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POLSCI 2I03 (101)
Lecture

Session10 Political Sci 2I03 Summer 2013

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Department
Political Science
Course
POLSCI 2I03
Professor
Mark Busser
Semester
Summer

Description
6/10/2013 3:02:00 PM Session 10 – Global Political Economy The effort to look at the ways in which politics shape markets – distribution of society and who wants what, who is willing to pay and how do resources and people’s inclinations work in order to supply certain goods and services. Supply & demand shapes (who, what, and when production takes place) Finance – Production – Trade Finance – Risk taking and money making. Investing & Planning. It has to do with the owners, investors and capitalist who front the money to invest in certain ventures. Put the money forward to get a business started and keep it going. In order to reap the reward based on their risks. Private investment and private financing, big pool of money and resources to purchase things, is called financial capital.  Financial capital – Money that can be put into things.  To bring income  Income is more than the costs of production  Finance – Wall Street, stocks, bonds and mortgages, borrowing and lending and trying to profit from it. Production – Who makes what? Making and crafting, building and constructing, workers and laborers  How and where it’s made  Factories and mines  Steel mills and labor unions  Kitchen tables where crafted goods are made  Production happening with the home  The design and resourcing and fabrication of physical products, or services that will be TRADED.  Financiers put money forward to start a business venture  Production (which hires labors, organize to produce goods or services  Trade Trade – Buying, shipping, and selling. Importing and exporters, and logistics  International trade  Goals and priorities of nations states are when it comes to the global economy. Trade  Buying and selling, Importing and exporting  10 times the world’s military spending. Trillion dollars into exporting and importing  (Imports) Goods and services that people in one country buy from another country  (Exports) Goods and services that people SELL to another country  Relationship between the two has been a matter of concern Balance of Trade The Balance of Trade is the value of a state’s exports relative to its imports  A country is said to have a trade surplus when it exports more than it imports  A country is said to have a trade deficit when it exports less than it imports  IF you sell more than what you import, you will have trade surplus instead of trade deficit.  Trade surplus ends up with more money which is a GOOD thing from a Country’s point of view  Bilateral trade deficits – when the import and exports of countries do not equal  China – Competitive advantage because of trade surplus, but it creates a noise because of the way China subsidizes its companies.  Trade Surplus – Seen as beneficial  More money stays ‘in’ than goes ‘out’  Provides capital to be invested in new ventures, new hires, new products, new buildings, new machinery, new technology  This money can be added to the reserves, and saved for later  High levels of international sales are good for businesses, and arguably, society  High profits, high employment, high tax revenues  Helps to retain local ownership and control of businesses, finance and production Tracking the global balance of trade  Countries can generally get by with Alternating periods of trade surpluses and deficits  Chronic trade deficits, however, are seen as a major problem needing resolution  The balance of trade is carefully tracked through a system of national accounts by the International Monetary Fund (IMF) o The balance of trade is tracked carefully and closely by economics and national policy makers Approaches to Trade Economic Nationalism – (AKA Mercantilism) o Focuses on the site as the actor in the global economy o Prioritizes relative economic gains o Aims at the goal of a favorable distribution of wealth o Making sure that their country gets a GOOD and the BIGGEST piece of the pie in terms of wealth and power o Advocates control and protectionism in the national interests Economic Liberalism – AKA Neo-liberalism o Focuses on multiple actors, states, individualism, households, firms o Prioritizes absolute economic gains o Aims at the goal of optimal total wealth through efficiency o Advocates economic liberalization in the general interest World Trade Organization (1995)  An International Organization that works to oversee and liberalize international trade  Carries on the work of the General Agreement on Tariffs and Trade, the previous multilateral agreement governing trade liberalization o Agenda on Liberalization  WTO Protests in Seattle (1999) o Anti-Globalization activism o What were the arguments and do we agree with these?  The Washington Consensus – Describes a set of policies, priorities, and ‘best practices’ that the US government and international economic institutions advocate for the liberalization of free trade. o Ideas pertaining how people should do things to facilitate ‘trade’ o Who benefits and looses in these from elements? ELEMENTS OF WASHINGTON CONSENSUS Trade liberalization Financial Liberalization Non-Interference in the economy by Governments Reducing restrictions on lending and borrowing A Laissez-faire or hands-off approach to the Letting market forces determine where interests economy rates should be Reduce protectionism, trade barriers, ETC Participating in the financial sector of the economy. Investing financial capital. Better trade of bonds and goods Encourage Exports Discourage Imports  Gives tax breaks and subsidies to companies to  Apply tariffs and duties, I.E taxes on imported be competitive goods  Reduce relevant regulations to make business  Create non-tariff barriers to trade that benefits easier domestic producers such as:  Send leaders and business elites on high-profile o Heightened standards (Environmental, trade missions safety standards, by making it harder for  Manipulate or remove foreign governments to foreign companies) – Drugs and make them open up their markets pharmaceuticals are regulated and tracked. o Administrative fees o Laws or regulations  Foster a national culture of buying domestic Reduced Role of the State Privatization  Non-interference in the economy by  Selling of state enterprises, government run- governments services and other national resources to private  A Laissez faire approach to the economy companies or investors Increasing Foreign Direct-Investment Deregulation Allowing outside investors to buy domestic Eliminating policies or rules that might get in the companies in the country, or to expand existing way of competition or hamper the entry of new companies into the country, and to do business firms to the marketplace. there  This is called foreign direct investment (FDI) Intellectual Property Rights Fiscal Discipline Protecting patents, copyrights and other guarantees Limiting government expenditures in order to that the producers of ‘intellectual property’ are notpursue ‘austerity’ meaning making sure to avoid cheated by counterfeits, copies, bootlegs and piracy government budgets that require taking loans to  Issues surrounding access to HIV / AID drugs, pay for programs there are enough drugs in order to provide people in the developing world who are suffering HIV/AID drugs but cannot afford Tax Reforms Spending Priorities  Broadening the ‘tax base’ the scope of what is  Limiting government spending on subsidies, considered taxable programs and administration  Reducing marginal tax rates, meaning how  Emphasizing government spending on much taxes increase at higher levels of income promising economic sectors (increase that comes with greater and greater income should be reduced) Economic Sanctions  Economic sanctions are a non-m
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