International Studies 101 UW-Madison

NIDL

(New International Division of Labor) Transfer of some types of jobs, especially those requiring low-paid, less-skilled workers, from more developed to less developed countries.

Cash transfers in South Africa

-3.4% of GDP is transferred to ~16 million individuals -don't require any behaviors/actions you must follow to receive the money

International Aid

-Between 1948-1952, US$13 billion of aid was transferred from US to Western European countries -World economic growth strong throughout 1950s and 1960s -International aid programs expanded to try and generate economic growth in poorer countries

The World Bank Model

-James Wolfen --> for profit model --> draws capital from investors - high interest rates to repay investors -->

New financial interdependencies

-Many governments buy $US-denominated assets and build large US$ reserves to hedge against speculation on their own currencies -US housing boom, starting in late-1990s, enabled by overseas investment and innovations in financial markets -->Securitization is when various kinds of debt (e.g. mortgages, credit card debts) are pooled together -->financial derivatives enable investors to purchase exposure to the performance of an underlying asset without ever directly owning it

The Bangladesh Model

-Muhammad Yunis -->self-sufficiency --> small, short-term loans (1 year loans w/ weekly repayments --> joint liability --> women were targeted as loan recipients --> lower interest rates

Cold War Costs

-US fiscal deficit also grows as Nixon administration prints more money to pay for (i) war in Vietnam and (ii) stimulus efforts --> The result is increasing inflation -Foreign governments start exchanging more of the their US dollars reserves for gold -In 1971, President Nixon formally closes the "Gold Window" -Value of the dollar - now set by global foreign exchange markets further decreases and US exporters temporarily regain foothold in global markets -Other governments also abandon currency stabilization arrangements agreed upon in 1944 -Producers of staple commodities traded in dollars- e.g. oil, coffee, iron ore --> real profits plummet -Some producers form cartels in order to control supply and push-up prices - most notably OPEC

Jobless growth in India

-informal economy - accelerating GDP growth over the last ~25 years in the service sector -problem of surplus population - not enough jobs to absorb India's growing labor surplus

Offshore Tax Havens

-offer secrecy and low or zero taxes -politically stable facilities to help people/entities get around laws or jurisdictions elsewhere -$12-20 trillion - around 10% of the world's wealth is held offshore and untaxed --> Creates downward pressure on onshore tax rates for the rich -Global South lose up to $1.8 trillion a year due to offshore financial flows --> Compare that to the ~$100 billion they received in annual aid from countries in the global North

Crisis in the Global South

1. Bilateral aid from wealthier countries is declining 2. Demand for some major exports is falling 3. Price of oil is rising

G20

group of 20 largest economies in the world

subprime mortgage

mortgage for a borrower with a not-so-good credit rating -- targets poor, predominantly black inner-city neighborhoods

Governmentality

the art of governing appropriate to promoting the welfare of populations within a state

balance of payments

the difference between the amount of money that comes into a country and the amount that goes out of it

Market access

the extent to which a consumer has the ability to find and purchase goods and services

capital flight

the movement (flight) of capital from one nation to another, via jobs and resources

Petrodollar Recycling

the recycling by private banks in Europe and the U.S. of dollars deposited by oil exporters through loans to oil-importing countries. -Governments in oil producing nations receive more US dollars -They deposit many of these petrodollars in lightly regulated offshore banks in London (the Eurodollar market) -Governments in developing countries take out dollar denominated loans from these banks at low but adjustable interest rates

Reterritorialization

the restructuring of a place or territory that has experienced deterritorialization

Joint venture

when a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity

Commodity

Any good - merchandise or service - that is bought and sold for money 3 imputs 1. Money 2. Materials 3. Labor

Neoliberalism

Approach to governing capitalism that emphasizes liberalizing markets and free trade. Developed in response to and as a critique of welfare state models of rule. Does not look the same in every place. Not a uniform policy -- just an ideology

Supply-side Economics

Assuming the rich are going to invest and create more jobs. (Invisible hand)

Market Model

Big retailers. Walmart, nike, GAP. Looking for market signals to figure out what is popular. Work with lots of different vendors that can quickly respond to the trends. Works for lower-tech production and lower-skill level.

1980s debt crisis

By the mid-1980s, virtually all of Latin America and the Caribbean is engulfed by a "debt crisis" starting w/ Argentina -SAPs introduced...

In-house Model of Production

Classic model of a commodity chain. Very hierarchical. The people at the top designing and delegating what everyone is going to do

Commodity Fetishism

Created by Marx. Describes a process we take for granted. The longer the commodity chain, the easier it is to hide how products are made.

import substitution

Development strategy that uses tariffs and other barriers to imports, and therefore stimulates domestic industries.

Post-Fordism

Dominant system of economic production past the 1980s that most companies followed. Aspects of it included: 1. Outsourced Production 2. Horizontal Integration 3. Just-in-time inventories 4. Economies of scale and scope 5. Market Driven -started in the 1970s

Cash Transfers

Done in South Africa since the 1990s. An alternative to capitalism. 1/3 of the population relies on a base income from the government without having to buy-in earlier.

Keynesian economics

Economic theory based on the principles of John Maynard Keynes stating that government spending should increase during business slumps and be curbed during booms. GOV SHOULD BE INVOLVED Globalization: - Corporations continued to expand overseas to access raw materials and/or new markets - Made green field investments", thereby avoiding tariffs - enabled them to maintain tight control over the commodity chain

derivatives

Financial instruments often derived from an asset (mortgages, loans, foreign exchange, interest rates) which parties agree to exchange over time; way of buying and selling risk in international financial markets

FDI

Foreign direct investment is what happens when a company invests abroad by building a new plant or directly acquiring new facilities and operations. There are two main types of FDI. The first involves establishing brand new factories or retail facilities on the ground. The second involves buying-up, merging with or otherwise acquiring a foreign company. These two types are known respectively as Greenfield FDI and Mergers and Acquisitions FDI. Greenfield investment simply means new investment in new facilities, infrastructure and equipment. It does not have to happen literally in a green field, and can take place in sites as varied as former housing zones and former rainforests. Mergers and Acquisitions, can be very varied too, but they are all usually investments made specifically with the purpose of exercising executive control over foreign companies.

GRIP

G- grassrootes R- relational I- interdisciplinary P- problem oriented

GATT

General Agreement on Tariffs and Trade; international trade organization that encourages free trade by lowering tariffs and other trade restrictions

GATS

General Agreement on Trade in Services; addresses international copyright violation and free access to foreign markets

Myth #3

Globalization is a leveler. Not true because there is still lots of inequality. Many Global North countries benefit from globalization while Global South countries can be exploited.

Myth #2

Globalization is inevitable. Not true because there are ways to pull out of international ties. People also work hard every day to make more international trade and policies. Idea of "golden straightjacket" - to fit in, your country must become neoliberal and adopt

Myth #1

Globalization is new. Not true because trade has been occurring since the 14th century.

Automobile Industry

Historically, US assembly plants for the "Big 3" national automobile companies - Ford, Chrysler, General Motors in Midwest In 1980s, Japanese automakers started locating assembly units just south of the parts plants in the old "manufacturing belt" Parts plants and assembly units gradually move further South during the 1990s ***due to the right-to-work law which means that you must pay to join union and membership is voluntary - union membership in these states are significantly lower, lower wages and less strikes - --> international companies are putting pressure on US states to implement these policies

US in Global Trade

In the postwar years, US was major global exporter - "workshop of the world" Since the 1970s it has become a major importer of goods - "Walmart of the world"

Cosmopolitanism

Increased commitments to being worldly and transnationally oriented as opposed to parochial and nationally restricted

Demand-side Economics

Increasing consumer power of the middle class too stimulate the economy (and full employment)

IMF

International Monetary Fund. They stabilize currencies and provide short-term solutions to fiscal crises.

Offshoring

When you move part of your company or production to a different country for monetary reasons.

Race to the bottom

a dynamic in which states compete to attract business by lowering taxes and regulations, often to workers' detriment

Global Union Federations

An international federation of national and regional trade unions representing specific industrial sectors and occupational groups

Andhra Pradesh (India)

1. Demand for microcredit -increasing number of small and marginal landholders -Shift towards cultivation of high-input cash crops -Uncertain climatic patterns, water depletion and soil degradation -Withdrawal of state support in the form of subsidies, irrigation programs, and low-interest loans 2. How are different microfinance models working in tandem or in tension with one another? -Number of State government-supported microfinance Self Help Groups (SHGs) in Andhra Pradesh rapidly increases from 1995 onward -Program draws primarily from Bangladesh model and promotes discourse of "women's empowerment" -Access to other welfare programs tied to membership of SHG -In 1995, the WB forms Consultative Group to Assist the Poor [CGAP], a consortium of microfinance donors and representatives from around the world -CGAP emphasizes need for "financial sustainability" (meaning a for-profit model) --> This led to new efforts to link microfinance programs around the world with commercial debt markets... -there were nearly 24 million self help groups and Microfinance Institution clients within a state with a total of 16 million households 3. Are microfinance programs reducing poverty and empowering poor women? -some Indian officials fear that microfinance could become India's version of the United State's subprime mortgage debacle, in which the seemingly noble idea of extending home ownership to low-income households threatened to collapse the global banking system -need to train women to work

4 worlds

1. First World: The West and its offshoots. Cut-off point is the poorest country of the First World (Portugal) 2. Second World: all those less than 1/3 poorer than Portugal 3. Third World: all those with GDP per capita between 1/3 and 2/3 of the poorest rich country 4. Fourth World: more than 2/3 below Portugal

Alter-Globalization policies

1. fair trade with worker rights 2. protect public services & space 3. re-regulate business globally 4. increase social spending 5. redistribute wealth with taxes 6. tax forex markets 7. link global labor organizations 8. foster food security 9. debt relief 10. promote open source

3 concepts of inequality

1. inequality among countries' per capita incomes (not weighted) - each country counts as 1 2. weighted by countries' populations 3. inequality between world individuals - divided by total number of people

Washington Consensus

1. introduce fiscal discipline 2. redirect public spending 3. broaden the tax base 4. let markets set interest rates 5. let markets set exchange rates 6. liberalize trade 7. encourage foreign direct investment 8. privatize state enterprises 9. deregulate business 10. establish legal security for property rights -An array of policy recommendations generally advocated by developed-country economists and policy makers starting in the 1980s, including trade liberalization, privatization, openness to foreign investment, and restrictive monetary and fiscal policies.

Anti-Globalization policies

1. nationalistic protectionism 2. limit migrant access to services 3. subsidize national industries 4. reduce public debt 5. tax to fund law and military 6. scapegoat foreigners 7. fight socialist rhetoric 8. promote energy independence 9. punish debtors 10. defend private property

Neoliberalism policies

1. trade liberalization - "adopt free trade" 2.privatize public services - "use business efficiency" 3. deregulate business and finance - "cut red tape" 4. cut public spending - "shrink government" 5. reduce and flatten taxes - "be business friendly" 6. encourage foreign investment - "reduce capital controls" 7. de-unionize - "respect rights to work and labor flexibility" 8. export-led development - "trade not aid" 9. reduce inflation - "price stability and savings protection" 10. enforce property rights - "property protection and 'titling'"

The Panama Papers

11.5 million leaked documents that detail financial and attorney-client information for more than 214,488 offshore entities

Bretton Woods

1944 conference to construct rules of post-war economy that would support global trade and international investment. Created new political-economic philosophies, organization frameworks of money, global institutions (IMF, WB, WTO), and a new global superpower (USA) -Harry Dexter White (USA) -John Maynard Keynes (UK) -dollar pegged to gold at a rate of $35/oz --> foreign currencies should only fluctuate within narrow band around this dollar-gold peg -trade commitments

AFL-CIO

1955 two larger labor unions united. American Federation Labor- Congress of Industrial Organization.

The Volcker Shock

1979 Chairman of the US Federal Reserves rapidly raises interest rates in an effort to cut inflation in the US. 3 major consequences for countries in the global south: 1. The interest rate on their loans increased from 9.2% in 1978 to about 16.6% in 1981 2. The cost of repaying loans in local currency became more expensive 3. A recession in N. America and Europe further exacerbated the downturn in global export markets

ATTAC

A French group organized to contest global neoliberalism and offer alternatives. Its acronym stands for Association pour la Taxation des Transactions financières pour l'Aide aux Citoyens (Association for a Tax on Financial Transactions in order to Aid Citizens).

Subprime mortgage crisis

A financial crisis that began as a result of the lending practices made to subprime borrowers. Mortgage delinquencies, home foreclosures, and a decline in home prices added to the crisis. US Response: -$700bn Troubled Asset Relief Program [TARP] -US government purchases "troubled assets" from more than 700 financial institutions -In 2010, Obama administration launches The American Recovery and Reinvestment Act, a $787bn stimulus plan European Response: -Several European countries also elect to bailout their banks using taxpayer money -As national debt grows, they are pressured to implement austerity programs to reduce budget deficits -But economic growth was poor and unemployment increased, particularly among the "PIGS" (Portugal, Ireland, Greece, Spain)

Battle of Seattle

A group in the 1990s protesting the IMF claiming they were anti-globalizationists but they actually just wanted a better way for the banks to be run so they were actually alter-globalizationists.

Fordism

A system of mass production that was pioneered in the early 20th century by the Ford Motor Company. Aspects of it included: 1. In-house production 2. Vertical Integration 3. Just-in-case Inventories 4. Economies of scale 5. Producer-Driven Commodity Chain

Trade deficit

An excess of imports over exports

Cash transfers

direct payments of money to eligible poor people

Life and Debt (film)

Jamaican Economy -high wealth disparities & weak market economy -poor living conditions & little job opportunities -unable to compete in global economy IMF Platform -IMF gives loan -conditions of the loan involve Jamaica DEVALUING their currency -supposed to make their exports cheaper & allow Jamaica to compete in the global economy -reduction of trade barriers -farming sector can't complete w/ farmers that use machines Jamaica & inter-American development bank loan -to support agriculture and manufacturing -abandon local subsidies and trade barriers -complete on a level playing field to w/ the world (but they can't compete) Kingston Free Zone -USA -creation of employment on lower level jobs -operate as separate entity to Jamaica - don't have income controls, taxes or certain duties -materials come from USA and assembled in Jamaica -pay is like slavery -E. Asian workers brought in and paid in US dollars -Jamaican gov pays 52 cents out of every $1 in interest payments on debt Jamaica Post-IMF Intervention -still cannot compete in global economy -do not have large enough economy of scale -extreme inflation leads to worse economy -goods are more expensive locally--economy gets worse

Globalization

Loaded buzzword when the "G" is capitalized. Used in political discourse. Has become an instrumental term put to work in shaping as well as representing the growth of global interdependency

Structural Adjustment Program

Main way that neoliberalism that has been imposed by the WB/IMF on poor countries. They consist of neoliberal reforms packaged and presented as the conditionalities for new loans or debt rescheduling. Purposed to make states more competitive and therefor better able to pay off their debt with the revenue generated by economic growth.

Keynesianism

Need for macroeconomic management by governments. Theories about how in the short run, and especially during recessions, economic output is strongly influenced by total spending in the economy.

NAFTA

North American Free Trade Agreement; allows open trade with US, Mexico, and Canada.

Stagflation

Persistent high inflation combined with high unemployment and stagnant demand in a country's economy

globalization

Process of economic, political and social integration. The extension, acceleration and intensification of consequential worldwide interconnections.

Downward Harmonization

Process whereby wages, environmental standards, and health and safety standards are systematically reduced to the lowest common denominator in a free-trade area or system

Sourcing efficiencies

Providing consumers with cheaper choices and giving businesses the benefit of cheaper inputs into other commodity chains -ways that TNCs try to lower the cost of production

Microfinance

Provision of small loans and financial services to individuals and small businesses in developing countries

Export processing zone

Region of a less-developed country that offer tax breaks and loosened labor restrictions to attract export-driven production processes, such as factories producing goods for foreign markets; sometimes called free-trade zone.

Relational Model

Relationship between many branches that are connected through a central bank that's financing them all. Emerged through ties, kinship, family and they're economically invested in each other's businesses. This benefits all the branches by being more secure financially. Less explicit in power coordination. Not top down hierarchical

Captive-Supplier Model

Some parts of production process are being tendered out to vendors but those suppliers are working exclusively with that company. Common for new high-tech technology to keep it all secret and have the right people to make it the exact right way

Modular Model

Some suppliers produce what you need but they also have more freedom in innovating to figure out the best ways to fulfill the order/contract.

ICFTU

The International Confederation of Free Trade Unions which has its headquarters in Brussels brings together workers from 221 national centers in 148 countries and territories. Collectively, 156 million members are represented

WTO

The World Trade Organization - an international body that enforces agreements that reduce barriers to international trade; successor to the GATT

Comparative advantage

The ability of a country to produce a good at a lower cost than another country can

Alter-Globalization

The belief that globalization should be done differently in a more socially just way. They challenge the myths of globalization.

Anti-Globalization

The belief that someone should disassociate from forms of integration. They reproduce the myth of newness but deny inevitability. Examples: Brexit, Trump's wall

Commodity chains

The different steps involved in the production, distribution and consumption of a commodity

G8

The following group of eight industrialized nations: Britain, Canada, France, Germany, Italy, Japan, Russia, and the United States.

Securitization w/ microfinance

The most effective way of getting market capital to the rural poor and pulling them out of poverty

TINA

There is no alternative (to neoliberal reforms)

World Bank

Transformed in the 70s into the World Bank after being the IBRD. Provides loans to countries in the Global South for capital programs. They used to deal with SAPs before microfinance though.

Floating Exchange Rates

Type of exchange-rate regime in which a currency's value is allowed to fluctuate in response to foreign-exchange market mechanisms. A currency that uses a floating exchange rate is known as a floating currency.

global compact

United Nations initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.

Outsourcing

When some part of your production is being tendered out to a vendor who can provide that service for you. Can be local or global.