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) –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 u PREVENTATIVE –GREENPEACE; SAVE THE WHALES – DEVELOPMENTAL –HABITAT 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 integration Nonregional—ASEAN Global—from GATT to WTO

EEC to the EU 6 countries in by 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 Only 2/3 of world trade covered by GATT Only 2/3 of world trade covered by GATT –a) Exceptions to Most Favored Nation, e.g., F Preference for manufactured goods from developing countries F 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