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33 Cards in this Set
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org for econ cooperation and development OECD
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1948, stimulate econ progress and world trade. forum of countries committed to democracy and the market econ, providing platform to compare policy experiences, seek answers, ID good practices, coordinate doemstic and intl policies.
coalition of democratic welfare states, formalized in 1961 and named OECD. wanted to build modern welfare states. japan was biggest success, output grew 8 fold, after WWII. various countries were involved but all had similar goals. industrial west rebuilt political econs on basis of compromise among nations. gov balanced intl integration and national autonomy. gov removed barrier to cross border trade/invest but protected weaker firms. labor and capital coop to keep profits/wages high. trading labor rights for labor peace. |
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export oriented industrialization EOI
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aim to speed up industrialization of country by export goods CA. seeks to find niche. policies adopted to promote EOI:
reduce tariffs, floating ER/ devaluation is often employed to facilitiate exports. great d to post wwii, under developed and developing have hard time, many foreign markets closed during that time, drove the countries to change. ex: Argentina, asian tigers! countries hope to gain enough money to import manufactured goods, implies opening of domestic market to foreign competition in exchange for market access. |
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raul prebisch
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head Argentina central bank during depression. noticed prices of primary goods fell more than manufactured goods of core.
matters whether a country exports agriculture or manufactured goods. headed ECLA, econ commis for latin america, saying that ISI is good/infant industry is good. compared it to wings, wings don't evolve one feather at a time. says there are more agricultural exporters so there's more competition. terms of trade- price of exports/price of imports, terms of trade may deteriorate over time if center and periphery are sufficiently different then engaging in trade can be detrimental to periphery. free trade with CA can hurt periphery. |
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decolonization
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until 1970 700 million people under colonialization, after there were only 2 million. US insisted on decolonization after WWII. said empires no longer needed security, US military will provide security. no longer need colonies for strategic purposes.
as former colony US opposes colonialism, also doesnt' like empires BC they were closed to US business. Atlantic charter called for autonomy of colonies, US pressured UK to abide. also said to open up trade to former colonies. |
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debt crisis of 1980s
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financial crisis when latin american countries and other lss develeoped, reach point where foreign debt exceeds earning power and unable to repay debts.
latin america suffered BC ISI polcies implemented compared to EOI framework of ISI explains the crisis. Argentina's ford factory!! ISI emphasizes protection and purchasing capital in order to build manufacturing centers/ imports. |
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UN conference on trade and development UNCTAD
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Prebisch created in 1964 seeking differential and more favorable treatment, rule exception, non reciprocity and special preference from north. the voice of developing countries.
org helps grant developed countries improved market access to exports from developing ones. stabilizes prices of exports essential for developing countries. developing countries beneft. o Prebisch headed the UN Conference on Trade and Development in 1964 and tried to fix problems with periphery and make things more favorable. |
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structural adjustment programs
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implemented by IMF and WB in developing countries, conditions for loans/lower interest rates on existing loans. wanted to reduce borrowing of country's fiscal imbalances. forces developing to focus on trade and production.
implements free market programs, cutting expenditures, focus on resource extraction, devauluation, trade liberalization, governance. |
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non discrimination
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members all treat each other equally, no MFN. EX: shrimp/turtle case, US lost because gave advantage to some nations.
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reciprocity
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negotiate trade barrier reduction to attain reciprocal concessions. bilateral negotiation in GATT, MFN applies to all. generalizes the concession .
bolsters lobbying position of expoters in political process. US tariff reduction linked with foreign reudctions means the RTAA created winners from freer trade, exporters who sell in newly open foreign markets. fostered development of exporters as free trade lobbyists. republicans support free trade BC of this. increased importance of exporters of congressional districts. |
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shrimp/turtle case
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US environmental law/endangered species act protected sea turtles from nets by requiring a TED. US law prohibits shrimp imports from countries without TEDs. foreign shrimp exporters complained (malaysia, india, pakistan) to WTO and they struck down on US, no discrimination!!
US lost, not because it protected nature but BC it discriminated between contracting parties. US provided some caribbean countries with the tech and cash to use TEDs, complaining nations didn't get that. US adjusted but Malaysia still complained. 2001 WTO sided with US, they complied, Malysia whiny baby. |
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new intl econ order NIEO
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set of proposals during 70s by developing countries through UNCTAD, to promote their interest by improving their terms of trade, increase development assistance, develop country tariff reduction.
replace bretton woods. abandoned gold but not completely. FIX!!! |
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jean monnet
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helped create European union. • Jean Monnet helped with Bretton Woods. Compared notes with Charles De Gaulle. Who wanted his help to jump start FR.
• BW was intl integration tempered by gov concern for national constituuencies, markets temprered by social reform, and US leadership. Delivered ‘goods’ econ growth, low unemployment, and stable prices. Japan most dramatic success story. Reason for EU integration? Much credit given to Jean Monnet ECSC which brought together the markets. What actually unified Europe. |
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national treatment principle
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treat foreigners like domestic. no discriminiation! neutrality. WTO says so. shrimp example again!
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mono exporters
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econ that relies on one or two export products as their output of GDP, much of latin america relies on bananas/coffee in 1910-90s, sugar/coffee from brazil in 19thC.
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washington consensus
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john williamson named it this, the organizing principle fo rmost discussions of econ policy. resonated well with developing countries, at the end of the C there was more agreement on econ doctrine than at any time since 1914.
This is the set of 10 policies that the US government and the international financial institutions based in the US capital believed were necessary elements of “first stage policy reform” that all countries should adopt to increase economic growth. At its heart is an emphasis on the importance of macroeconomic stability and integration into the international economy - in other words a neo-liberal view of globalization. The framework included: Fiscal discipline - strict criteria for limiting budget deficits Public expenditure priorities - moving them away from subsidies and administration towards previously neglected fields with high economic returns Tax reform - broadening the tax base and cutting marginal tax rates Financial liberalization - interest rates should ideally be market-determined Exchange rates - should be managed to induce rapid growth in non-traditional exports Trade liberalization Increasing foreign direct investment (FDI) - by reducing barriers Privatization - state enterprises should be privatized Deregulation - abolition of regulations that impede the entry of new firms or restrict competition (except in the areas of safety, environment and finance) Secure intellectual property rights (IPR) - without excessive costs and available to the informal sector Reduced role for the state. These ideas proved very controversial, both inside and outside the Bretton Woods Institutions. However, they were implemented through conditionality under International Monetary Fund (IMF) and World Bank guidance. They are now being replaced by a post-Washington consensus. |
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newly industrializing countries NICs
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countries whose econ haven't reached first world status yet but have outpaced their developing counter parts. undergoing rapid growth, EOI, many NICs can occur when rural move to cities where growth of manufacturing draws many workers.
WTO supoprt, environ, labor, social standards are weaker. fair trade supporter advocate standard for importing product the outsourcing job to NIC. ISI problems left them bad off. rapid industrializing LDC have problems paying for imports. stagnation in west reduces demand for exports, inflation raises prices of manufactured goods they need to import. foreign borrowing allowed more advanced developing countries, NICs to continue to invest in industry. from world bank. one good they heavily imported to run their machines was oil. OPEC being horrible raised their import bill. Developing country debt created strange triangle, oil price gave OPEC more money, they put it in financial markets. intl banks lent the OPEC petrodollar among the non oil developing countries, aka NOPEC. one aspect of third world borrowing. LDC least developed nation. |
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infant industry
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new industry in early stage. ISI protects it. gov supports it with subsidies and tariffs, but with ISI no need to work hard and be competitive.
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european coal and steel comm ECSC
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six nation intl org, serves to unify western eur during cold war and create foundations for modern day EU. orignally done to prevent war between FR/GR, if economically tied to one another war will seem impossible.
contributed to expansion of econ, development of employment and improvement to standard of lving. jean monnet was first president. |
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non tariff barriers
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trade barriers restrict imports but aren't in usual tariff form. some are anti dumping, voluntary export restraints, and counervailing.
US asked VER of japan on their cars. they complied. reduction in tariffs after WTO. NTBs didn't reverse liberalization, but did hint that balance of of forces was shifting back to new protectionism. US business and labor unions wanted freer trade. but as they faced more competition on world and domestic markets they switched to protectioism. |
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import substitution industrialization ISI
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gov effort to replace imports of manufactured products by expanding dom inds. use high tariffs to protect the new/infant inds. like textiles, shoes appliances, etc.
period of 1945-80 was near catastrophic for many developing, rationale was to break from teh unfair CA, prebisch, where developed have manufactured good and developing have primary, prices fall easier. ISI had some success. industrialization happened with it, but no growth or convergence. with high tariffs the domestic inds didn't have to be competitive, efficient or productive. countries that did catch up used other policies, EOI/east asia. ISI increases dependence on imports, needed them for make their own exports. EX: Argentina, africa/asia... infants never matured, excessive protection for final goods. |
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declining terms of trade
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raul preisch, prices of primary fall more than manufactured. terms of trade is export/import price. prices deteriorate over time, free trade is based on CA which can hurt smaller nations.
gains from trade with industrial countries were distribtued, worse terms of trade as value of primary products fell compared to manufactured goods. limited market access for exports BC riche country protectionism. |
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non aligned countries
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group of states considering themselves as not formally aligned with or against any major power bloc. neutrality in cold war, attempt to thwart it? mutual respect for each other, peace!
Third world took the non aligned stance to avoid the conflict between the USSR and US. Bandung conference decided this for 29 african asian nations. led by nehru. |
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generalized system of preference GSP
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formal system of exemption from WTO specifically from teh MFN that obliged WTO member countries to treat imports of all other WTO members no worse than they treat imports of their MFN.
unctad claims that MFN reduces incentive for rich countries to reduce tariffs. GSP exempts WTO members from MFN for purposes of lowering tariffs for least developed countries without also lowering tariffs for rich countries. developing doens't have to pay as much to export?? |
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multi fiber arrangement
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governed trade on textiles, quoto on how much developing could export to developed. After Uruguay round, WTO absorbed this and got rid of quotas. developing countries had CA in unskilled labor therefore were good at textiles. worried that dismantling of this would take away the CA. Bangladesh did well!
goes against non discrimination |
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regional trade agreements
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reciprocal trade agreements between two or more partners. easier to reach deal than in bigger forum like WTO. does make it hard for those outside the group to trade within the group.
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contracting parties
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• Members are called contracting parties. Less formality. Doesn’t’ mean it wasn’t effective. When contracting parties reached agreements the GATT obliged them to follow their agreements. Also gave rights to retaliate with tariffs for those who failed to do so.
GATT had weak enforcement. Origins and theoretical underpinnings of the GATT: est 1948. Meeing in new hamphsite in 1946 involved major world powers and followed US lead in negotiating set of institutions, GATT was one of them. |
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multinational corps
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corp that manages production in more than one country. US took lead of MNC and automobile corps were the quintessential MNC. In the past it was money that flowed from country to country but US was first to take MNC abroad
MNC after WWII, persistence of trade barriers didn't allow them. US MNC twice as large as foreign loans and stocks. MNC important for G. national and local gov often compete to atttract MNC, expect increased tax revenue, employment, econ activity. kind of seen as race to the bottom. MNC important for developing. |
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dispute settlement mechanisms, GATT/WTO
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ts dispute settlement mechanism: for any ruling that comes out of DS panel to be blocked you have to have complete consensus that the …when there is a dispute. Countries are given 60 days to resolve dispute under DSB. The DSB sets up a panel of experts if they can’t come to an agreement, panel of lawyers with specialization in those areas. Panel then listens to evidence on both sides, makes ruling. If made in favor of the complainant then the voting rule eliminates the voting of the respondent to veto.
o If respondent doesn’t like voting it can go to review. o Once panel report is accepted, the losing party proposed implementation of reform and timetable. o EX: Venezuela complained to WTO that US applied stricter rules on imported gasoline than it did for domestically refined gas. No chemical difference between the two so ruled that this was just an effort to block imports from Venezuela. US disagreed. Appellate body ruled against US so US had to change its policies. US took 6 months to decide how to remove policies. Went to the end point of timetable, took it to the 15 month period. But conformed, removed policy. Took less than 2 years for US to conform to WTO. |
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retaliatory tariffs
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when a naiton raises tariffs against you respond with tariff of your own. tariff war after smoot hawley also part of GATT, where if someone breaks rule you can retaliate.
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jwaharlal Nehru
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PM of independent india, 1947-64, leader of free india movement, advocated liberation from UK rule. his rule is due to US atlantic charger pressure on UK. suffered heavy econ problems after independence due to lack of strong institutions put in place by UK. india closed to free trade as colony, after break free atlantic says they should open up.
Bandung conference leader, non alignment during cold war. |
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obsolescing bargain
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MNC has bargaining power. over time host country develops skills required to ru the MNC, and the power of MNC declines and expropriations become possible. EXP peaked in 1970s, most vulnerable were extracted and raw material industries, oil minerals. problem has mostly disappeared now but the o bargain results in negative ship between MNC power and host governments and time.
MNC invest in manufacturing now, not so vulnerable to EXP. |
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dollar devaluation of 1973
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US dropped from gold ending bretton when Nixon took dollar off gold in 1971:
• Monetary fiscal restraint, cut spending, raise taxes, raise interest rates. This was vetoed because of conflict with other goals, Vietnam war, social programs full employment. Unemployment was going up. Tension was for US dollar to keep gold value it would require policies that went against these other goals, raising taxes/interest rates, and reducing spending. • Devaluation: US could’ve said inflation eroded value of gold dollar we should just devalue it. Say dollar is now worth 50 per ounce. Devalue in terms of gold?? Why not? Big concern, once it devalues, and broke commitment of 35/ounce. What was to stop it from doing it again. Instead of adjusting or maintaining commitment they might do it again and continue to do domestic goals and ignore the bretton wood regime. Worry was if devalued other countries would sense it was the first of many devaluations. Then there’d be a run on US dollars. People would cash out. Bring flood of requests to convert dollar to gold. And bring about same devaluation they fear. • System was pretty inflexible when faced by mismanagement. Could either commit to regime or go its own way and pursue its own domestic policies. And that’s the third option. Take dollar off gold and end Bretton Woods, and that’s what Nixon does. • Conflict between domestic politics and intl responsibilities. • Because US is inflated they needed to devalue, opposite of Germany printing money. In both cases there are cross cutting domestic and intl pressures. In GR in the 20s, pressures were intl, in US it was both foreign and domestic. Vietnam was causes huge deficits, so unpopular politicians don’t enforce high taxes to pay for it. |
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capital controls
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o Capital controls: policies that seek to limit the levels of foreign investment in the country. Up tile ht 1990s these were high in the world.
• 1 = tight capital control means not able to purchase anything. • 0= no capital controls. • Become easier to invest oversees. Easier ot buy stocks and bonds. And relatively easier to buy ownership of factories. |
