GLOBAL ECONOMY AND MARKET

• Unilateral trade order

  Euro monetary system
• • Rustow – underdevelopment is not the first stage of growth but effect of colonialism and imperialism
  • Wallenstein – dependency and exploitation in a world system under a capitalist design
• Monetary regime

  Gold standard
• Integrated Economy


  One Economy through regime formation
• Underdevelopment because countries have not converged
• Regimes

  Implicit and explicit principles, norms, rules, decision-making procedures and institutions around which actors expectations converge
• Economic globalization


  Movement from international economy/global economy to an integrated market economy
• Changing character of states

  • Going beyond the national
  • Re-define what is “national”
  • States as agents – midwives of globalization
  • New actors
• GATT - WTO
• National Economies

  • Monetary policy
  • Fiscal policy
  • Trade policy
• International trade policies

  Bretton Woods
• Regimes


  Shape a particular aspect of inter-relations
• Global economy (globalization)

  1. Historical process of increasing integration (production, consumption, etc.)

  2. Aspects/dimensions – trade, capital, finance, technology, commerce

  3. Globalization goes beyond internationalization

  4. Economy is an organic system

  5. New global context
• Global Economy


  Common arrangements of exchange
• • Solow growth model- industrialization of developed world led to underdevelopment of the rest because
  • Industrial revolution
  • Economic nationalism; self-sufficiency
• IMF - WB
• Integration through regime formation

  1. Concept of money – Money represents a value promised. i.e., a piece of paper may be exchanged for the said value

  2. Gold standard – a country's currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price

  3. Bretton Woods System - system that required a currency peg to the U.S. dollar which was in turn pegged to the price of gold

  4. European Monetary Integration / European Monetary System (EMS)
• Historical phenomenon

  1. Silk road

  2. 16th Century long distance trade

  3. 17th Century free market trade

  4. Globalization
• International trade policies

  1. Ricardo - Comparative advantage

  2. Hamilton - Nationalist protectionism

  3. Marx - Uneven, core-periphery exploitation
• Bretton Woods System


  • Currency peg to the U.S. dollar which was in turn pegged to the price of gold
• Market Integration through Corporations

  Market integration occurs when prices among different locations or related goods follow similar patterns over a long period of time. Corporations (MNCs, GOCCs) function as main market integrators by coordinating multiple functions of the organization
• Multilateralism

  1. GATT - General agreement on tariffs and trade

  2. GATT Rounds - multilateral negotiations in various years focusing on tariffs, anti-dumping agreements, non-tariff barriers, framework agreements, rules, services, intellectual property, dispute settlement, textiles, agriculture, and the creation of the WTO

  3. World Trade Organization - official forum for trade negotiations with legal personality
• Unilateral trade order

  1. Non-institutionalized unilateralism

  2. Zero Sum game

  3. Voluntary trade

  4. Bilateral negotiation (most favored nation)
• Developing countries and international trade

  • Unwillingness of developing countries to open markets due to fear of losing comparative advantage
  • UNCTAD (UN Conference on Trade and Development) promotes cooperation between developing and developed nations
  • North-South divide in regime formation
• European Monetary Integration / European Monetary System (EMS)


  • Links currencies of European states with the goal of stabilizing inflation and stopping large exchange rate fluctuations between neighboring nations to facilitate trade
• Gold standard


  Country sets a fixed price for gold and buys and sells gold at that price