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Lesson 6 global economic systems


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Edexcel A Level 2016 Specification: Superpowers

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Lesson 6 global economic systems

  1. 1. Global Economic Systems
  2. 2. IGOs • As mentioned after WW2 there was a growth in international organisations where Govts came together and worked together. • IMF • World Bank • OECD • WTO
  3. 3. Case Study of IMF in action: Côte d'Ivoire • The IMF prevented the Ivory coast receiving aid until 2013 • It did so only when the Govt had agreed to set up commercial; courts and allow free elections • After economic reform £4.4bill of debt was cancelled • A further £10bill depended upon reform of the electricity and banking sector. • This allows for MNCs to move in • UN still bans diamond exports from the area due to them financing the previous civil war 2005
  4. 4. How long can it go on?
  5. 5. World Trade Organisation • Established in 1945 to promote international economic co-operation • Based in Geneva • 153 countries on 23 July 2008 • It deals with the rules of global trade • It aims to ease trade and remove barriers to trade • It negotiates trade agreements between countries and make sure that countries stick to them
  6. 6. What does it do? • Administering WTO trade agreements • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing countries • Cooperation with other international organizations
  7. 7. • It differs from the IMF and WB as it operates on a one country one vote basis • This should be fairer for developing countries • Unfortunately no voting has ever occurred • Decisions are generally by mutual consent • The biggest markets usually deciding the outcome • The poorest countries with the smallest markets usually come off worse • They see the WTO as a rich man’s club that favours the EU and USA
  8. 8. Subsidies • Presently it is concentrating in removing or reducing farm subsidies to help make trade fairer. • WTO believes in fair trade without tariffs or subsidies • Only the rich can afford to subsidise their industries, giving them an unfair advantage in the market place.
  9. 9. Agreement on Agriculture (AoA) • Allows domestic support (Subsidies) for producers • Three levels of this agreement • Green • Amber • Blue
  10. 10. Green • Allows subsidies on environmental grounds • For instance reducing crop output and implementing woodland • Obviously more applicable to wealthier countries
  11. 11. Amber • Allows subsidies that governments have agreed to reduce but not cut out altogether • I.e. are in the process of doing so
  12. 12. Blue • Allows subsidies to be given, so long as production is reduced in the long term • This is vague and allows some countries to take advantage.
  13. 13. • This system allows the USA and EU to spend $400 billion annually on farm subsidies • They argue it protects the small farmer where costs are greater • However 50% of EU subsidies go to the largest 1% of producers • In the USA this figure is 70% of the largest 10% • This effectively allows farmers to go on producing large volumes of goods at subsided rates • The EU and USA buy these and ‘dump’ on developing countries in the form of aid
  14. 14. So isn’t that a good thing? • Well by dumping all there excess on developing countries it undermines and undercuts local producers such as Ghanaian tomato and rice farmers causing their produce to be worth less in the market place. • This allows the EU and USA to buy it back up at a cheaper price.
  15. 15. That’s really bad. Is there anything they can do..? • Some of the cocoa farmers have been joining together to form co-operatives • Kuapa Kokoo (Good cocoa farmers) began in 1993 • Has 40,000 members in 650 villages – this produces 1% of global crop • Because it has a larger voice it can get a better price for per bag
  16. 16. • It does this by selling to fair trade organisations in Europe • 1998 began the Day Chocolate Company • Makes ‘Divine’ chocolate • Kuapa Kokoo is managed by a farmers trust and provides members with credit • Profits have helped pay for improved drinking water in rural areas and health insurance for farmers
  17. 17. So what do some people think? • People who disagree with the WTO say that: • The WTO is too powerful, in that it can make countries change laws. • The WTO is run by the rich for the rich and does not give significant weight to the problems of developing countries. • The WTO doesn't do enough for workers' rights, child labour, the environment and health. • The WTO meetings are closed to the public and the media.
  18. 18. Questions • What do we mean by cultural imperialism? • How do the older superpowers feel threatened by new ones
  19. 19. Structural Adjustment Programme