In the last lesson what we did was examine the impact of globalization on the nature of the nation-state and in this lesson what we're going to do is talk about the impact of economic globalization specifically and this means examining where economic globalization has taken place, the kind of effects that it has had on the geopolitical structures and then how it has been limited in a number of ways and how we see that the economic globalization isn't necessarily as impactful as one might. ultimately suggest at first instance. So in the previous lesson we examined the impact of globalization more broadly as I've mentioned and this lesson is going to focus on the impact on the state. So economic globalization is something that we have definitely seen developed quite slowly over the past 100 years. We see that a lot of economic globalization that took place took place at the end of the second world war where we see a the establishment of the Bretton Woods institutions so things like the World Bank and the International Monetary Fund as well as things like the General Agreement on Tariffs and Trade the GATT which would ultimately evolve into the World Trade Organization in the 1990s and then there were some failed attempts at multilateralizing trade and investment at the end of the Second World War as well with the International Trade Organization and the Havana Charter these things failed but they showed a desire at least on the surface a desire for there to be more globalization and there to be more interconnectedness when it came to economic economic relations with other countries since the end of the cold war though economic globalization has followed the principles of the neoclassical economic theories and neoliberal theories that are encapsulated in this washington consensus we've described this in a previous lesson when we looked at economic globalization the Washington Consensus, the idea of a reduction in barriers to trade, a reduction in barriers to the flow of foreign direct investment, as well as things relating to a reduction in the government intervention in markets and all these different kinds of things.
These are the kind of neoclassical and neoliberal interpretations. In the 1980s we see sort of neoconservative monetarist theories of economics. exemplified in a number of different leaders such as Ronald Reagan and Margaret Thatcher. And the general consensus is that global economic polity is something that should follow this general consensus idea.
So we do see an emphasis on the reduction of barriers to trade, an emphasis on the reduction of intervention in the free market, as well as the encouragement of increasing capital flows of foreign direct investment. And so as a result of this, nation states, in order to see the benefits of economic globalization, have opted to conform to these neoclassical ideas, to sort of jump on the bandwagon when it comes to all of the institutions that operate under this Washington Consensus. So we represent this in a number of different ways. For example, the IMF often operates under a policy known as the Structural Adjustment Program. And this is really where we start to see a lot of the countries that benefit from IMF membership actually having to conform to the ideas of the IMF more generally.
It allows a nation-state to receive a certain amount of economic financing and support, but this support is often conditional on a number of changes in economic policy. So where a country is requiring the intervention of the IMF in a certain institute, in a certain... way because of economic collapse or depression or anything like that, the IMF will often condition the loans that they offer to member states on a condition of a number of different changes in their macroeconomic policy. These often include spending cuts, cuts in taxation, as well as the privatization of certain industry in order to encourage the inflows of foreign investment. We have also seen since the 1990s a proliferation of what we call bilateral investment treaties or bits and what a bilateral investment treaty is is a treaty between two nation states hence why it's bilateral that are designed to encourage the flows of foreign direct investment and the vast majority of investment regulation more broadly is regulated under a complex web under a complex network of these bilateral investment treaties there are thousands of these bilateral investment treaties the first one came into existence in the 1950s with a treaty between Germany and Pakistan, and they have just seemed to have grown almost exponentially.
And one of the most significant instances of growth was during the 1990s. We've also seen the impact of economic globalisation as a result of the 2008 financial crisis. This is where we see an economic bubble that existed in the housing market that turned into a global economic crisis with large investment banks going into insolvency.
So banks such as Bear Stearns, JP Morgan, as well as Lehman Brothers, all of these different investment banks really getting caught up in this economic crisis. that became a global economic disaster and the ways in which this crisis impacted the whole world just does go to show the impact of economic globalization this was a u.s housing bubble this was a u.s housing market crash that was going to happen but because of a number of different financial instruments and a number of different institutions investing quite heavily in these financial instruments under the fixed assumption that the housing market was not going to crash because the idea of thousands of homeowners defaulting on their mortgages was something that was just unheard of. All of these different things led to the relatively relatively localized economic problem turning into a global economic crisis. So now that we've looked at the impact of economic globalization, what are some of the limits to how economic globalization has taken place? Because while there is considerable impact that economic globalization has had on the rest of the global structure, there are also instances where nation states and political leaders will actually book the trend and will limit the impact of global economics.
So for example, as I've mentioned in the previous lesson, the United States has since the Obama administration constantly acted in ways that run contrary to the general consensus of neoclassical economics. So for example, in 2016 and since 2016, This is something I mentioned in the previous lesson. The United States has refused to approve the appointment of any new members of the World Trade Organization's appellate body, essentially freezing the ability for the dispute settlement system to run according to which it is established, according to the dispute settlement understanding.
And so therefore we have seen a crisis with the appellate body. The appellate body no longer functions and we only have the WTO panel system that is currently operating. We also can talk about the introduction of tariffs on steel and aluminium imports, I believe 20 and 25% accordingly, or I won't quote, don't quote me on those numbers, but around 25% on each of these tariffs on each of these different types of imports under the Trump administration in 2018. Now, this does go against the neoclassical consensus because a reduction in trade barriers and barriers to trade is what we see and what we expect from growing economic globalization.
But. But the Trump administration went against this by imposing a number of tariffs on a number of different countries, of which we see, oh, there we go, 25% and 10% respectively. And we see countries like China and institutions like the European Union respond to these tariffs by imposing their own trade barriers and trade sanctions to the United States. All of these things run contrary to the general ideas relating to neoclassical economics. The Trump administration also pulled out of the Trans-Pacific Partnership, the TPP, due to the fact that they were supposedly not in the economic interest of the United States.
And we've also seen a bit of a hindrance when it comes to the United States in terms of its response to NAFTA, the North American Free Trade Agreement. This was a free trade agreement that existed between the United Mexican States, the United States and Canada. And essentially what's been going on is that the NAFTA has been... going through a period of updating, essentially, and we have seen it being slowed to almost a halt due to a number of different things taking place with the United States. So again, more economic globalization being halted as a result of the interests of the nation state.
And therefore, we see things such as the Trans-Pacific Partnership and the Trump administration pulling out of such institutions.