INT 200: Global Capitalism and its Discontents

Emerging Markets

International Trade

• The exchange of capital, goods, and services across international borders or territories

• Free trade– a policy which allows traders to trade across national borders without

interference from their respective governments

• Trade Barriers– tariffs, import licenses, export licenses,

import quotas, subsidies, voluntary export restraints, local content regulations, embargos

• Bilateral Treaties– a trade treaty between two nations or

two trading blocs

International Trade• Regional Trade Agreements

– ASEAN Free Trade Area (AFTA)– Asia-Pacific Trade Agreement (APTA)– Central American Integration System (SICA)– Central European Free Trade Agreement (CEFTA)– Common Market for Eastern and Southern Africa (COMESA)– G-3 Free Trade Agreement (G-3)– Greater Arab Free Trade Area (GAFTA)– Gulf Cooperation Council (GCC)– North American Free Trade Agreement (NAFTA)– Pacific accord– South Asia Free Trade Agreement (SAFTA)– Southern African Development Community (SADC)– Southern Common Market (MERCOSUR)– Trans-Pacific Strategic Economic Partnership (TPP)

International Trade• World Trade Organization policies:

– Non-Discrimination• same conditions with each WTO member + domestic and imported goods treated

the same– Reciprocity

• lower trade barriers in return for similar concessions– Binding and Enforceable Commitments

• WTO dispute settlement procedures– Transparency

• publish trade regulations– Safety valves

• exceptions

International Trade

• Global North v. Global South– Developed country:

• High income per capita, high GDP per capita, high level of industrialization

– Developing Country/ Emerging Market– North-South Divide / North-South Gap

International Trade

• Developed Country, Developing Country, Underdeveloped Country

• First World, Second World, Third World

• The Global North: UN Security Council, the G8, the IMF, the WB

International Trade

• Pros of eliminating trade barriers– enhance consumer choice– increase global wealth– secure peaceful international relations– spread new technologies around the world

• Cons of eliminating trade barriers– gap between rich and poor countries widening– growing indebtedness of the poor countries to the rich– global labor standards lowered – ecological degradation– Besides, rich countries still have trade barriers

• The Doha round of WTO trade negotiations

International Trade• “Myths” of Globalization and International Trade

– downward pressure on wages: main factor is technology – race to the bottom: TNCs pay workers more than national corporations– globalization irreversible: 90 years was lost by WWI, the GD, WWII; 9/11 and

the 2008 financial crisis showed it can be slowed down– The shrinking state: the government may have new roles but it will not

disappear

• Emerging markets: – country that has some characteristics of a developed market, but does not

meet standards to be a developed market (formerly, Less Developed Countries)

– BRICS is the acronym for an association of five major emerging markets: Brazil, Russia, India, China and South Africa

China

China• People’s Republic of China under Mao Zedong

– Great Leap Forward (1958-1961)– The Cultural Revolution (1966-1976)– Reform of the Economic System (1978 – 1982)

• Deng Xiaoping • increased the autonomy of enterprise managers, reduced emphasis on

planned quotas • individual enterprise allowed • foreign-trade procedures eased

– Reform and Opening (1982 – present)• commune structure dismantled • flexibility, autonomy, and market involvement improved • more restrictions on trade loosened• private entrepreneurship and freemarket activities legalized • private property rights

China

• Consequences:– 2011 2nd largest economy, passing Japan

• China should overtake the US to become the largest economy in the world by 2020, India taking second by 2030, moving the USA to third, with Brazil fourth

– $2.5 trillion ($US) in currency reserves – $1.16 trillion of US debt – highest foreign exchange reserve $3.0447 trillion

Emerging Market TNCs• Traditionally, the vast majority of MNCs and TNCs that

operate across borders have originated from developed countries such as the United States (US), Japan and members of the European Union (EU)