Chapter 9 Case Study Economic Globalization in Africa
(F) Day of the week: Thursday Class: IS305 Created Time: January 28, 2021 2:15 PM Database: Class Notes Database Date: January 28, 2021 2:15 PM Days Till Date: Passed Last Edited Time: June 9, 2021 10:42 AM Type: Presentation Notes
Group 5
Case Study: Economic Globalization in Africa
the benefits of globalization is not equally distributed.
- Africa lacks behind in almost every aspect
there are positive signs in Africa economies though:
- They erased their debts to the IMF
- Received China’s aid and investments without preconditions
- < have some form of democratic elections
attempts to mobilize capital must be domestic, external aid should serve as a compliment to Africa’s own efforts, and better governance is essential for positive changes in Africa to occur.
1. An Evolving Global Economy
4 Major Economic Systems
- Soviet Union Socialist model
- The US liberalm arket ecoomy
- The imperial preference system of European
- Mercantilist Statist
Countries were mostly closed, without much IOs to help with trade
How global economy adapted to expanding globalization.
2. The Globalization of Liberal Economy Norms
Adam Smith: humans are selfish beings, for self-interests only. Market economy supply and demand will keep price low.
- Market without interference from institutions or governments will benefit and improve
- Less developed countries must borrow loans to kick start economy
- Bretton Woods institutions wanted to bridge the financial gap between rich and poor states
The Bretton Wood Institution
World Bank and IMF aid countries with economic issues
The Washington Consensus became new model (Bretton Wood Consensus)
- Helping the poor: prove basic healthcare, infrastructures etc.
Why did they doubt the Bretton Wood System?
The Role of Multilateral Corporation
The liberal order is best representing today’s global economy.
- 60,000 MNC: expand market, labor…
The Critics of Liberal Economic Norms
ECLA questioned liberal thinking of developing states
Dependent on others isn’t good ⇒ Creation of NIEO (1970s)
- G77 against the GATT: served only developed states
G77 demanded 6 changes:
- Change terms of trade in international trade (only one that succeeded)
- Tried to change voting system for developing states
- Demand more authority for the developing states: regulation on it’s MNCs
- Improve technology transferring
- More foreign aid and better condition
3. Pieces of Global Governance
Development and Finance
WB, IMF, UN, NGOs
gap between Rich North and Poor South is still wide.
- Income of developing countries are growing
- If the gap is being bridged is based on perspective
The World Bank
Work on development
- Reconstruct states after WW2
- 50s: provide loan with interest for economic, governmental development
- With strings attached: policy changes
- to fund infrastructure projects
- 70s: to improve social services
- 80s: for sustainable development, environment, and poverty
- 90s: loans provided to private companies along with governments.
Focus on giving loans or not to corrupted governments
International Monetary Fund
Functions:
- To provide loans and help with exchange between currencies
- Initiatives to help poor indebted countries
- Condition: policy changes
- Annual meetup: to anticipate economic problems
The Mexican Debt Crisis: involved in bailout and structural adjustment
Asian Financial Crisis: Exchange rate, stock market, and real GDP impacted
Revealed weakness of Asian banking system
The IMF added to debt crisis (80s)
- Developing countries couldn’t pay their debt
- Can’t accomplish set adjustment programs
Collaboration with NGOs
Mechanisms to tackle poverty in the world, economic development, growth
Who does what?
- Actors: what do they do to promote these goals
Global or regional mechanism, which are more effective in this goal
Critical assessment of the mechanisms
Limited success of these mechanisms in eradicating poverty, economic prosperity…
- Challenges created by
- The mechanism
- Environment
- International System
- …Etc
Policy recommendation to reduce poverty, help poor country with poverty trap