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POL 2103 E - Intro to International Relations Global Politics - Joseph Roman - 22 Mar. 19.docx

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University of Ottawa
Political Science
Joseph Roman

• The teacher decides to send the exam 1 week ahead of time instead of only 1 day ahead POL 2103 E - Intro to International Relations & Global Politics - Joseph Roman - 22 Mar. 19 Economic globalization: What is going on? • Regionalization rather than globalization as most trade agreements are bilateral, not multilateral • Trade flows are triadized, remaining in the post-war zones of NA, Western Europe, & East Asia • Some select countries are being integrated into these trade flows, such as China, India, Mexico, South Africa, & the ex-communist countries • Central America, non-oil producing countries of the Middle East, & much of sub-Saharan Africa are excluded • Assumptions of globalized finance - policy convergence - the amount of money that flows across borders > 1 trillion dollars • Policymakers are not as handcuffed despite what they may be insisting • States with generous social policies continue to attract high levels of foreign direct investment • No evidence exists that link tax decreases & public expenditure to globalization - The justifications for decreasing taxes used to blame globalization • Democratic deficit with globalization The Roots of contemporary globalization (the long boom), 1945-1971 • Bretton Woods Agreement of 1944 reflected its architects’ wishes to avoid a return Depression era economics • Bretton Woods provided a framework for an open & liberal economic order • Establishing the dollar standard, the American dollar • Currencies fixed to the American dollar, but a band of +/-1% would be allowed so that countries could manage their trade deficits • The American dollar would be backed by gold, i.e. 35$/oz. of gold - gold only has value b/c people gave it value • Eagerness to avoid hot money - Hot money = money which flows into jurisdictions to get the highest rate of return, but in order to do that, you have to pull money out of other jurisdictions. - If people removed a high amount of money out suddenly, due to suspicions of places no longer being a good place to invest, they almost immediately hurt the economy - hot money was seen as one of the causes for the great depression • The BW agreement was an international agreement. It depended on domestic governments implementing it. It had to be turned into domestic law, had to be adopted, turning international law into domestic law. The adoption of the BW was then obviously not automatic. • The International Monetary Fund (IMF) & the International Bank for Reconstruction & Development/World Bank were part of the BW package • The IMF was designed to co-ordinate & stablize exchange rates & to cover short-term deficits if the need ever arose, thereby providing liquidity • IMF members’ economic power determines their contribution quota • Conditions were attached, but this only changed in the 1970s • Voting rights in the IMF are based on a member’s contribution to it • The World Bank was created to finance long-term capital projects • The International Trade Organization (ITO) was supposed to be a key institution for the post- war order even though its origins were not in BW • The ITO was proposed by ECOSOC & it eventually became the General Agreement on Trade & Tariffs (GATT) • Keynes proposed the Havana Charter in 1947, which included the ITO • ITO did not survive b/c the Havana Charter was not ratified by America’s Congress • The ITO’s significance was its ambition in linking a range of matters with trade • The ITO set out a full employment obligation & it proposed settling trade disputes through mediation & consultation • GATT’s focus was on the reduction of trade barriers • The post-war order sought to realize a liberal trading regime • The USA was interested in reflating the German & Japanese economies & returning the City of London to its role as a centre of haute finance • BW was complemented by domestic policies promoting full employment & Fordist regimes of accumulation, that hinged on mass production & mass consumption • Growth rates during the Golden Age of Capitalism were exceptional with high & stable rates of employment • Kennedy & Johnson administration supported London’s Eurodollar market • The Eurodollar market was
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