ITS EXAM TWO CREATEDATE 10/26/09 8:01 PM Economics - Roots: Oikos & Nomos ( basic social unit, way of behaving - Study of production, distribution, & consumption - Study of alternative uses of scarce resources - Study of human behaviors in the above activities 4 Theories Liberal Theory: Adam Smith, Wealth of Nations (1776) - Markets: economic relations organized by market and price mechanisms; place for buyers and sellers to meet Arise spontaneously Are self-regulating through natural laws ? supply and demand (reach an equilibrium) Comparative Advantage: all countries will have a comparative advantage at something over other countries ( specialization in resources, be more efficient and provide that service - Actors in Markets: Make rational choices based on self-interest and knowledge Use cost/benefit analysis to make decisions - Free Markets will: Maximize economic efficiency ( gain profit Create economic growth (through distribution may be unequal) Promotes individual welfare - Policies: Free Trade/Free Market Lower tariff and non-tariff barriers (NTB) ? Tariff = Tax on imported goods Minimize government interference in the market ? ?Laissez Faire? attitude (Let it be) Ex. NAFTA ? reciprocity and lowering tariffs Nationalist/Mercantilist Theory - Assumptions: National wealth = national power ? a nation?s economy is subordinate to national interests Markets functions within competitive state system States will attempt to maneuver into themselves in a better position than others Not enough money for all states to have same wealth - Goals: create a positive balance of trade (reduce imports/increase exports) create and protect domestic industry limit others? competitive advantage (make things as cheaply as possible) - Policies (Protectionalism): protecting your market tariffs: implement Subsidies and Quotas: monetary compensation (from government), protecting your market ? quotas: limit the amount you can import of a certain good NTBs: restricts or prohibits trade Ex. Subsidies and quotas State (nationalized) Industry: state has taken over industry; high tariffs to reduce competition Marxist Theory: Karl Marx (during Industrial Revolution) and Friedrich Engels, Communist Manifesto (1848) - Materialism: economic relations (production and distribution of wealth) are the foundation of all societies - Capitalist System: inherently unequal and class conflict inevitable Dialectic Classes: capitalists (owners of the means of production) vs. workers Workers exploited for profit (surplus capital) ? used to make goods Markets tend toward disequilibrium ? fluctuation (boom/bust) Efficiency concentrates profits and created unemployment ( technology ? hurts workers ? inevitable there will be revolution/conflict - Policies: Redistribution of Wealth! (by state) Communist Revolution: overthrow the capitalist, destroy classes Social Democracy: don?t overthrow system, create political parties, give workers vote ( cradle to grave welfare Keynesian Theory: John Maynard Keynes, Father of Modern Economics - Normal Economy: cycle of money, people produce goods and services ( population buys them, people stay employed - Recessions: Problem: consumers stop spending/start hoarding (saving) Cure: government should expand money supply (lower interest rates, etc.) - Depressions: Problem: government expands money but people still hoard Cure: government should spend money (prime the pump) - Today: Role of Federal Reserve Expand money supply to fight unemployment Contract money supply to fight inflation Development In LDCs - Monetary Approach (Historic Approach ? ?failure?): economic growth GDP: if we can raise GDP, lead to economic growth/alleviate poverty GNI: Gross National Income ? per capita Purchasing Power Parity (PPP) Examining goods and services and seeing its distribution in comparison to other countries ? see what you can/can?t buy - Policy: Structural Adjustment Programs (SAPs) Conditions attached to loans from INF/WB (liberal conditions) Focus on cutting government expenditures Focus on increasing national revenues through export trade Process controlled by MDCs (More Developed Countries) ( This approach FAILED. Capabilities Approach: Human Development as well as economic GNI Educational Levels Health Indicators Policy: Poverty Reduction Strategy Papers (PRSPs) Policies governments will implement to promote economic growth to reduce poverty Process as partnership between MCDs and LDCs Sustainable Development - Components: Economic growth/efficiency ? business aspect Environmental conservation/responsibility ? resources sustainable? Social justice/equity ? social progress, people and their say, how it will affect them ( All aspects must be there for sustainable development Globalization: process (or set of processes) which embodies a transformation in the spatial organization of social relations and transactions ? assessed in terms of their extensity, intensity, velocity, and impact ? generating transcontinental or inter-regional flows and networks of activity Process of interconnectedness Helped by technology (railroad, telegraph) ? today = internet People are all greatly impacted by this Political, social, cultural, economic, intellectual ? all connected Global institutions helping steer Economic Globalization - Global Economy: increasing connections between countries that is changing the marketplace - International Economic Networks and Transactions: International flow of trade, capital investment, labor (goods, services, financing) Expansion of free trade and interlocking economies (GOAL) International Economic Regime - International Monetary Fund (IMF) oversees the global financial system; reorganizing/stabilizing system - World Bank: financial assistance to developing countries Leveraged, low interest loans, interest-free credits, and grants ( lend to LDCs Goals: poverty reduction, international trade, monetary cooperation Criticisms: most of money given out is loans, which come with conditions; who controls institutions (MDCs) - General Agreement of Trade and Tariffs (GATT), 1947 Series of bilateral agreements to reduce tariffs, establish free-trade Huge system of trade with little organizations - World Trade Organization (WTO), 1995 Taking the agreements of GATT and creating an institution/organization ?Multilateral Trade System? to establish laws for international commerce Goal: ensure international trade flows smoothly, predictably and freely as possible Criticisms: agenda dominated by MDCs, benefits multi-national corporations Issues of Economic Globalization Maintain long-term growth and accumulation Labor exploitation and environmental degradation International debt (ex. Map: Asia ? more GDP = High debt, b/c loans) Food and Product Safety: FDA doesn?t have control over other countries ex. China Unregulated power of trade and finance MNCs/TNCs: Multi-National Corporations (Transnational) Private enterprises that include subsidiaries operating in more than one state/firms operating ?across? borders Advantages for Company: Reduce cost: financing, production, research and development ? more efficient, more profit for shareholders Easier to control technology Improved access to markets and natural resources - Advantages for Host Country: Maximize employment: give people jobs Technology transfer: gaining knowledge Encourages loans and investments: more Foreign Direct Investment and business Creates a favorable balance of trade: as you export more Ex. Global 500, Sinopee ? Chinese Oil Company (only LDC represented) Neo-Liberals/Supporters Without Free-Trade: Small national markets Limited economies of scale High prices and near monopoly Limited product diversity Different standards (environment, product safety) With Free-Trade/Liberal Policies: Increased competition: better quality Lower prices Create economies of scale: produce and export more Specialization Interdependent with other economies Raised standards of living Raised wages and environmental standards Promotes moral values and democracies Avoid a corrupted government and individual rights (political and economic) Dependency Theorists/Opponents: Critics of Globalization ? help theorize Neo-Colonialism - Fair Trade: liberalization a one-way street, believe it only benefits a certain part of the population (GATT, MDCs) - Believe in Neo-Colonialism: Illusion of independence Continuation of overseas control by indirect means 3 Types of Trade: Primary producer (no processing), labor for component parts (cheap labor), markets - Core-Periphery Paradigm: Core: knowledge, high value goods = high profit (capitalist) Periphery: low value goods = low profit; but must buy high value goods from core (workers who are exploited) Semi-Periphery: medium value goods to periphery = medium profit; but dependent on core for technology - Based on Marxist Theory of dependency Other Criticisms - Creates less competition due to corporate domination Damage to environment, exploitation of labor (increase wage, but cost of living increases), monopoly of power, non-renewable resources, damage to cultures (destroy social networks) - Accepts unequal status quo: profits will be distributed unequally - Increases gap between rich and poor: people profiting = small, gap grows larger - Trade/Investment: more FDI only in a couple of places - Management: comes from Europe, where the companies started (MDCs) - Ethnocentrism: BRIC Countries (Brazil, Russia, India, China) ? based on old institutions - Hypocrisy: lack of opportunities for the poor to be able to have access to markets MCDs vs. LDCs Issues - Control of International Institutions: LDCs want greater voting rights in IMF/WB (Africa 25% membership, only 4% vote) MDCs don?t want to give up control; they control purse strings - Tariffs: MDCs want access to markets in LDCs and demand they adhere to free trade policy LDCs want flexibility to protect domestic agriculture and at risk industries (suicides by farmers) - Trade Subsidies: domestic and export All agree to eliminate subsidies in coming years MDCs agree to reduce some domestic subsidies LDCs want greater reduction in order to break into MDC markets Does Globalization cause Poverty? Yes, can be correlated with international poverty increases and decreases Correlation between globalization and poverty involves multiple variable and variables effects: Global economic competition and integration Foreign investment, trade Government borrowing Poverty relative to a country, ex. China ? widespread reduction in poverty since the country opened its economy Mugged Article - Coffee: 2nd largest traded commodity, (Oil = #1) - Its importance to the global economy ? producing (temperate) and consuming the product - Arabica: high quality ( high price - Robusta: low quality ( low price - There is not enough beans to supply ?Arabica? bean ? ?Gourmet? - Most MNC buy ?Robusta? ? largest portion of bean (BIG 4) - Oxfam: International NGO trying to reduce poverty - Major who produce coffee: small, rural farmers with little land Many people involved in crisis are small, rural sector - Crisis: cost plummeting 1. Flooded Market: oversupply coffee cartel ended (kept a balance in supply), end of agreements ? Cartel: restriction on trade lagging demand in coffee (competitors soda, energy drinks) price increases = oversupply of Robusta bean ? CRASH! 2. Unequal relationship between LDC farmers vs. MDC MNCs MNC Benefits: brand name recognition, value added processes, knowledge of quality, cost control, control chain of trade LDC lacks all of these benefits ? knowledge, etc. ?Tasting? 3. Technology Advancements: use Robusta over Arabica 4. Lack of rural development/no alternatives: crops lack knowledge, alternatives, credit ? cant get loans, infrastructure (transportation)/processing ? problem of government capacity (priorities) - Solutions: Infrastructure/rural development ($) Increase quality, create minimum standards for coffee Destroy the lowest bean quality to help oversupply Sustainable coffee ? train and work with farmers to create sustainable coffee (change from Robusta ( Arabica) Fair trade: Arabica ( agreement to pay a fair price Direct Buy: roasters buy directly from farmers without having to go through ?middle man? ?Coffee culture?: certain brands should cost more/less than others ASIA Geography Central Asia: emerged from Soviet Control South Asia: were all controlled by Britain Southeast Asia: crossroad of influences from India and China East Asia: China, Japan, Taiwan, N. Korea and S. Korea History: issues of diversity and cultures - Hydraulic Civilizations: based on rivers and irrigation for crops Harrapan Civilization, 3200-1000 BC ? Indus River Huang River Civilization, 4000 BC ? Yellow River - Beijing and India - Silk Road: Beijing (( Far East, 100-1500 BC Communication (migration of people, religion), trade Unifying people, cultures spreading - Islamic Conquest, 65-1050 - Mongolian Empire, 1200-1300 Largest movement Nomadic peoples, cattle based ? don?t see a lot of culture - European Colonialism (Imperialism) The Great Game: Britain vs. Russia Chinese Open Door Policy Culture: Religion - Buddhism: non-theistic, 4th largest organized religion ? Most Present: Northern China (Mongolia), Southwest China (Tibet) Teaching of Gautama Buddha ? Title - Four Noble Truths: centers of suffering ? why do people suffer? Goal: to become enlightened or awakened 1. Suffering exists, suffering in all aspects of life 2. All of man?s desires and wants lead to suffering 3. End mans desires and wants to end suffering 4. Follow the enlightened path ? outward physical actions (act in a moral way), spiritual/mental (control and master mind ? meditation), then purify mind = enlightenment - Karma: moral energy, can be good and bad ? your intentions and consequences (Karma is attached to all), take multiple lifetimes to rid bad karma - Reincarnation: wheel of life, until you purify mind and reach enlightenment - Dalai Lama: political and religious rule of Tibet, currently: 14th, when one dies the monks search for new Dalai Lama (w/spark) - Hinduism: polytheistic, monotheistic, pantheistic, atheist, agnostic Most Present in: India Aryan/Vedic Civilization (from Central Europeans), 1500-500 BC ? how Hinduism came, invasion - Brahman: considered ultimate reality, some say ?God? Avatars: actual people who promoted this, ?Brahman? Brahma: creator Shiva: destroyer Vishnu: preserver - Karma: intentional actions - Reincarnation: reach Moksha (get rid of physical aspect and reunited with Brahman) - Caste System: class system, occupation present in religion Brahmin: highest, teachers and priests Kshatriya: 2nd, protectors Vaishya: 3rd, producers (farmers, merchants, artisans, etc.) Shudra: working class, workers Harija: ?Untouchables?, occupations no one wanted to do ( modernizations and industrialization has changed system over time Others: Confucianism: nontheistic Islam: monotheistic Christianity; monotheistic Secularism: atheistic Demography - Overpopulation: Connected to rural areas Growth slowing: highest in South Asia/Southeast Asia One-Child Policy: if you have a girl first you?re likely to be allowed one more child; penalized for more children you have We do see a DECLINE in growth rates in Asia (China DECREASE overall) ? Hahn - Urbanization: Increase from rural to urban migration (unplanned) Natural increase - Missing Female Population: 100-135 million [For every 100 F, 105 M] Sons assets/daughters liability: son-hard/heavy labor, money from bride if marry, keep family name Preferential Treatment: boy gets education, healthcare, over girl Abortion: high rates if gender is female, low female births Ex. India Undercounted: not in system, cant be counted (no government benefits) Consequences: Decline in growth rates Limiting women?s empowerment Social tensions created when women are ?scarce? / class conflict Politics: mix of systems - Central Asia: transitioned policy, now illiberal democracies - Minority/Nationalist Problems: India: Hindis, Sikhs, Muslims and Maoists (moving from Nepal) ? different religions create religious problems Division of Hindu and Muslim State, Britain decides this division ?Lahore Declaration?: 3 countries (Afghanistan, Pakistan, Bangladesh) China: Uighurs and Tibetans (want to be independent), Uighurs are minority finding their culture suppressed by Hahn (92% of population) Sri Lanka: Tamils (minority) and Singhalese (majority) ? protests by Tamils, fighting militias in Civil War, ?Tamils Tigers?, Singhalese defeated the Tamils ? Agree to not destroy culture aspect, only political Kashmir: India vs. Pakistan (see India) Economics - East: Statism ? way to help economy (State-Capitalism: economy is tied to the market, but government is extremely tied to trade) State highly involved with setting goals and aims of economy Four Tigers (NICs): Newly Industrial Countries ( Industrialized ? economic growth! South Korea, Thailand, Singapore, Hong Kong - South: Two-Tiered system (Middle class/poor) ? Ex. China Middle Class: hi-tech industry Poor: rural agricultural, uneducated, cant participate - Southeast: mixed - Central: problems of former Soviet dominance (communist economy made all of their decisions) No national economy, infrastructure, or manufacturing capabilities ? always relied on Russia and Communist Party Lost door to world trade and major market (communist) No more Soviet investments or revenue Indian Economy - Pre-Reform: Socialist/Nationalist Jawaharlal Nehru and Indira Gandhi ? state monopolies Import substitution industries Over-regulated private sector ? not allowed entrepreneurship Discouraged FDI High tariffs and NTBS - Reform (1991) R. Gandhi and M. Singh Reduce state owned industry Deregulate private sector/entrepreneurs Encourage FDI Reduce tariffs and NTBs Focus on Growth: hi-tech, service sector needing skilled labor; Increased domestic consumption by middle class Created rapid economic growth Chinese Economy - Pre-Reform: Command Economy/Communist Economy not tied to market Complete state ownership/control Collective Farming: no private ownership on land, communal Concentration on heavy industry: not a lot of consumer goods/domestic consumption, focus on military, infrastructure ? railroads - Reform: Open Door Policy (1978- ) Priavte enterprises allowed Encouraged/increased FDI, high ?diaspera? (money to invest in China) High Savings Rate: 10-30% - encouraged, often legally enforced Focus on Growth: lower-tech, manufacturing sector needing unskilled labor, increased exports consumed by other countries Created rapid economic growth Problems (India vs. China) - India: High public debt ? failing health system, water/sanitation system Strict labor laws Inefficient public sector Lack of large manufacturing sector Failing public education ? economy depends on educated/skilled laborers (human capital) - China: Growth imbalance Domestic consumption too low Export manufacturing too high Growth through investment, NOT reform State monopolies and control Misallocation of resources/investment Growth in quantity not quality Growing consumption of resources: resource wall MIDDLE EAST Geography - Crossroads: trade and conflict ( large migrations (easy access) - Arid/Semi Arid deserts and grasslands: leads to massive competition for fresh water - Few fertile River Valleys: Nile (Egypt), Tigris and Euphrates (Turkey, Syria, Iraq, end in Persian Gulf), Jordan (Lebanon, Jordan, Syria, Israel) - Consequences: Complex irrigation systems: Shaduf and Qanat Shaduf: simple system using levers Qanat: focus on ground water vs. surface water Nomadic Pastoralism: have to move herds around b/c of technology, private property, national borders, urbanization, economic changes History: Egypt and Samaria are foundations - Hellenistic Empire, 3rd BCE: Alexander the Great Greek culture being overlaid, very urban/cosmopolitan Followed by the Roman Empire [2nd Diaspora of Jews] - Arab Conquest, 630-900: Mohammed, continues to spread Sahara, Spain, some Africa (Kenya) ? Muslims didn?t conquer France, 1492 ? pushed out of Spain ?Moors? - Ottoman Empire (Turks), 1580: longest established empire Controlled much of N. Africa and Middle East - Europeans, 1918 Claim Palestine, Jordan, Syria, Liberia Culture: Islam - Monotheistic religion: ?Submission? to God ? Muslims (practice Islam) Muhammad: founder of Islam, Gabriel revealed God?s will to Mohammad Both political and religious leader (Caliph), cast from society, fled from Mecca to Medina with followers ( spread of Islam Qur?an or Koran: written by Mohammad and followers, the Holy Book Hadith: supplement to Qur?an, explain certain things, several versions (not modernized) - Five Pillars of Islam (Arkaan) Shahada: ?There is no God but Allah, and Muhammad as his prophet? Mohammad considered last prophet Pray five times a day in the direction of Mecca Giving of Alms: charity, be pure/good in God?s eyes A month of daytime fasting ? Ramadan, never same time period Hajj: pilgrimage to Mecca once in your life - Division: Shi?a vs. Sunna (Sufism ? issue of succession and leadership) Conflict over succession: after Mohammad?s death appointed successor Shi?a (10%): Ali and the Imams/Ayatollahs (Iran and Iraq) Sunna (90%): elections and local clerics 3rd Caliph (Uthman) killed, people believe Ali was responsible ? believe in lineage, creates a CIVIL WAR between followers of Ali and followers of Uthman Political Science - Pre-Independence Era: never nation-states, organized by empires (central local attachment), which are very centralized: relied on religion, tribal, lineage connections ? ?informal networks? dominated - Post-Independence: transition to nation-states Few had feeling of common nationalism: lacked sense of unity Local elite replaced imperial powers - Post-Independence: Cold War Secular State: Anti-West, turned to Soviet Union ? Egypt, Syria, Iraq Problems and tensions within states and their governments Supporting groups that aren?t doing much for people Monarchies: Saudi Arabia, Iran (Kingship), Pro-West ? oil and region becomes a place of religious dominance Shaw never reformed, Jordan did Today: Political Islam Movements were first a response to secular governments One argument; seen as a solution to failed capitalist and socialist policies Repressed in many countries ? led to going Civil War 3 Branches: political party, militant arm (terrorist), charitable arm ? cant rely on the governments, most groups are not international Ex. Hezbollah: Israeli occupation, push outside border AND Hamas: wants a Palestinian state and control government Minorities - Proto-States: nations that want their own state Kurds: Turkey, Syria, Iraq Palestinians: Jordan, Egypt - Migrant Labor: most from South Asia bc they work cheap Construction Oil Domestic Services - Refugees: people who flee area of conflict Iran is getting refugees from both sides Most don?t cross borders Lead to political and economic instability Arab-Israeli Conflict - Zionism: Jewish Nationalism ? Anti-Semitism was fed by this Jewish leaders in Europe who believed they should have their own state in their old home (Israel and Judea) - Balfour Declaration (1917): Balfour promised Britain would support a Jewish state if the Zionist supported them against Ottoman Empire, promised SAME to Arabs ( created tensions through contradictory tensions British win Palestine land - Mandate System (1918-1948): after war Did allow more Jewish migration Arabs discontent: political, economic, religious differences ( Arab hostility, try to restrict Jewish immigration ? Arabs have majority, get tired of British and Arabs start bombing British UN: gets handed the issue and their solution was a ?Two State Solution?: Not a contiguous state (lack infrastructure and access to irrigation), religious issues over the capital ? Jews would have to go through capital to get to the Holy Site Zionist accept the solution and Arabs don?t bc they had already set up a democracy, which majority takes control ? here, they only have ½ control - Israel Formed (1948): war and refugees First Arab-Israeli war in 1948 ? Israeli?s take more land (1/2 of Palestinian state), Gaza ( Egypt, etc. Also, we see an expulsion of Arabs from territory (voluntary and involuntary). Term: ?Palestinian? used after war - Palestinian-Liberation Organization (PLO) (1964): Yasser Arafat, leader of the ?umbrella? of groups ( Fatah is the strongest group - Six-Day War (1967): Preemptive War: Israel attacked first Punish enemies by taking even more land Occupied territories: Golan Heights (military), Sinai Peninsula, Gaza Strip, and West Bank Begin to settle in Jewish settlements ? these areas are packed with Palestinians ( created massive problems - Yom Kippur War (1973): Started by the Egyptians ? want to push the Israelis from Sinai, Suez Canal to reach diplomatic goals (peace) Resolutions/Agreement: Egypt recognizes Israel?s right to exist (wont attack or try to destroy) In return, Israel leaves Sinai, keeps Gaza strip Anwar Sedat: considered a ?traitor? and assassinated by his people ( President of Egypt who started war and negotiated peace negotiation - Palestinian Response: Terrorism and Intifada (militant and civilian arms) ordered to boycott (raises sympathy and seen as martyrs from West) - Oslo Accords (1993): First, most important step of peace process to try and get 2 sides to sit and discuss with each other PLO recognized Israel?s right to exist, but in return wanted own state Palestinian Authority (PA) with a governor, police force, bureaucracy desired and established Framework for settlement ( SUCCESS! - Peace Summit (2000): Clinton, Arafat and Barak at Camp David Final status of Jerusalem ? settlements (Gaza Strip) Right of return for refugees (Palestinian): those who left cant come back Territorial Borders: fight over access to capital/Holy Sites Borders during first Arab-Israeli war? 6 day war? Issue of resources, religion, infrastructure ( After this: we see more violence than ever, peace process breaks down - Roadmap to Peace (2003): UN, EU, Russia, US Palestinian Authority (PA): Democratic Reform: Fatah, must allow other political parties in PLO ? democratic election Renounce Terrorism: PLO divided, Fatah accepted Israel: Must accept PA as long as they renounce violence Must end new settlements and get rid of old ones ( people become more hopeful - Problem: Fatah vs. Hamas: need elections to be free/fair Fatah: Secular Party (no religious goals, instead: statehood goals) ? POWER Renounced terrorism in 1988 Controlled PA until 2006 Accusations of corruption Hamas: Islamic Party Terrorist organization Has not recognized Israel Religious interests - Elections: 2006, Hamas won - Civil War (2006-2009): Fatah: took control of the West Bank, Presidency Hamas: took control of Gaza, Parliament Israel: blockaded and invaded - Today: government unity talks
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