A 21- member regional organization that includes most of the countries of the greater Pacific Ocean region, including Russia, Australia, China, Chile, Mexico, the United States, and Canada and founded in 1989. APEC now meets in annual summit meetings, though the scope and direction of the organization remains only tentatively defined.
Association of Southeast Asian Nations (ASEAN)
A regional organization that emphasizes improved trade relations, established in 1967; ASEAN now includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), the Philippines, Singapore, Thailand, and Vietnam.
Foreign aid given by one country directly to another.
A term that refers to the policy of the International Monetary Fund, the World Bank, and some other international financial agencies to attach conditions to their loans and grants. These conditions may require recipient countries to devalue their currencies, to lift controls on prices, to cut their budgets, and to reduce barriers to trade and capital flow. Such conditions are often politically unpopular, may cause at least short-term economic pain, and are construed by critics as interference in recipient countries' sovereignty.
The total amount of money due on principal and interest payments for loan repayment.
Development Assistance Committee (DAC)
A committee within the OECD that is made up of 22 EDCs and is the primary source of the majority of foreign aid to LDCs.
Monies and resources needed by less developed countries to increase their economic growth and diversify their economies.
The ninth and latest round of GATT negotiations to reduce barriers to international free economic interchange. The round is named after the 2001 WTO ministerial meeting in Doha, Qatar, where agreement to try to negotiate a new round of reductions in barriers by 2005 stalled and failed to meet its deadline.
Free Trade Area of the Americas (FTAA)
The tentative name given by the 34 countries that met in December 1994 at the Summit of the Americas to the proposed Western Hemispheric free trade zone that is projected to come into existence by the year 2005.
General Agreement on Tariffs and Trade (GATT)
The world's primary international treaty agreement promoting the expansion of free trade. Established in 1947, the number of countries currently party to the GATT totals 144.
Group of 77 (G-77)
The group of 77 countries of the South that cosponsored the Joint Declaration of Developing Countries in 1963 calling for greater equity in North-South trade. This group has come to include more than 120 members and represents the interests of the less developed countries of the South.
Group of Eight (G-8)
The seven economically largest, free market countries plus Russia (a member on political issues since 1998).
Currencies, such as dollars, euros, pounds and yen, that are acceptable in private channels of international economics.
International Conference on Financing for Development (ICFD)
A United Nations-sponsored conference on development programs for the South that met in Monterrey, Mexico during March 2002. The conference was attended by 50 heads of state or government, as well as by over 200 government cabinet ministers, leaders from NGOs, and leaders from the major IGOs.
International Monetary Fund (IMF)
The world's primary organization devoted to maintaining monetary stability by helping countries fund balance-of-payments deficits. Established in 1947, it now has 183 members.
Multilateral (foreign) aid
Foreign aid distributed by international organizations such as the United Nations.
North American Free Trade Agreement (NAFTA)
An economic agreement among Canada, Mexico, and the United States that went into effect 1994. It will eliminate most trade barriers and eliminate or reduce restrictions on foreign investments and other financial transactions among the NAFTA countries. Many losses for US because of jobs/corps relocating to Mexico (maquiladoras). But lower prices for goods imported from Mexico. Greatest effect on Mexico, increasing manufactured exports, GDP growth rate grew. But displaced workers for all countries. US corn hurt Mexico's corn industry.
Organization for Economic Cooperation and Development (OECD)
An organization that has existed since 1948 (and since 1960 under its present name) to facilitate the exchange of information and otherwise to promote cooperation among the economically developed countries. In recent years, the OECD has begun to accept as members a few newly industrializing and former communist countries in transition.
Regional Trade Agreement (RTAs)
Agreements focused on regional economic cooperation and integration based on the idea that the states whom are signatories can achieve greater economic prosperity by working together. These groups are becoming more and more frequent worldwide and include examples such as NAFTA and the EU.
Southern Common Market (Mercosur)
A regional organization that emphasizes improved internal trade relations among its members was established in 1995 among Argentina, Brazil, Paraguay, and Uruguay, with Chile (1996) and Bolivia (1997) as associate members.
Special drawing rights (SDRs)
Reserves held by the International Monetary Fund that the central banks of member-countries can draw on to help manage the values of their currencies. SDR value is based on a "market-basket" of currencies, and SDRs are acceptable in transactions between central banks.
UN Conference on Trade and Development (UNCTAD)
A UN organization established in 1964 and currently consisting of all UN members plus the Holy See, Switzerland, and Tonga, which holds quadrennial meetings aimed at promoting international trade and economic development.
UN Development Programme (UNDP)
An agency of the UN established in 1965 to provide technical assistance to stimulate economic and social development in the economically less developed countries. The UNDP has 48 members selected on a rotating basis from the world's regions, and has offices and activities in 132 developing countries.
The eighth, and latest, round of GATT negotiations to reduce tariffs and nontariff barriers to trade. The eighth round was convened in Punta del Este, Uruguay, in 1986 and its resulting agreements were signed in Marrakesh, Morocco, in April 1994.
World Bank Group
Four associated agencies that grant loans to LDCs for economic development and other financial needs. Two of the agencies, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), are collectively referred to as the World Bank. The other two agencies are the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
World Trade Organization (WTO)
The organization that replaced the General Agreement on Tariffs and Trade (GATT) organization as the body that implements GATT, the treaty. Has rounds (Uruguay, Doha) and hears complaints
LDC requirements for development
1. economic diversification 2. stable currency 3. strong physical and technological infrastructure 4. domestic order 5. international market and investment access 6. effective government
UN focuses on
1. global economic regulation 2. economic development
Criticisms of IMF
1. voting (weighted voting. EDCs have more votes than LDCs because votes are based on how much a country contributes to the IMF's resources) 2. conditionality: most loans are subject to conditions such as cutting programs and raising taxes 3. destabilizes LDCs gov'ts because it forces them to institute polices that cause domestic backlash 4. undermine social welfare by pushing countries to cut budget and reduce social services
World Bank controversy
1. dominated by EDCs 2. use a weight-based voting formula 3. an american usually heads the bank 4. EDCs could be using this organization and others to maintain neoimperialistic control
Regional trade agreements
Free Trade Agreement among 3+ countries in a region. Example is the EU
Bilateral trade agreement
Free Trade Agreement between 2 countries or between RTA and a nonmember country. Example is US and Australia trading
Fixed exchange rate
used from 1945-1972. Nixon abandoned this because there was a recession, vietnam war, reelection. This ensures stability and certainty but is not flexible
Floating exchange rate
all currencies trade according to their value, supply and demand
first major foreign aid program, gave money to Western Europe. 2 motives: to strengthen Western Europe to fight against communism and allow them to buy exports from the US
External sources of capital for LDCs
loans, remittances, private investment, trade, aid
Problems with primary products
product instability: pests eating crops, bad weather. Price weakness: demand has decreased for sugar because of substitutes and dietary changes
Drawbacks to aid
not enough of it to go around, influenced by politics, US gives the most aid but only 0.17% of its GNP and should be 0.7%
Economic Internationalism Advantages: Economy
1. general prosperity: unhindered trade and other forms of free economic exchange 2. benefit of specialization: Ricardo, Mill; produce your most cost-efficient products 3. cost of protectionism: products will cost more 4. promotion of competition: lack of competition promotes price fixing and lack of innovation 5. providing development capital: free economic interchange increases the flow of investment capital to the LDCs
Economic Internationalism Advantages: Political
1. world cooperation: if countries can trade together in peace, their interactions will bring greater contact and understanding 2. decreased violence: countries are too dependent on each other to go to war; poor are becoming more hostile towards the rich so if the poor achieve prosperity they won't be so hostile 3. promoting democracy: hard to have free enterprise system and authoritarian gov't (Mexico has had democratic elections recently)
Economic Nationalism Advantages: Economy
1. protecting domestic economy: preserve jobs and create jobs 2. diversification: specialization can make a country too dependent on a few resources or products 3. compensating for existing distortions: as protectionism and other distortions like cartels continue, free traders will be hurt 4. putting domestic needs first: increasing foreign aid 0.7% of the GNP would mean higher taxes, fewer social programs, higher deficits
Economic Nationalism Advantages: Political
1. national sovereignty: joining IGOs and FTAs decreases sovereignty 2. national security: don't become so dependent on foreign sources that you can't defend yourself 3. policy tool: trade is powerful political tool (example of US embargo on trade with Cuba) 4. social and environmental protection: MNCs who go abroad often commit violations of human rights, don't pay minimum wage; will start a "race to the bottom" where countries will compete for lowest wages, least environmental standards, lowest prices; this can cause social programs to be cut to maintain low prices
Regional Trade Agreement Examples
NAFTA, Free Trade Area of the Americas, ASEAN, APEC, EU, Common Market for Eastern and Southern Africa, Gulf Cooperation Council
Bilateral Trade Agreement Examples
US between Australia, US between Southern Africa Customs Union, Central American Free Trade Association-Dominican Republic
the economy is a zero-sum game. economic policy should be used to further a state's own self-interest. do not help the LDCs for fear that they will become competitors
the economy is a positive sum game. cooperation. capitalism and free trade. help the LDCs with free trade, foreign investment, aid, reduced gov't interference
the structure of the economy needs to be fixed. LDCs are suffering because EDCs keep them suffering. LDCs should be given aid and a greater say in IGOs