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ECN 523

Week #1 Notes:

Global Economics, International Economics, and Globalization are one
and the same. Global economics is the way in which we view the global
economy and global marketplace.

Global trade is measured by the difference of those goods and services
that go out from a country (exports) and those goods and services that
come into the country (imports).

Globalization was actually greater at the beginning and end of the century
than in the middle of it.

GDP is computed by the following: CIGX-M or Consumption, Investment,
Government, and Net Trade = C+I+G+(X-M) = GDP

An extension of net trade is the Index of Openness.

A freer flow of labor across borders may impact you directly.

FDI (Foreign Direct Investment) is the investment by foreign companies in
the physical assets of a country: factories, real estate, and business
ownership in a foreign country. FDI has been an integral component of
any economic growth that has been able to occur in the past few years.

A nations savings equal their investments.

Page 2, Highlight (Red):
Content: "There are three features of the "new" global economy:
integration, multilateral organizations, and regional trade agreements."

Page 2, Highlight (Red):
Content: "Integration refers to the level of protectionism and use of tariffs
and/or quotas. Shallowintegration is when tariffs and quotas are

Deep integration is the elimination or reduction of trade barriers by broad
based domestic policies on trade.

Multilateral organizations are multi-nation organizations.

The International Monetary Fund (IMF), World Bank (WB), and World
Trade Organization (WTO) are key international multinational

Regional trade agreements are preferential trade agreements between
nations. They have significantly increased over the last few years.

Gerber identifies twelve themes facing global economics and uses those
issues as the topics for his chapters:

GATT (which is now included in the WTO) was set up in 1947 as a
contract among governments to promote free trade under the Havana
Charter. The GATT (General Agreement on Tariffs and Trade) is not a
formal international organization. GATT provides the necessary legal
framework for international trade with its primary mission being the
reduction of trade barriers. GATT's most fundamental principle is
nondiscrimination in trade.

This principle is further broken down into two key components: Most-
Favored Nation and the National Treatment Provision. The main goal of
lowering trade barriers has been accomplished by GATT through the
"rounds" of negotiations among all member countries. Eight rounds were
completed. The member countries agreed that it was time to have a
formal international governing body to support the GATT (as well as other
agreements), and they created the WTO.

Uruguay Round Final Actin Marrakesh on April 15, 1994 that the WTO
Ministers adopted a decision on trade and the environment that called for
the creation of a full WTO Committee on Trade and the Environment.

The WTO Preparatory Committee created a Sub-Committee on Trade
and the Environment.

In June 1994, the GATT Secretariat hosted a public symposium on trade,
the environment, and sustainable development. The two principal
objectives of the event were: provide information on GATT and bring
together recognized experts to examine and debate environmental
protection and conservation and in accelerating sustainable development.

The Uruguay Round was the eighth round in a series of multilateral trade
negotiations held under GATT.

For the focus of this section, it is the area of institutional issues that the
Uruguay Round produced noted results.

The Uruguay Round created the WTO. Environmental concerns were
addressed and sustainable development issues.

The Uruguay Round ended the ambiguous structure for global trade of the
GATT by creating the WTO as the "single umbrella" for trade agreements
in goods, services, intellectual property, and other areas such as the
environment, labor, and competition policies (issues of deeper

The WTO was launched on January 1, 1995. The WTO is an
administrative body with the responsibility to facilitate trade negotiations
and dispute settlements among its members. It is not a legislature for
creating obligations. The trade ministers officially signed it on April 15,

The three primary objectives of the WTO: Predictable and growing access
to markets, Promoting fair competition and encouraging development,
Economic reform"

The essential functions of the WTO: Administering and implementing
multilateral and plurilateral trade agreements, Acting as a forum for
multilateral trade negotiations, to resolve trade disputes, Providing
technical support to developing countries, and especially the least-
developed countries, Overseeing national trade policies, and Cooperating
with other international institutions in global economic policy-making

In establishing the WTO, a heavily debated issue was the setting up of a
council to review the link between trade and the environment.

Currently, the WTO has assumed this responsibility but it is designed to
facilitate trade under GATT rather than possess environmental expertise.

In 1965, the UN created the United Nations Development Programme
(UNDP). UNDP published the UNDP Human Development Report to
assist the global community in designing practical concepts, strategies,
programs, and policy instruments for more people-oriented development.

The UNEP addresses environmental issues in cooperation with partner
agencies and centers of environmental excellence at the global, regional,
and national level.

At the 1992, United Nations Conference on Environment and
Development (UNCED), Agenda 21 was created.

The central assumption underlying Agenda 21 was sustainable

The main concern addressed in Agenda 21 is that current incentives do
not safeguard those ecological functions and it is business that takes from
the environment.

The comprehensive program to guide Agenda 21 lacks any type of
enforcement of policy and environmental protection. Capacity 21 assists
developing countries to build their capacity to integrate the principles of
Agenda 21 into national development. Capacity 21 is designed to promote
capacity building for sustainable development.

United Nations Commission on Sustainable Development (CSD) was
another important achievement of UNCED.

These institutions address various aspects of environmental issues and
sustainable development as they relate to other nations doing international

The GEF was established in 1991 to aid developing countries with global
warming issues, ozone depletion, biodiversity, and other global
environmental issues.

The UN World Conference on Women in Beijing provided a unique
opportunity for UNEP to build consensus on the integration of women's
environmental concerns into sustainable development.