International Politics Week 11
International Politics Week 11 PSC 1003
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This 2 page Class Notes was uploaded by Jaimee Kidd on Monday April 25, 2016. The Class Notes belongs to PSC 1003 at George Washington University taught by Talmadge in Spring 2016. Since its upload, it has received 8 views. For similar materials see Introduction to International Politics in Political Science at George Washington University.
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Date Created: 04/25/16
Beyond Bretton Woods: The IMF and WTO Global Finance After 1973 • International Monetary Fund o Adjustable peg exchange rate system o Access to financing o Regulation of capital flows o Collective management, frequent consultation • Move to floating exchange rates, 1973 o Currency values fluctuate in response to supply & demand o Requires capital mobility across borders § States can now devalue currency to avoid recession o But new challenge of rapid capital mobility • The Mundell Dilemma o States can have any two of these three things: § (1) fixed exchange rates § (2) international capital mobility § (3) monetary independence • but not all three • Globalization o The increasingly free movement of goods, people, and capital across national borders o Financial crises of the 1990s § Mexican Peso Crisis o Currency Crisis Example à Frieden page 390 § Globalization can actually spread international monetary crises faster IMF Evolves • IMF’s Evolving Role o Loans provided under principle of conditionality o Private loans but IMF coordinates, certifies credit worthiness • Typical stabilization package o Currency devaluation o Reduce budget deficits o Tight monetary policy (high rates) o Deregulation labor markets o Privatization o Capital, trade liberalization • Protest, Criticism, and Reform o Austerity too harsh, too uniform § Worsen recessions o But… § Austerity inevitable, worse w/o IMF § Recurrence inevitable w/o adjustment § Packages vary o Reforms too fast § Rapid free trade à unemployment § Rapid capital liberalization à crises § Rapid privatization à corruption o IMF says… § Trade à growth § Some trade > none § Pacing, caution important o Bails out western banks § Moral hazard o IMF response… § Private capital, foreign investment à growth § Investor losses huge From GATT to the WTO • WTO o Evolves from GATT, Uruguay Round 1994 o Resolves trade disputes o 162 members • The Uruguay Round, 1986-94 o More than tariff reductions o New issues § Intellectual property § Investment § Services § Agriculture o Dispute settlement mechanism • Criticism and Conflict o Environmental and labor standards undermined? o Rich countries, corporations dominate WTO?
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