Chapter 17

Making the World a Better Place

Review• Concepts to Review– Corporate social responsibility, global civil

society organizations, inequality, WTO, cyclical volatility, environmental regulation, 2008 financial crisis

• Key Words– Poverty alleviation; alternative forms of

global economic system; the G20; global governance systems; the Bretton Woods agreement

Recap of Themes• Geographic rescaling of economic activities• Cyclical volatility• Changes in the relative growth rates of different

parts of the world

• Increased interdependence: a source of vulnerability

• TNCs and states: shaping of the global economic map.

• Impossibility of separating the geoeconomic from the geopolitical

• Three big geopolitical issues:– US shift towards pre-emptive action post-9/11– Rise of China and East Asia generally– Failed, dysfunctional or inadequate states

Corporate Social Responsibility• Global civil society organizations

– Vary from the anti-capitalist to the national– Often have contradictory agendas– Force people to engage with the unevenness of globalization

• Corporate social responsibility– Milton Friedman: companies only exist to maximize shareholder

value– Alternative: stakeholder capitalism– Define: inactive, reactive, active and proactive approaches– Participation may be altruistic or through self-interest

• Codes of conduct– Four major types:

• Devised by TNCs• Drawn up by coalitions of interest groups• Formulated by TNCs in association with stakeholders • Established by NGOs

Global Governance• Finance

– Bretton Woods agreement1944: • International Monetary Fund (IMF) and World Bank created

– Since 1970s, agreement undermined, leading to a market-led rather than state-led system

– 1997: Asian crisis, calls for a reformed financial architecture– 2008: need for a new financial architecture for everyone made plain– Most important development is the emergence of the G20

• International trade– Regulated since WWII by the GATT and since 1995 by the WTO– WTO takes rule-oriented approach to multilateral trade cooperation– Fundamental basis is non-discrimination, based on

• Most-favoured nation principle• National treatment rule

– The Doha development round (2001—)

• Environmental regulation– 1992: Framework Convention on Climate Change (FCCC)– 1997: Kyoto Protocol– Problem: developing countries adopting measures that could prevent their

future economic development

Future Trends?• Alternative economies

– Hyper-globalizers: argue for more openness of markets– Anti-globalizers: argue for the opposite– Environmentalists: need to take environment into account– Development of ‘community economies’ and micro-finance

• Openness versus poverty alleviation– IMF and World Bank encourage openness as cure for all ills– This only works if playing field is level– Opening up a developing economy will also lead to disaster

• Hence need means in place to develop robust internal structures

– UN Millennium Development Declaration: to alleviate extreme poverty

– Aid programmes failing to meet needs– Prosperity isn’t just about money: it can also be about

happiness, well-being