Lecture Notes: Impact of Economic Globalization

Introduction

• Focus of Lesson: Impact of economic globalization on geopolitical structures and its limitations.
• Previous Lesson Recap: Examined broader impact of globalization on the nation-state.
• Objective: Understanding economic globalization's effects and limitations.

Development of Economic Globalization

• Post-WWII Developments:
  • Establishment of Bretton Woods institutions (World Bank, IMF).
  • Formation of General Agreement on Tariffs and Trade (GATT), later WTO.
  • Failed attempts: International Trade Organization and Havana Charter.
• Post-Cold War Era:
  • Adoption of neoclassical/neoliberal theories (Washington Consensus).
  • Reduction in trade barriers, foreign direct investment flow, and government market intervention.

Neoclassical and Neoliberal Influence

• 1980s Neoconservative Monetarism:
  • Leaders: Ronald Reagan and Margaret Thatcher.
  • Emphasis on free market and capital flow.
• Nation-State Conformity:
  • Structural Adjustment Programs by IMF.
  • Conditions include spending cuts, tax cuts, and industry privatization.

Bilateral Investment Treaties (BITs)

• Definition: Treaties between two nation-states to encourage foreign direct investment.
• Growth: Began in 1950s; significant increase in 1990s.
• Regulation: Complex network of thousands of BITs.

Impact of Financial Crises

• 2008 Financial Crisis:
  • Originated in U.S. housing bubble.
  • Global impact due to interconnected financial instruments and investments.
  • Collapse of major banks (Bear Stearns, JP Morgan, Lehman Brothers).

Limitations to Economic Globalization

• Nation-State Resistance:
  • Actions contrary to neoclassical principles.
  • U.S. Policy Examples:
    • Post-2016 WTO appellate body appointments blocked.
    • Introduction of tariffs on steel and aluminum imports (Trump administration, 2018).
    • Withdrawal from Trans-Pacific Partnership (TPP).
  • NAFTA Update Delays:
    • Free trade agreement with Mexico and Canada stalled.

Conclusion

• Impact vs. Limitations:
  • Significant economic globalization impact yet met with resistance from nation-states.
  • Examples include U.S. policies under recent administrations.