GLOBAL POLITICS

Chapter 10 Lecture 1

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) shared
Global: Achieve this same balance when beliefs, values, and behavior are not shared

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

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 R&D 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

Political Systems Affect Business Investments Through

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

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

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

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)

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

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

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

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

Reasons for Third Sector Role in Global Politics

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

Intergovernmental Organizations

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

EEC to the EU

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

Danish eye
for design

German head
for business

Irish mouth
for charm

Belgian ear for

languages

English stiff Portuguese

nose for opportunity French flair for quality of life upper lip for perseverance

Italian hand
for crafts

Luxembourg for
deep pockets

Dutch touch
for industry creation

Spanish feet for

quick adaptation

Greek heel for weakest

link

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 market;improve flow of productive factors

1992 Maastricht Treaty Economic and monetary; cultural artifacts merge

A Global example: FROM GATT TO WTO

Single market needs a single set of commercial rules

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

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

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