?
- Overview: Greico and Ikenberry: Economic Globalization and Political Backlash
- For peace
- For the economy
- For economic inequality
- For governments
- For cultures / cultural autonomy.
Globalization: Consequences - 1. Economic globalization and world peace?
- Several views… no definitive consensus
- A. Globalization as a source of peace
- Globalization = interdependence
- Argument: The more interdependent we are, the more we have to lose by fighting…
- Example: War between the US and China = disastrous
- B. Contrasting view: a source of conflict
- Globalization creates potential for new disagreements
- Ex: over trade, currencies, etc
- C. Globalization is a source of peace, but only for democracies… which are accountable
- Totalitarian rulers may not be deterred…
Globalization: Consequences - 2. Economic globalization and national economic welfare
- Argument: Economic globalization increases the risk of “external shocks”
- Complexity of global markets creates possibility for unforeseen disasters
- Interconnectedness of global economy means that problems in one place may spread across the system
- Example: Crisis in Asia due to rapid capital flows and “contagion”
- Example: Collapse of LTCM (a Hedge fund) in the US due to economic crises in Russia and other places.
Globalization: Consequences - 3. Economic and Economic Independence
- A. Globalization may worsen inequality
- Trade may reduce demand for low-skilled workers
- Ex: Imports from low-wage countries wiped out manufacturing jobs in the US.
- B. The “Golden Straightjacket” (friedman)
- Governments can’t pursue Keynesian policies… for fear that companies & investors will flee
- C. The “Race to the Bottom”
- An extension of the prior argument
- Countries may compete to cut social services or environmental protections to attract foreign companies.
Globalization: Consequences - 4. Economic and cultural autonomy
- A. American / Western domination of the global economy has prompted concerns
- In short: American/global culture may be erasing local cultures
- We’ll explore this more in future weeks.
Globalization and Governance - Issue: Can we do anything about the negative consequences of globalization
- As Stiglitz recommends we “reform governance”
- What does he mean?
- Governance: Ruling, governing, or managing
- Sovereignty: Supreme power over a body politic; freedom from external control (Webster)
Video: Commanding Heights - Issue: Who “writes the rules” of global governance?
- Episode 3, Chapters 15-17 (13 minutes)
Governance: Definitions - Treaty: An agreement among nations to follow certain rules
- Ex: GATT: “General Agreement on Tariffs and Trade”
- Set rules for global trade, prior to the WTO
- Ex: Montreal Protocol on CFC emissions
- An environmental treaty, in which countries agreed to ban the use of chemicals that damaged the Ozone layer.
Governance: Definitions - IGO: Inter-governmental Organization: An organization whose members are governments
- Again, purpose is usually to negotiate or enforce agreements among governments
- Ex: The World Trade Organization (WTO)
- Members created it as a forum to manage world trade
- Ex: The World Bank
- Governments created it to reduce poverty and encourage development via loans and projects
- Ex: European Union
- An supra-national government that coordinates (and in some cases has the power to set) economic & trade policies for member countries
- Ex: UNEP: The United Nations Environment Program
- Branch of the UN; urges nations to address environmental issues
Governance: Global Civil Society - Issue: States and corporations are not the only players in global governance
- Civil society: citizen activity in the public sphere that is not part of the state or business sector
- Includes things like: Citizen participation in organizations, protest activities
- Social movements: Sustained efforts by members of civil society to challenge existing governance and produce social change.
Governance: Definitions - Some components of civil society:
- NGO: Non-governmental Organization
- A domestic association
- Also sometimes called “non-profits” or “associations”
- INGO: International non-governmental organization
- An association that is international in membership and (typically) scope
- Ex: Greenpeace, WWF
Key Players in Global Governance Video: Commanding Heights - Wrap up: Inequality, governance, and the future of globalization
- Episode 3, Chapters 17-end (28 minutes)
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