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

– CommandMonarchyDictatorship

Distribute or redistribute resources distribution (taxes and social programs)

– Socialism—the state decides

– Markets—the 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

interpretation—most 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

5 Public Goods a Global 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 PREVENTATIVEPREVENTATIVE

– GREENPEACE; SAVE THE WHALESGREENPEACE; SAVE THE WHALES– DEVELOPMENTALDEVELOPMENTAL

– HABITAT FOR HUMANITY; L’ARCHEHABITAT FOR HUMANITY; L’ARCHE

Reasons for Third Sector Role in Global Politics

1. PERCEIVED CRISIS OF THE WELFARE STATE

2. CRISIS OF DEVELOPMENT; NEED FOR QUICK CHANGE

3. GLOBAL ENVIRONMENTAL CRISIS

4. CRISIS OF SOCIALISM STIMULATED EXPERIMENTS

5. IMPROVED LITERACY AND A COMMUNICATION REVOLUTION

6. GROWING MIDDLE CLASS AND HIGHER ASPIRATIONS

Intergovernmental Organizations

Trade agreements– Bilateral– Multilateral

Regional—NAFTA, EU– Free trade area, customs union, common

market, economic integrationNonregional—ASEANGlobal—from GATT to WTO

EEC to the EU

6 countries in 1957 12 by 1986 15 by 1995—Sweden, Finland, Austria

(Norway declined to join) 25 in 2004

German head for business

Irish mouth for charm

English stiff upper lip for perseverance

Belgian ear for languages

Danish eye for design

Italian hand for crafts

French flair for quality of life

Portuguese nose for opportunity

Dutch touch for industry creation

Luxembourg for deep pockets

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 MARKET—1957 – 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 OOnly 2/3 of world trade covered by GATTnly 2/3 of world trade covered by GATT

– a) a) EExceptions to Most Favored Nation, e.g.,xceptions to Most Favored Nation, e.g.,

PPreference for manufactured goods from developing reference for manufactured goods from developing countriescountries

CCommon market concessionsommon market concessions– b) b) AAreas not covered by GATT, e.g., services, intellectual reas not covered by GATT, e.g., services, intellectual

property, agriculture, textilesproperty, 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