Politics of the World Economy

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  • Created by: Catherine
  • Created on: 20-05-14 16:14
Define Politics
Who gets what, when and how - Harold Lasswell
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Define Economy
Originally meant the extension of the application of household laws to society or the nation at large - S.Lee R.Wodward
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World Economy definition
all trade, relationships and movement of capital between geographical units
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10 concepts that shape world economy
Idea, Institutions, Interests, Innovation, Power, Policies, Prescriptions, Contexts, Comparisions
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Define Ideas
Rival political economies, cultures of capitalism, rules and regilations
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Define institutions
Organisations and actors - public and private, states and markets
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Define Interests
Public and private, consumer, citizen and producer, corporate and community
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Define innovation
Processses of economic, political and social change
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Define Power
actors and processes which determine who gets what, when and how
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Define Policies
monetary, fiscal, industrial, enterprise and competitiveness, sustainability
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Define Prescriptions
rival agendas for determining what should be happening in the global economy
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Define Contexts
Economic developments do not occir in a vacuum, but in polities and societies with histories and traditions
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Define Comparisions
World economic performance reflects attempts to learn the lessons from and emualte rival economies and/or earlier periods of history and economic development
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last year the world economy grew by
2-3%
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Bank bailout amounted to
£1.2 trillion
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IMF projects world output to grow by ..... in 2013
2.9%
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IMF projects world output to grow by ..... in 2014
3.6%
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Political economy term was first used
in 1615 by Antoine de Monchrétien
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key governance actors;
the state, international institutions, regional/supranational institutions, market actors
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Examples of the state as key governance actors
excutive, legislative and judicial branches
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Examples of international institutions
World bank, IMF, BIS, WTO, OECD, G7/8/20/77
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Examples of Regional/supranational institutions
EU/NAFTA/APEC/mercosur
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Examples of market actors
TNCs, Banks, Entrepreneurs
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Key roles of public actors
laws, legislation, regulation, ownership, taxation
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Key concepts of public actors
accountability, participation, legitimacy, transparency, citizenship. The world economy doesnt stand seperate from the world of politics
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Key Actors in the Private domain
Individuals, consumers, consumers, entrepreneurs, TNC, SMEs, Public Institutions
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Key roles of Private actors
innovation, entrepreneurship, employment, goods and services
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Key concepts on Private actors
Profit, competition, risk, enterprise. the constant lobbying of governments and public institutions by private corporations is indicative of the importance of politics and the exercise of political power in shaping the developments of the world econ
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how many stages are there of the development of the world economy
6
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years of the age of mercantilism, state rivalry and emualtion
1615-1776
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years of the age of industrialisation and empire
1776-1871
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years of from internationalism to globalisation
1874-1914
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Years of retreat to nationalism
1914-1944
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Years of embedded liberalism: Bretton Woods to collapse of communism
1944-1990
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Years of the world economy in the era of of neo liberalism globalisation
1990-2013
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Age of mercantilism, state rivalry and emulation. key ideas
the emergence of the nation state, nationalsim, soveriegnty and a static conception of economic liefe, where the idea is that there is a fixed quantity, of economic resources in the world, so resources can only be increased in a country at expense of
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Age of mercantilism, state rivalry and emulation, power
In certain rival nations, the power of the state is placed behind the process of national economic development. Power is conceived as an end in itself, and economis policy is the servant of national power
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Age of mercantilism, state rivalry and emulation, policy
If free trade is advoated, it s only through a concern for the interests of one's own country. Economic activity must be directed towards the ends demanded by political power and more especially military power.
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Age of mercantilism, state rivalry and emulation, interests
The national interest is placed at the top of the political values, above those of the individual or the international community or the world
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The age of industrialisation and empire. ideas
Liberalism: Adam Smith, David Ricardo, John stuart-Mill - the invisible hand, comparative advantage. Economic nationalism: alexander hamilton, Friedrich List - national systems of political economy. Critiques of capitalism: Marx and Friedrich Engels
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The age of industrialisation and empire, Institutions and Power
Imperial rivalry,defeat of Napoleon, emergence of new industrial powers
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The age of industrialisation and empire, innovation
the industrial revolution, urbanisation, major advances in sciece, rechnology and agricultural productivity
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The age of industrialisation and empire, interests
the growth of free trade imperialism
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The age of industrialisation and empire, policies
Rhetorical commitment to laissez faire and free trade, but enduring commitment to protectionism
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from internationalisation to globalisation Role of Gold
The gold standard fixes and official gold price for each currency, combined with the free export and import of gold with no current or capital account restrictions. it is directly linked to the level of gold reserves, national autonomy is minimal.
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From internationalisation to globalisation, Requires...
The system requires a remarkable degree of central banks commitment to free trade and the city of London's financial markets
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From internationalisation to globalisation, created huge opportunities
Triggered by a combination of falling transport cost e.g switch from sail to steamship, the reduction in tariff barriers, pioneered by an Anglo-French agreement and railways created opportunities for land intensive commodity exports
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From internationalism to globalisation, most dynamic economies
Former British colonies: the US, Cananda, Australia and New Zealand, whose incomes per head grew by 1.8% and their exports 4.7% a year
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From internationalism to globalisation, figures
International trade grew by 4% a year. Capital flows increased from 7% of GDP to nearly 20%. 60 million people migrated from Europe to North America and Australia
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From internationalism to globalisation, growth accerlation figures
GDP per capita rose by 1.3% annually, in the previous 50 years it had only risen by 0.5% annually
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From internationalism to globalisation, poverty reduction
In the 50 previous years, poverty fell at 0.3% a year, from 1870-1914 it fell at 0.8% a year
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The retreat to nationalism, challenges to liberal economic order
Socialism, fascism, militarism, communism nad doctrines which highlight the unjust, unstable and inefficient nature of capitalism
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The retreat to nationalism, effect of Great war
role of state redifined, with a huge 'beggar thy neighbour'. Protectionsim leads to a dramatic decline in world trade. 21% in 1913 -> 9% in 1938
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The retreat to nationalism, Smoot-Hawley tarrif
US passed it, raised average tariff to 48% causing a 30% drop in imports and a 40% drop in exports between 1929 and 1933
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The retreat to nationalism, debt
there is monetary disorder and a failure to re-establish financial stability arising from huge public debt - legacy of war and inflationary finance
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The retreat to nationalism, Great crash of 1929
World trade fell by 70% in value and 25% in real terms between 1929-1932. Immigration to the US declined from 50mill in 1870-1914 to 6mill between 1914-1950
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the retreat to nationalism, only positive
The emergence of the politics of John Maynard Keynes from 1919-1936 and the implementation of the New deal
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Embedded liberalism: From Bretton Woods to the Collapse of communism, creations.
Bretton Woods created the IMF, World Bank, UN and GATT
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Embedded Liberalism, average annual growth for world output, trade and exports
4.7% between 1950 and 1973. World trade grew by 7.2%, volume of exports grew by 7.9%
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Embedded liberalism, Reduction on average tariffs
1940s - Pre GATT/WTO - 40% Late 1970s - Pre tokyo round - 7.1% Late 1980 - post tokyo round - 4.7% Late 1990s - Post uruguay round - 3.8%
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Embedded liberalism, pattern of trade
Pattern of trade was very one sided, rich countries got richer, developing countries didnt participate in this growh, by 1980 only 25% of merchandise outputs from developing countries were manufactured goods.
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Embedded liberalism, reduction of poverty
There was a reduction in poverty in OECD countries, but increases in the devloping world
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The qoels wconomy in an era of Globalisation and Competitiveness, most significant changes
International trade of good and services, increased importance to trade to a wider range of services. increase in FDI, international movements of capital and people, huge increase in the ability to share knowledge and ideas quickly
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The world economy in an era of Globalisation and competitiveness, FDI
Between 1990-1997 FDI grew by an annal average by 13% and by 50% from 1998 to 2000
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The world economy in an era of Globalisation and competitivess, most important aspects
Broad ranging politcal consensus in support of openess of movement of goods, serivces, investments and ideas. Easy access to information means more informed choices can quickly be made
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Bretton Woods 5.3% annual growth rate VS
Neo liberal globalisation 2.6% annual growth rate
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Bretton Woods recession average 1.1 years and led to an average 2.1% decline in output VS
Neo liberal globalisation recession average 1.5 years leading to 2.5% decline in output
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No recession lasted more than 3 years in Bretton Woods era VS
60% were 1 year in Neo liberal globalisation, 32.5% were 2 years and the remainder 3yrs and over
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Card 2

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Define Economy

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Originally meant the extension of the application of household laws to society or the nation at large - S.Lee R.Wodward

Card 3

Front

World Economy definition

Back

Preview of the front of card 3

Card 4

Front

10 concepts that shape world economy

Back

Preview of the front of card 4

Card 5

Front

Define Ideas

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