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GLOBAL ECONOMY & DEVELOPMENT Lianna Lee, Julian Nguyen & Marc Vidal

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GLOBAL ECONOMY & DEVELOPMENT

Lianna Lee, Julian Nguyen & Marc Vidal

INTRODUCTION TO GLOBAL TRADE

• 19th century BCE attest to the existence of an Assyrian merchant colony at Kanesh in Cappadocia

• Silk road

• Guangzhou Port

• Christopher Columbus expedition to America

• Dutch East India Company

POST-WORLD WAR II

BRETTON WOODS CONFERENCE (1944)

• Stabilize currency exchange rates • Binding rules on international economic activities• Creation of IMF, World Bank, WTO

FACTORS THAT AFFECT ECONOMIC DEVELOPMENT AND INVESTMENT

• Foreign direct investment

• Historical factors (I.E. Impact of colonial rule & Cold War in African countries)

• Mortality decline

• Human capital investment= “knowledge”

• Physical capital= technology

• IDL

• Globalization

• Decrease in Mortality + increase in schooling= economic growth• Increase in investment in H (human capital) ->change in fertility via

quality-quantity trade off -> higher growth rate of technology-> growth to higher level of output

PRODUCTION FUNCTION

t= timeK= physical capitalH= human capitalA= magic**

MOBILITY IN THE IDL AND ECONOMIC GROWTH

• International division of labor (IDL)• Linear hypothesis: the core grows

faster than others• Non-linear hypothesis: semi

periphery grows faster than others• Beneficiaries of the relocation

of global industries to non-core countries

• R&D strategies in an emerging economy

• The development and protection of technological competencies

NGO: VEGA

GLOBALIZATION AND ECONOMIC DEVELOPMENT

CURRENCY/ECONOMIES

CURRENCY/ECONOMIES

• FREE FLOATING VS. PEGGED

• EXCHANGE RATES

• PRODUCTION POSSIBILITIES CURVE

• OPPORTUNITY COST

• PRICE CONTROLS

• TARIFF/QUOTA

• PRICE INDEXES

GLOBAL ECONOMIC DEVELOPMENT & DEMOCRACY

• THERE IS A NOTICEABLE TREND BETWEEN ECONOMIC GROWTH AND DEMOCRATIZATION. GROWTH, HOWEVER, ALSO LEADS TO A COMPLACENT POPULACE

• NEOLIBERAL ECONOMIC POLICY HAS CONSOLIDATED POWER AND INFLUENCE IN AN ELITE GROUP OF CORPORATIONS AND COUNTRIES

• BECAUSE MUCH OF THE DETERMINING POWER OF THE WORLD IS WRAPPED UP IN SPECIFIC NATIONS WORKING TOGETHER, WHEN THOSE NATIONS DISAGREE, MASSIVE AMOUNTS OF GRIDLOCK OCCUR ON A WORLDWIDE SCALE.

• THIS LEADS TO NATIONALIST BACKLASH, A CONSEQUENCE OF THE POPULACE DEMANDING MORE INPUT IN THE WAY THEIR GOVERNMENT WORKS.

INTERNATIONAL TRADE

US/CHINA TRADE RELATIONS

• 1972 NIXON VISIT TO CHINA

• UNITED STATES-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

• BILATERAL ECONOMIC RELATIONS

• CHINA'S MEMBERSHIP IN INTERNATIONAL ORGANIZATIONS

TRANSNATIONAL CORPORATIONS• TNCS ARE BEST DEFINED AS COMPANIES THAT HAVE THE CAPACITY TO COORDINATE AND

CONTROL OPERATIONS IN MORE THAN ONE COUNTRY, EVEN IF THEY DO NOT OWN THE FACTORIES AND PAY FOREIGN WORKERS DIRECTLY.

• EXTRAORDINARILY RICH, POLITICALLY POWERFUL, RESPONSIBLE TO SHAREHOLDERS, NOT SOCIETY

• PRIMARY GOAL IS: PROFIT

• SECONDARY GOAL IS REDUCING COSTS

• POSITIVE OUTCOMES:

• INCENTIVE TO INNOVATE

• LOWER PRICES PASSED ON TO CONSUMERS

• GREATER AVAILABILITY OF GOODS AND SERVICES

• NEGATIVE OUTCOMES:

• TAX AVOIDANCE

• SEARCH FOR FAVORABLE LAWS IN NATION-STATES

• SKIMP ON BENEFITS & SALARIES TO WORKERS

• AVOID PAYING FOR POLLUTION CLEANUP COSTS

FREE TRADE AGREEMENT/AREAS

NAFTA (NORTH AMERICAN FREE TRADE AGREEMENT) CANADA, USA, MEXICO

KORUS (THE KOREA-US FREE TRADE AGREEMENT) USA, SOUTH KOREA

JAMPRO (THE EUROPEAN PARTNERSHIP AGREEMENT (EPA) JAMAICA, EU

FTAS VS CUSTOM UNIONS

GLOBAL ECONOMIC GOVERNANCE

• INTERNATIONAL MONETARY FUND: - CONTROLS INTERNATIONAL MONETARY SYSTEM (EXCHANGE RATES, INTERNATIONAL PAYMENTS) & STRUCTURES LOANS TO EMERGING ECONOMIES/DEVELOPING COUNTRIES

• WORLD BANK:-PROVIDES LOANS FOR EMERGING ECONOMIES/DEVELOPING COUNTRIES

• WORLD TRADE ORGANIZATION:-GLOBAL TRADE ORGANIZATION THAT CREATES & ENFORCES TRADE AGREEMENTS BETWEEN NATION-STATES

GLOBAL ECONOMIC GOVERNANCE

• IMF AND WORLD BANK MAKE AND ENFORCE RULES ON GLOBAL ECONOMY BASED ON NEOLIBERAL POLICIES

• STRUCTURAL ADJUSTMENT PROGRAMS (SAP)

• BELIEVES IN SUSTAINED ECONOMIC GROWTH AND HELPS END POVERTY WORLD WIDE

WASHINGTON CONSENSUS

• COINED BY JOHN WILLIAMSON IN 1989

• SET OF 10 ECONOMIC POLICY PRESCRIPTIONS TO CONSTITUTE THE “STANDARD” REFORM PACKAGE PROMOTED FOR CRISIS-WRACKING DEVELOPING COUNTRIES ACCORDING TO WASHINGTON D.C.

MULTIMEDIA VIDEOLIFE IN DEBT

https://www.youtube.com/watch?v=YoIJPwfsbqg