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IPE Finals Reviewer re-familiarize yourselves with the following terms, concepts and

Week 9 Politics of Foreign Aid
Amount of ODA in relation to other capital flows
to developing countries
Difference between bilateral, multilateral assistance
Types of assistance
Technical assistance
Experts sent to advise poor countries,
Poor country officials study abroad
Provide advanced equipment.
Controversies over tied aid
Debt forgiveness for HIPCs
Odious debt
Aid recipients and US foreign policy
Chinas foreign aid mysteries
Non-OECD aid provider
Amount, destination, purpose?
0.7% aid target
Original rationale for this target
OECD Development Assistance Committee
Countries meeting this target
Week 10 Globalization
3 theses of globalization
Findings against the hyperglobalist thesis
Sources of contention in globalization debate
Held et al. analytical framework for globalization
Outsourcing / offshoring difference
Counterfactuals to The World is Flat (Leamer)
Wage equalization
Trade as a neighborhood phenomenon
Trade and manufacturing jobs Stateside
US and the Internet

Week 11 The logic of economic integration

Intraregional vs extraregional trade
Intra-regional trade refers to trade which focuses on economic exchange primarily between countries of
the same region or economic zone. (ex. Phil-Vietnam)
Extraregional trade refers to trade which focuses on economic exchange between countries of different
region or economic zone ( ex. Phil-USA)
Reasons for PTA proliferation
Preferential Trading Agreement -- > A trade pact between countries that reduces tariffs for
certain products to the countries who sign the agreement. While the tariffs are not necessarily eliminated,
they are lower than countries not party to the agreement. It is a form of economic integration.

1. PTAs foster political stability and economic prosperity, thereby supporting the continuation of the
democratic process and reducing the likelihood of political and social disruption in those
countries that are economically or politically important to the strategic interests of the United
2. PTAs hasten the progress of multilateral trade negotiations, such as GATT; the achievement of
timely, substantial reduction in barriers to trade, particularly agriculture, intellectual property
rights, services, nontariff barriers, and dispute settlement procedures; and stimulate economic
growth and development.
3. PTAs counter the economic and political power created in Europe by further expansion and
integration of the EU and the prospects for trade and economic cooperation with former Soviet
and Eastern bloc nations.
The short term effects of creating a PTA are measured in terms of trade creation and trade diversion. In
the case where there is full employment of domestic resources, trade creation increases the economic
well-being of member nations because it leads to greater specialization in production and trade, lower
consumer prices, and higher disposable incomes
Long term effects.
Increased Competition. Possibly the most important single gain from a PTA is the potential for increased
With the formation of a PTA, trade barriers among members are greatly reduced or eliminated, and
producers must become more efficient to effectively compete with foreign firms.
Economies of Scale. Another benefit of PTAs is that substantial economies of scale may become possible
in the enlarged market area
Stimulus to Investment. The formation of a PTA is likely to stimulate outside investment in production
and marketing facilities
Efficient Resource Use. Finally, if the PTA is a common market, the free movement of labor and capital is
likely to stimulate more efficient use of the economic resources of the entire bloc.
The negative effects of PTA would be to the detriment of the local producers. It may increase competition
but it may also drive local producers out of the market due to incapability to compete with international
industries. Also with PTA, multilateral trade negotiations are challenged. PTAs effect would be the
discrimination of other parties thus contradicting the entire idea of multilateral trade negotiations.
European Union (EU)

The European Union (EU) is an economic and political union of 28 member states that are
located primarily in Europe.[12][13] The EU operates through a system of supranational independent
institutions and intergovernmental negotiated decisions by the member states
The EU has developed a single market through a standardised system of laws that apply in all member
states. Within the Schengen Area (which includes 22 EU and 4 non-EU states) passport controls have
been abolished.[17] EU policies aim to ensure the free movement of people, goods, services, and
capital,[18] enact legislation in justice and home affairs, and maintain common policies on
trade,[19] agriculture,[20] fisheries, andregional development.[2
in 2012 generated a nominal gross domestic product (GDP) of 16.584 trillion US dollars, constituting
approximately 23% of global nominal GDP and 20% when measured in terms of purchasing power parity,
which is the largest economy by nominal GDP and the second largest economy by GDP (PPP) in the
recipient of the 2012 Nobel Peace Prize.[34]
Customs union features
Unity, common standrads, mutual respect for Members, Associated countries, ccordinated aid for
developed countries, free movement of goods, services and labour ; and being able to drive from one
country into another without slwoing down at the motorway borders... a common currency, common
harmonised defence policy
import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area,
regardless of which country within the area they are entering.
Common external tariff - The single tariff rate agreed to by all members of a customs union on imports of
a product from outside the union.
Revenue sharing mechanism Own resources provide the EU's main revenue. There are three kinds
of own resources
Traditional own resources
- mainly customs duties on imports from outside the EU and sugar levies.
own resource from value added tax (VAT)
A standard percentage is levied on the harmonised VAT base of each EU country.
own resource based on gross national income (GNI)
A standard percentage is levied on the GNI of each EU country. It is used to balance revenue and

Criticisms as an elite-driven project

The European project was an elite-driven, top-down affair from the outset. Its leaders took the
view, often explicitly, that Europe's voters did not know what was good for them and would have
to be led to enlightenment. There was never any willingness to let public indifference or outright
hostility moderate the pace. For the most part, voters were not consulted. When they were, and
voted No in the occasional referendum on further transfer of power to Brussels, governments
resolved to keep on asking until voters got it right. Germany adopted the euro despite a
sustained majority opposed to monetary union.
In short, elites were the ones who pushed for the European Union. They masked it by saying
people needed to be enlightened. In voting, if people would react negatively in terms of saying
no. Governments would push forth until it got the answer it needed. Basically the elite interest
were seen especially in Germany wherein the elites pushed for euros but the majority did not
want it to happen. This would lead to increase apathy to the parliament which would explain the
low turnout in Member of European Parliament elections.
Theoretical gains from integration
Theoretically, specialization will happen in integration. People who can produce something better will
stick to that to increase national wealth. However the problem here is the loss or risk of losing in other
industries. (kunyari expert ang Germany sa corn, yun lang gagawin nila thus losing economies of scale in
cars which is another industry. Ito kung baga yun problema ng specialization).
Economies of scale
These are stated in the upper half. Basahin niyo nalang ulit yun. Technically pareho lang yun.
Higher growth = higher living standards
Obviously, with integration, more investments and cheaper goods will come in. It will improve the less
developed ones but will greatly benefit the developed ones more. But overall they both gain to a higher
standard of living and social welfare.
Economic Integration in the Asia-Pacific
Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim member economies
seeks to promote free trade and economic cooperation throughout the Asia-Pacific region



The proposal for a FTAAP (Free Trade Area of the Asia Pacific) arose due to the lack of progress in
the Doha round of World Trade Organization negotiations, and as a way to overcome the "noodle bowl"
effect created by overlapping and conflicting elements of the copious free trade agreements there were
approximately 60 free trade agreements in 2007, with an additional 117 in the process of negotiation
in Southeast Asiaand the Asia-Pacific region. In 2012, ASEAN+6 countries alone had 339 free trade
agreements - many of which were bilateral.
Some criticisms include that the diversion of trade within APEC members would create trade imbalances,
market conflicts and complications with nations of other regions
Even with the economic integration happening (APEC), some of the major countries (Japan, China) are
not heavily involved.

Noodle bowl effect

phenomenon of international economic policy that refers to the complication which arises from the
application of domestic rules of origin in the signing free trade agreements across nations. The effect
leads to discriminatory trade policy because the same commodity is subjected to different tariffs and tariff
reduction trajectories for the purpose of domestic preferences.

the Asian noodle bowl of FTAs has been sketched as a map of chaotic lines
representing an intertwined mass of preferential trading arrangements
To make things simpler, noodle bowl effect is when bilateral agreements FTAs and such are overlapping
and sometimes contradicting with the international or regional agreements (basta may contradiction)
Asias economic integration is composed of sub-agreements between countries which makes it difficult for
a true regional integration.

One non-economic motive would be that it was established out of fear of Japan dominance in economic
activity in the Asian region (ito lang nakikita ko. If you guys can add go ahead)
ASEAN Free Trade Agreement (AFTA)
s a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in
all ASEAN countries

ASEAN Framework Agreement on Services

Aims to:

Facilitates the establishment of free flow of services in the AEC by 2015

Creating a competitive, more efficient services delivery network to facilitate further growth in
other sectors in the economy
Strengthen cooperation among service suppliers in ASEAN;
Eliminate substantial barriers to trade in services;
Progressively liberalise trade in services beyond those undertaken under GATTS of WTO; and
Provides mutual recognition of qualifications and experience through MRAs.
Focus to progressively liberalise trade in services to complement goods sector
Prepare AMS for closer integration of ASEAN into the global economy

ASEAN Investment Area (AIA)

is an agreement between the Member States of the Association of South East Asian
Nations (ASEAN) to promote mutual direct investment.
it is one of the agreements to a ASEAN Economic Community

* Be able to compare EU with ASEAN economic

integration in terms of institutional capacity,
depth of integration

if you are to compare EU with ASEAN, one can see that EU is far better as compared to ASEAN. The
reason being that EU has reached a common policy on a lot of things such as having a common external
tariff and a shared revenue mechanism. ASEAN on the other hand is still in the progress towards
achieving a level that EU has. It still lacks any coherent and inclusive policy for all its member countries.
As seen, there is a noodle bowl effect that prevents a true regional intergration in Asia. The overlapping
of bilateral agreements is detrimental to the ultimate goal of a regional policy especially on tariffs.

In terms of capacity, ASEAN is a little more capable of being economically developed as compared to
EU. The reason being that investments and trade are slowly shifting from the West (Europe countries) to
the East (specifically Japan and China). But what hinders Asia from reaching a higher level would be that
they are still dependent on imports coming from outside countries. They still produce products which
are completed in other countries and sold back to them.
(this is my point of view, feel free to make your own)
Week 12 Multinational corporations (MNCs)
Difference in definition between TNCs & MNCs
Multinational (MNC) and Transnational (TNC) companies are types of international corporations. Both
maintain management headquarters in one country, known as the home country, and operate in several
other countries, known as host countries.
Most TNCs and MNCs are massive in terms of budget and are highly influential to globalization. They
are also considered as main drivers of the local economy, government policies, environmental and
political lobbying
An MNC have investment in other countries, but do not have coordinated product offerings in each
country. It is more focused on adapting their products and service to each individual local market. A
TNC, on the other hand, have invested in foreign operations, have a central corporate facility but give
decision-making, R&D and marketing powers to each individual foreign market.
British East India Corporation
The East India Company (EIC), originally chartered as the Governor and Company of Merchants of
London trading into the East Indies, and more properly called the Honourable East India Company, was
an English and later (from 1707)British joint-stock company formed for pursuing trade with the East
Indies but which ended up trading mainly with the Indian subcontinent, Qing Dynasty China, North-West
Frontier Province and Balochistan.
Commonly associated with trade in basic commodities, which included cotton, silk, indigo dye, salt,
saltpetre, tea and opium, the Company received a Royal Charter from Queen Elizabeth in 1600, making
it the oldest among several similarly formed European East India Companies. Shares of the company
were owned by wealthy merchants and aristocrats. The government owned no shares and had only
indirect control. The Company eventually came to rule large areas of India with its own private armies,
exercising military power and assuming administrative functions. Company rule in India effectively
began in 1757 after the Battle of Plassey and lasted until 1858 when, following the Indian Rebellion of
1857, the Government of India Act 1858 led to the British Crown assuming direct control of India in the
era of the new British Raj.

Dutch East India Corporation (VOC)

was a chartered companyestablished in 1602, when the States-General of the Netherlands granted it a
21-year monopoly to carry out colonial activities in Asia. It is often considered to have been the
first multinational corporation in the world and it was the first company to issue stock. It was also
arguably the firstmegacorporation, possessing quasi-governmental powers, including the ability to wage
war, imprison and execute convicts, negotiate treaties, coin money, and establish colonies.

FDI origin and destination (North or South)

is a direct investment into production or business in a country by an individual or company of another
country, either by buying a company in the target country or by expanding operations of an existing
business in that country
Usually done by a developed country (USA) to a developing country (Philippines).

Regional patterns of FDI

The bulk of FDI globally takes place between industrialized nations, specifically between
multinational corporations (MNCs) of the developed countries and their subsidiaries located
in other developed countries. However, a significant and growing amount of FDI occurs
between developed countries and developing countries.
a new phenomenon - South-South Foreign Direct Investment - has
emerged, with many developing countries themselves becoming sources of foreign
investment, instead of mere recipients.
Pero basically, ang origin would be industrialized countries.
Investment location decisions
Product life cycle (PLC) theory
There are five stages in a product's life cycle:



A copy product is produced elsewhere and introduced in the home country (and
elsewhere) to capture growth in the home market. This moves production to other


New products are introduced to meet local (i.e., national) needs, and new products are
first exported to similar countries, countries with similar needs, preferences, and incomes.
If we also presume similar evolutionary patterns for all countries, then products are
introduced in the most advanced nations. (E.g., the IBM PCs were produced in the US
and spread quickly throughout the industrialized countries.)

The industry contracts and concentratesthe lowest cost producer wins here


This is a period of stability. The sales of the product reach the peak and there is no
further possibility to increase it.

Saturation of sales (at the early part of this stage sales remain stable then it
starts falling).

It continues until substitutes enter into the market.

Marketer must try to develop new and alternative uses of product


Poor countries constitute the only markets for the product. Therefore almost all declining
products are produced in developing countries.

Investments happen during introduction, growth, maturity and saturation.

Appropriability theory (Caves)

The appropriability theory of the multinational corporation emphasizes the conflict between
innovators and emulators of new technologies
Appropriability is "high," and innovators can protect their profits more easily for sophisticated technologies
and on breakthroughs that can be transmitted worldwide through the innovator's own subsidiaries.
appropriability is "low," and multinationals find it less profitable to create simple technologies and ideas
that require market transfer.

Stephen Hymer (monopoly preservation)

an approach in international business which explains why firms can compete in foreign settings against
indigenous competitors
a direct foreign investor possesses some kind of proprietary or monopolistic advantage not available to
local firms which is why they can compete with local firms/industries.

International division of labor

Explains the spatial shift of manufacturing industries from advanced capitalist countries to developing
A spatial division of labor which occurs when the process of production is no longer confined to national
As developing economies are merged into the world economy, more production takes place in these

Law of uneven development

a Marxist concept to describe the overall dynamics of human history

Different countries, Trotsky observed, developed and advanced to a large extent independently from
each other, in ways which were quantitatively unequal and qualitatively different
In other words, countries had their own specific national history with national peculiarities.
But at the same time, all the different countries did not exist in complete isolation from each other; they
were also interdependent parts of a world society, a larger totality, in which they all co-existed together, in
which they shared many characteristics, and in which they influenced each other through processes
ofcultural diffusion, trade, political relations and various spill-over effects from one country to another.
The effects:

a more backward, older or more primitive country would adopt parts of the culture of a more
advanced, or more modern society, and a more advanced culture could also adopt or merge with
parts of a more primitive culture with good or bad effects.

Cultural practices, institutions, traditions and ways of life belonging to both very old and very new
epochs and phases of human history were all combined, juxtaposed and linked together in a rather
unique way, within one country.

In turn, this meant that one could not really say that different societies all developed simply through
the same sort of linear sequence of necessary developmental stages, but rather that they could
adopt/utilize the results of developments reached elsewhere, without going through all the previous
evolutionary stages which led up to those results. Some countries could thus "skip", "telescope" or
"compress" developmental stages which other countries took hundreds of years to go through, or,
very rapidly carry through a modernization process that took other countries centuries to achieve.

Different countries could both aid or advance the socio-economic progress of other countries through
trade, subsidies and contributing resources, orblock and brake other countries as competitors from
making progress by preventing the use of capital, technology, trading routes, labour, land or other
kinds of resources. In Trotsky's theory of imperialism, the domination of one country by another does
not mean that the dominated country isprevented from development altogether, but rather that it
develops mainly according to the requirements of the dominating country. For example, an export
industry will develop around mining and farm products in the dominated country, but the rest of the
economy is not developed, so that the country's economy becomes more unevenly developed than it
was before, rather than achieving balanced development. Or, a school system is set up with foreign
assistance, but the schools teach only the messages that the dominating country wants to hear.

The main tendencies and trends occurring at the level of world society as a whole, could be also
found in each separate country, where they combined with unique local trends but this was a locally
specific mix, so that some world trends asserted themselves more strongly or faster, others weaker
and slower in each specific country. Thus, a country could be very advanced in some areas of
activity, but at the same time comparatively retarded in other areas. One effect was that the response
to the same events of world significance could be quite different in different countries, because the
local people attached different "weightings" to experiences and therefore drew different conclusions

Sovereignty-at-bay (Vernon)
This part deals with the changing relationship between transnational corporations (TNCs) and
the State. Transnational corporations are "the primary 'movers and shapers' of the global
economy. "It has been the rise of the TNC - especially of the massive global corporation - which
is seen to pose the major threat to the autonomy of the nation-state.
Obsolescing bargain (Kobrin)
A model of interaction between a multinational enterprise and a host country government, which initially
reach a bargain that favors the MNE but where over time as the MNEs fixed assets in the country
increase, the bargaining power shifts to the government.

Week 13 Global production chains

3 key determinants of value chain governance
Complexity of transactions
Codifiability of transactions
Capability of suppliers
5 basic types of value chain governance
Modular value chains
Relational value chains
Captive value chains
Commodity chain research (compare and contrast)
Modern-world systems theory
Global commodity chains (GCC) / Global
value chains (GVC)
Global production networks (GPN)
Development via upgrading
Move up same value chain by increasing range
of functions performed
Product upgrading
Process upgrading
Upgrading more difficult moving up value chain
Week 15 Migration governance
Migration vs immigration
Migration-related international law
Universal Declaration of Human Rights
1990 Convention on Migrant Workers
Lack of receiving-country signatories
Definition of temporary migration
Skilled and unskilled migrants
Developed country migration policies
Skill-based schemes
Investor schemes
Global migration governance
Lack of WTO / IMF equivalent
GFMD is consultative, non-UN agency,
non-binding process
Sociocultural controversies over migration
Debates over the nature of migration
Migration as kind of development
Brain drain / brain gain / brain circulation
Remittance flows
Compared to ODA, FDI
Uses for remittances
Dutch disease-like effects on exports

* Be able to apply liberal, realist and critical

perspectives on migration
5 immovable forces driving migration
Wage differences
Differing demographics
All but labor globalization
Low-skill, hardcore non-tradables
Lagging growth in ghost countries
8 immovable ideas blocking migration, especially:
Nationality as a basis for discrimination
Morality based on proximity
Development as being national development
Labor movements not necessary for raising
living standards
Unskilled labor migration depresses native
wages in destination countries
Migrants take more than they contribute
Movement creates crime, terrorism risks
Culture clash
6 accommodations
Bilateral instead of multilateral arrangements
Temporary status for labor mobility
Rationing, using job-/region-specific quotas
Enhance devt impact in sending countries
Sending country involvement in enforcement
Protection of migrants fundamental rights