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Political Science
Christopher Cochrane

Exam Study Bretton Woods System (IMF) - Purpose: o To secure international monetary cooperation, to stabilize currency exchange rates, and to expand access to hard currencies (international liquidity. o Stability of currency exchange rate without backing currencies entirely with gold o Reduction of the frequency and severity of balance- of- payment deficits, elimination of mercantilist trade policies, such as competitive devaluation and foreign exchange restrictions o Promote world trade, investment, economic growth - Achieved by maintain convertible currencies - Nations attempted to revive the gold standard following World War I, but failed - representatives of most of the world's leading nations met at Bretton Woods, New Hampshire, in 1944 to create a new international monetary system - America was the leader in holding most of the world‘s gods, the leaders decided to tie the world currencies to the dollar, ($35 per ounce) - This gave the central banks of countries other than the US the task of mauntaing fixed exchange rates with the dollar and their currency. If the currency was higher than the dollar, banks of other countries would sell domestic currency and buy $US. - Bretton woods system lasted until 1971 and collapsed due to high inflation and growing trade deficit of the $US - After 1971, the $US was allowed to float (fluctuate against other currencies) - Side note: countries with high trade surpluses would sell their currencies in order to prevent appreciating (thereby hurting export) - Countries with large deficits would buy their currencies in order to prevent depreciation (which raises domestic deficits) NAFTA (North American Free Trade Agreement) - Free trade agreement between the US, Canada, and Mexico - Allows for reduced or duty-free rates on goods that are imported from these countries to one another - The North American Free Trade Agreement (NAFTA), signed by Prime Minister Brian Mulroney, Mexican President Carlos Salinas, and U.S. President George H.W. Bush, came into effect on January 1, 1994 - NAFTA has generated economic growth and rising standards of living for the people of all three member countries - NAFTA created the world's largest free trade area, which now links 450 million people producing $17 trillion worth of goods and services - Goals: o to reduce barriers to trade o to increase cooperation for improving working conditions in North America o to create an expanded and safe market for goods and services produced in North America o to establish clear and mutually advantageous trade rules o to help develop and expand world trade and provide a catalyst to broader international cooperation - Trade is considered "free" or "open" when goods and services can move into markets without restrictions, and prices are determined by supply and demand Welfare State - a welfare state is a government that completely provides for the welfare, or the well-being, of its citizens. Such a government provides for its citizens' physical, material and social needs rather than the people providing for their own needs. The purpose of the welfare state is to create greater economic equality or to ensure at least a certain minimum standard of living for all citizens. - A welfare state provides education, housing, sustenance and healthcare for its citizens. It also provides benefits such as pensions and unemployment insurance, and it provides equal wages through price and wage controls. This type of government provides public transportation, childcare, social amenities such as public parks and libraries as well as many other goods and services. Some of these things are paid for through government insurance programs, and others are paid for by taxes. - Those who meet the requirements, however, are entitled to these benefits. This type of system is frequently referred to as a "safety net" that is designed to help people who are in need. - government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens - The question may arise concerning what is welfare state, and the simple answer is that welfare state is a government that provides for the total well-being of its citizens and is akin to socialism. However, very few true welfare states exist. The United States is a good example of this as it provides some social insurance or entitlement programs to its citizens but does not espouse socialism. As socialism and democracy cannot go hand in hand, therefore, it is impossible for the United States to be one of the true welfare states. The United States does make efforts to provide for persons in need through a myriad of social service programs known as welfare. The Great depression - The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s. [1]It was the longest, most widespread, and deepest depression of the 20th century. - The depression originated in the U.S., starting with the fall in stock prices that began around September 4, 1929 and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday). From there, it quickly spread to almost every country in the world. - while international trade plunged by more than 50%, Unemployment in the U.S. rose to 25%, and in some countries rose as high as 33% - caused by major bank failures and the stock market crash. And yet, the Stock Market Crash was just the beginning. Since many banks had also invested large portions of their clients' savings in the stock market, these banks were forced to close when the stock market crashed. - Seeing a few banks close caused another panic across the country. Afraid they would lose their own savings, people rushed to banks that were still open to withdraw their money. This massive withdrawal of cash caused additional banks to close. Since there was no way for a bank's clients to recover any of their savings once the bank had closed, those who didn't reach the bank in time also became bankrupt. - Businesses and industry were also affected. Having lost much of their own capital in either the Stock Market Crash or the bank closures, many businesses started cutting back their workers' hours or wages. In turn, consumers began to curb their spending, refraining from purchasing such things as luxury goods. This lack of consumer spending caused additional businesses to cut back wages or, more drastically, to lay off some of their workers Transnationalism - Human activities and social institutions thth extend across national boundaries - Coined by Randolph Bourne in the 19 century - Internationalism: Government, Transnationalism: people - Transnationalism as an economic process involves the global reorganization of the production process, in which various stages of the production of any product can occur in various countries, typically with the aim of minimizing costs - Proponents of transnationalism seek to facilitate the flow of people, ideas, and goods among regions. Socialism - Definition: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods - A socialist economic system would consist of an organisation of production to directly satisfy economic demands and human needs, so that goods and services would be produced directly for use instead of for private profit driven by the accumulation of capital, and accounting would be based on physical quantities, a common physical magnitude, or a direct measure of labor- time. Distribution of output would be based on the principle of individual contribution. - a kind of command economy in which the government owns and operates the main industries, while individuals own and operate less crucial industries  Workers are allowed to choose their own occupations and professions  A large proportion generally work for the government  This also is generally declining in popularity WHO: World Health Organisation - Purpose is to promote the highest possible level of health by all people - Defines health as a state of complete physical, mental, and social well-being and not merely the absence of disease and infirmity - April 7 , world health day; headquarters in Geneva - Meets annually as the general policy-making body - Financed by individual government - WHO is the directing and coordinating authority for health within the United Nations system. It is responsible for providing leadership on global health matters, shaping the health research agenda, setting norms and standards, articulating evidence-based policy options, providing technical support to countries and monitoring and assessing health trends. - providing leadership on matters critical to health and engaging in partnerships where joint action is needed; shaping the research agenda and stimulating the generation, translation and dissemination of valuable knowledge; setting norms and standards and promoting and monitoring their implementation; articulating ethical and evidence-based policy options; providing technical support, catalyzing change, and building sustainable institutional capacity; and monitoring the health situation and assessing health trends. - Promoting development, Fostering health security, Harnessing research; information and evidence, Enhancing partnerships, Improving performance - WHO‘s Constitution came into force on 7 April 1948 – a date we now celebrate every year as World Health Day ILO: International Labour organization - The ILO is the international organization responsible for drawing up and overseeing international labour standards - The International Labour Organization (ILO) is the only tripartite U.N. agency with government, employer, and worker representatives. This tripartite structure makes the ILO a unique forum in which the governments and the social partners of the economy of its 183 Member States can freely and openly debate and elaborate labour standards and policies. - The International Labour Organization (ILO) is devoted to promoting social justice and internationally recognized human and labour rights, pursuing its founding mission that labour peace is essential to prosperity. Today, the ILO helps advance the creation of decent work and the economic and working conditions that give working people and business people a stake in lasting peace, prosperity and progress o Promote and realize standards and fundamental principles and rights at work o Create greater opportunities for women and men to decent employment and income o Enhance the coverage and effectiveness of social protection for all o Strengthen tripartism and social dialogue - The ILO was created in 1919, as part of the Treaty of Versailles that ended World War I, to reflect the belief that universal and lasting peace can be accomplished only if it is based on social justice. WTO: World Trade organization - WTO was established to supervise and liberalize world trade - Successor of GATT - Six main objectives: o Set/ enforce rules of international trade o To provide a forum for negotiating and monitoring further trader liberalization o To resolve trade disputes o To increase the transparency of decision-making processes o To co-op with other major international economic institutions involved in global economic management o To help developing countries benefit from the global trade system - The WTO‘s creation on 1 January 1995 marked the biggest reform of international trade since after the Second World War. It also brought to reality — in an updated form — the failed attempt in 1948 to create an International Trade Organization. - World Trade Organization. It is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other. - Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to open markets for trade. But the WTO is not just about opening markets, and in some circumstances its rules support maintaining trade barriers — for example, to protect consumers or prevent the spread of disease. - At its heart are the WTO agreements, negotiated and signed by the bulk of the world‘s trading nations. These documents provide the legal ground rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives - Stand for: o Non-discrimination: country should not discriminate between trading partners o More open: lowering trade barriers o Predictable and transparent: foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily o More competitive: discouraging unfair practises o More beneficial for less developed countries: more time to adjust, greater flexibility o Protect the environment : protects, public health, animal health and plant health GATT: General Agreement of Tariffs and Trade - The General Agreement on Tariffs and Trade (typically abbreviated GATT) was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1946 and lasted until 1993, when it was replaced by the World Trade Organization in 1995. The original GATT text (GATT 1946) is still in effect under the WTO framework, subject to the modifications of GATT 1994 FAO: Food and agriculture organization - Established in 1845, objecting is to eliminate hunger and improving nutrition and standards of living by increasing agricultural productivity. - Helps develop agricultural, forestry, fisheries, and land and water resources - Carries out research, provides technical assistance of projects in individual countries; educational programs through seminars and training centers - Achieving food security for all is at the heart of FAO's efforts - to make sure people have regular access to enough high-quality food to lead active, healthy lives - FAO's mandate is to raise levels of nutrition, improve agricultural productivity, better the lives of rural populations and contribute to the growth of the world economy. - Main areas o Putting information within reach: to collect, analyze and disseminate data for aid dev. o Sharing policy expertise: FAO lends its years of experience to member countries in devising agricultural policy, supporting planning, drafting effective legislation and creating national strategies to achieve rural development and hunger alleviation goals o Providing a meeting place for nations: On any given day, dozens of policy-makers and experts from around the globe convene at headquarters or in our field offices to forge agreements on major food and agriculture issues o Bringing knowledge to the field: Our breadth of knowledge is put to the test in thousands of field projects throughout the world. LDC‘s: Least developed countries - Least developed country (LDC) is the name given to a country which, according to the United Nations, exhibits the lowest indicators of socioeconomic development, with the lowest Human Development Index ratings of all countries in the world. The concept of LDCs originated in the late 1960s and the first group of LDCs was listed by the UN in its resolution 2768 (XXVI) of 18 November 1971. A country is classified as a Least Developed Country if it meets three criteria: o low-income (three-year average GNI per capita of less than US $905, which must exceed $1,086 to leave the list) o human resource weakness (based on indicators of nutrition, health, education and adult literacy) and o economic vulnerability (based on instability of agricultural production, instability of exports of goods and services, economic importance of non-traditional activities, merchandise export concentration, handicap of economic smallness, and the percentage of population displaced by natural disasters. EU: European Union - This treaty marks a new state in the process of creating an ever closer union among the peoples of Europe, in which decisions are taken as openly as possible and as closely as possible to the citizen - The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States. - For peace. - The EU is a unique economic and political partnership between 27 European countries that together cover much of the continent - It was created in the aftermath of the Second World War. The first steps were to foster economic cooperation: the idea being that countries who trade with one another become economically interdepend ent and so more likely to avoid conflict - Since then, the EU has developed into a huge single market with the euro as its common currency. What began as a purely economic union has evolved into an organization spanning all policy areas, from development aid to environment. - The six founders are Belgium, France, Germany, Italy, Luxembourg and the Netherlands. - Denmark, Ireland and the United Kingdom join the European Union on 1 January 1973, raising the number of member states to nine - 1986 the Single European Act is signed. This is a treaty which provides the basis for a vast six-year program aimed at sorting out the problems with the free-flow of trade across EU borders and thus creates the ‗Single Market‘. - With the collapse of communism across central and eastern Europe, Europeans become closer neighbors. In 1993 the Single Market is completed with the 'four freedoms' of: movement of goods, services, people and money - The 1990s is also the decade of two treaties, the ‗Maastricht‘ Treaty on European Union in 1993 and the Treaty of Amsterdam in 1999. People are concerned about how to protect the environment and also how Europeans can act together when it comes to security and defence matters. - A financial crisis hits the global economy in September 2008, leading to closer economic cooperation between EU countries European Parliament - It is constituted of European Members of Parliament who are directly elected in each Member State. The Parliament holds a three-fold action: o It is one of the European decision makers; it carries Community acts - Legislative Power o Its Budgetary Power allows it to define the definitive budget. It is enabled to reject it. o It also holds a Political control of the institutions: it can ask the Commission to submit a proposal to the Council or ask written or oral questions to the institutions. - The European Parliament (abbreviated as Europarl or the EP) is the directly elected parliamentary institution of the European Union (EU). Together with the Council of the European Union (the Council) and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world - The Parliament is currently composed of 754 Members of the European Parliament, who serve the second largest democratic electorate in the world (after India) and the largest trans- national democratic electorate in the world (375 million eligible voters in 2009). - The President of the European Parliament (Parliament's speaker) is currently Martin Schulz (S&D), elected in January 2012 - two largest groups being the Group of the European People's Party (EPP) and the Progressive Alliance of Socialists and Democrats (S&D). Global Governance - Global governance or world governance is the political interaction of transnational actors aimed at solving problems that affect more than one state or region when there is no power of enforcing compliance. - In response to the acceleration of interdependence on a worldwide scale, both between human societies and between humankind and the biosphere, world governance designates regulations intended for the global scale. - In a simple and broad-based definition of world governance, the term is used to designate all regulations intended for organization & centralization of human societies on a global scale. - Traditionally, government has been associated with "governing," or with political authority, institutions, and, ultimately, control. Governance however denotes formal political institutions that aim to coordinate and control Independent social relations, and that have the ability to enforce, by force, their decisions. Gross National Product - Total value of all goods and services produces by a national economy within a given period regardless of where the factors of production are located o Profit earned by a Canadian company abroad is considered in GNP but not GDP o Profits earned by foreign firms in Canada is included in GDP but not GNP - Gross National Product (GNP) is the market value of all products and services produced in one year by labor and property supplied by the residents of a country. Unlike Gross Domestic Product (GDP), which defines production based on the geographical location of production, GNP allocates production based on ownership. - GNP measures the output generated by a country's enterprises (whether physically located domestically or
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