GLOBAL POLITICS Chapter 10 Lecture 1

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GLOBAL POLITICSChapter 10 Lecture 1
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What is the Purpose of Political Systems?

• Domestic to achieve balance between individual
  (self-interest) and collective (common good)
  interests when beliefs, values, and behaviors are
  (mostly) sharedGlobal Achieve this same
  balance when beliefs, values, and behavior are
  not shared

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Roles of Government

• Make decisions (laws, treaties, etc.)
• Democracy
• Command
• Monarchy
• Dictatorship
• Distribute or redistribute resources distribution
  (taxes and social programs)
• Socialismthe state decides
• Marketsthe market decides

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Governments Intervene in Markets

• Protect future, e.g., environmentalism, build
  infrastructure that all use
• Provide public goods, e.g., police, parks,
  highways
• Correct spillovers and externalities, e.g.,
  encourage RD that is not directly profitable
  such as orphan drugs
• Correct for business cycle instabilities
• Maintain principles of justice and equality,
  e.g., equal access to good schooling

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Political Systems Affect Business Investments
Through

• Rules of law
• Transparent
• consistent
• Enforced
• Property rights
• Taxes
• Government services
• Standards, treaties, etc.

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Three Main Types of Legal Systems

• Civil Law
• Laws are absolute and specific and not subject to
  much interpretationmost of W. Europe except
  British Commonwealth
• Common law
• courts interpret law to set precedents British
  Commonwealth and US
• Religious law
• Sharia
• Animist tradition

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Global Political Shifts Create Interconnections

• Transfer of government roles to businesses
• Privatization
• Deregulation
• Governments play more active roles in business
• Industrial policies and subsidies
• Stimulating business activities
• Encourage export activities
• Attract FDI
• Civil society organizations
• monitor activities
• collaborate
• engage in social activism

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5 Public Goods a Global Governance System Can
Provide

• A systematic financial system to smooth worldwide
  volatility
• Protection of the global commons and a framework
  to promote sustainable development
• An open system for trade, technology transfer,
  and investment with acceptable dispute mechanisms
• Infrastructure and institutions to reach
  agreements on common systems like weights and
  measures or aviation and communication systems
• Equity and social cohesion through economic
  cooperation that includes international
  development assistance and disaster relief
  (Commission on, 1995)

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Reasons for Global Governance of Business

• Trade growth requires facilitation
• Worldwide economic development is likely to
  remain uneven without global action
• Trade and other global activities cannot easily
  be managed without common safety and a common
  defense system

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Forces Opposing Global Governance

• Nation state history suggests few will be eager
  to sacrifice national interests to global
  interests
• When the focus is on economic interests, national
  leaders may give priority to businesses over
  those of the poor or the disenfranchised
• Compromise is almost inevitable

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Many Organizations Shape Global Governance

• Businesses
• Lobby or pressure governments
• Professional groups influence standards
• Businesses collaborate with governments to solve
  problems
• Global gangs
• Other global actors, e.g., churches, universities
• Intergovernmental organizations
• UN, WTO, NATO, OECD, etc.
• Nongovernmental or civil society organizations

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Non Governmental Organizations (NGOs) Play these
Roles to Shape Global Governance

• meeting present and future needs
• CHARITABLE
• SAVE THE CHILDREN UNICEF CARE
• RESCUE
• AMNESTY INTERNATIONAL
• PREVENTATIVE
• GREENPEACE SAVE THE WHALES
• DEVELOPMENTAL
• HABITAT FOR HUMANITY LARCHE

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Reasons for Third Sector Role in Global Politics

• 1. PERCEIVED CRISIS OF THE WELFARE STATE
• 2. CRISIS OF DEVELOPMENT NEED FOR QUICK CHANGE
• 3. GLOBAL ENVIRONMENTAL CRISIS
• 4. CRISIS OF SOCIALISM STIMULATED EXPERIMENTS
• 5. IMPROVED LITERACY AND A COMMUNICATION
  REVOLUTION
• 6. GROWING MIDDLE CLASS AND HIGHER ASPIRATIONS

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Intergovernmental Organizations

• Trade agreements
• Bilateral
• Multilateral
• RegionalNAFTA, EU
• Free trade area, customs union, common market,
  economic integration
• NonregionalASEAN
• Globalfrom GATT to WTO

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EEC to the EU

• 6 countries in 1957
• 12 by 1986
• 15 by 1995Sweden, Finland, Austria (Norway
  declined to join)
• 25 in 2004

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German head for business
Danish eye for design
Belgian ear for languages
Irish mouth for charm
English stiff upper lip for perseverance
Portuguese nose for opportunity
French flair for quality of life
Italian hand for crafts
Luxembourg for deep pockets
Dutch touch for industry creation
Spanish feet for quick adaptation

Greek heel for weakest link
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A regional example FROM COMMON MARKET TO
EUROPEAN UNION

• Post World War II development based on fear
• 1. Germany
• 2. Cold War
• EEC or COMMON MARKET1957
• Economic purpose to reduce internal barriers to
  common marketimprove flow of productive factors
• 1992 Maastricht Treaty
• Economic and monetary cultural artifacts merge

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A Global example FROM GATT TO WTO

• Single market needs a single set of commercial
  rules

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General Agreement on Trade Tariffs

• 1947, an agreement among 23 nations to follow
  common rules
• Rules revised via rounds, e.g., Tokyo Round,
  Uruguay Round (1986)
• Difficult to enforce
• Only 2/3 of world trade covered by GATT
• a) Exceptions to Most Favored Nation, e.g.,
• Preference for manufactured goods from developing
  countries
• Common market concessions
• b) Areas not covered by GATT, e.g., services,
  intellectual property, agriculture, textiles

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WORLD TRADE ORGANIZATION

• The successor to GATT in 1995
• Exists for 3 purposes
• Promote world trade
• Provide a framework for trade negotiations
• Provide a mechanism for resolution of trade
  disputes

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Need for a Global Governance System Open
Systems, Infrastructure, and Equity

• An open system to facilitate trade
• ISO and global accounting standards
• Standards on transparency and corruption
• Infrastructures and institutions for
• Security
• Conflict management
• Crime management
• Supra Terrorism
• Equity
• To create a viable world future