AgendaAgendaQuestions?Questions?

ReviewReview Test 1, October 6Test 1, October 6 Interdependent Global EconomyInterdependent Global Economy

Canada’s trade structureCanada’s trade structure

Pacific RimPacific Rim

World system theoryWorld system theory

DependencyDependency

Terms of TradeTerms of Trade

Multinational EnterpriseMultinational Enterprise

Test 1 will be based on Test 1 will be based on the following sources:the following sources:

Wheeler et al. Chaps 1-4Wheeler et al. Chaps 1-4 Lectures up to Monday, October 4Lectures up to Monday, October 4 Scan the introduction to NAICS Scan the introduction to NAICS Californian Perspective on Regional Californian Perspective on Regional

Economic Development Policy in CanadaEconomic Development Policy in Canada Scan the CAMI siteScan the CAMI site Look over the WTO pages on the Seattle and Look over the WTO pages on the Seattle and

Doha Ministerials, paying special attention to Doha Ministerials, paying special attention to “Criticism, yes…misinformation, no!” “Criticism, yes…misinformation, no!”

Trade as a Measure of Trade as a Measure of Global InterdependenceGlobal Interdependence

International trade: one measureInternational trade: one measure Merchandise tradeMerchandise trade Trade in services Trade in services

Deeper integrationDeeper integration Foreign direct investmentForeign direct investment Strategic alliancesStrategic alliances FinanceFinance SupranationalismSupranationalism

Canada’s International Trade Balance, Canada’s International Trade Balance, 20012001

($ 000,000)($ 000,000)Commodity Classification Exports Imports Balance  Section I Live animals 2,394 398 1,996  Section II Food, feed, bev. & tobacco 25,723 18,674 7,050  Section III Crude materials, inedible 54,558 20,939 33,619  Section IV Fabricated materials, inedible 109,058 69,444 39,614  Section V End products, inedible 208,566 227,895 (19,329)  Special transactions, trade, exports 8,119 6,843 1,275  Other balance of payments adjustments 6,221 6,430 (209)  United States 350,908 255,028 95,880  United Kingdom 6,574 11,863 (5,290)  Other EEC 15,727 23,225 (7,498)  Japan 9,482 10,585 (1,104)  Other OECD 10,925 18,626 (7,701)  All other countries 21,023 31,295 (10,272)

Source: Statistics Canada 2003, Cansim II Table 228

Pacific RimPacific Rim

US “is functioning in the traditional role of a US “is functioning in the traditional role of a Third World country” with Pacific rim (p. Third World country” with Pacific rim (p. 61)61)

Large US deficit with JapanLarge US deficit with Japan

NICs, 4 little tigers…NICs, 4 little tigers…

One big lionOne big lion

Canada’s Trade with ChinaCanada’s Trade with China

China is now China is now Canada’s second Canada’s second largest import source, largest import source, ahead of Japan and ahead of Japan and UK, 5.5% of total Cdn UK, 5.5% of total Cdn importsimports

In the US, China is the In the US, China is the second largest import second largest import source at 12% of total source at 12% of total imports!imports!Source Statistics Canada Infomat, April 7, 2004

World-system TheoryWorld-system Theory

Immanuel WallersteinImmanuel Wallerstein CoreCore

Semi-PeripherySemi-Periphery PeripheryPeriphery

Hierarchy of dominance (hegemony) andHierarchy of dominance (hegemony) and

Dependence (subordination)Dependence (subordination)

Wallerstein’s 4 epochsWallerstein’s 4 epochs

Dependency TheoryDependency Theory

DependenistasDependenistas of Latin America (1960s) of Latin America (1960s)

underdevelopment as active process,underdevelopment as active process,

preventing the development of the peripherypreventing the development of the periphery

Net economic flows from periphery to coreNet economic flows from periphery to core

e.g. brain drain is a “reverse transfer of e.g. brain drain is a “reverse transfer of technology” exceeding value of forward transfers technology” exceeding value of forward transfers of technology with foreign investmentof technology with foreign investment

e.g. repatriated profits exceed capital investmentse.g. repatriated profits exceed capital investments

Foreign aid payments are relatively smallForeign aid payments are relatively small

Deteriorating Terms of TradeDeteriorating Terms of Trade

Is trade mutually beneficial?Is trade mutually beneficial? GATT WTO in 1995GATT WTO in 1995 Traditionally, the periphery exports resource Traditionally, the periphery exports resource

products to pay for manufacturesproducts to pay for manufactures But commodity prices have declined relative to But commodity prices have declined relative to

manufacturesmanufacturesEngel’s Law: As incomes rise, proportion of income Engel’s Law: As incomes rise, proportion of income spent on food declinesspent on food declines

Tech. change in core economies reduces their Tech. change in core economies reduces their consumption of many resource products consumption of many resource products

Battle in SeattleBattle in SeattleSeattle Ministerial Conference in 1999 Seattle Ministerial Conference in 1999 WTO has few friends: WTO has few friends: A threat to US trade sovereigntyA threat to US trade sovereignty A threat to periphery because WTO controlled A threat to periphery because WTO controlled

by the wealthy core nationsby the wealthy core nations A threat to all peoples because WTO is A threat to all peoples because WTO is

undemocratic tool of MNCsundemocratic tool of MNCs

Does this come as a surprise?Does this come as a surprise? Intergovernmental organization representing Intergovernmental organization representing

140 states140 states

Doha Round – a “do-over” announced 2001 Doha Round – a “do-over” announced 2001 at a “Ministerial Conference” in Qatar at a “Ministerial Conference” in Qatar