Commanding Heights Essay Example

exporting their goods to the US.

The relocation of production from the US to Mexico was a notable change, as demonstrated by the fact that 80% of TVs bought in the US originate from Mexico.

Despite the mutual benefits of increased trade volume between the U.S. and Mexico over a period of six years, around 400,000 Mexicans have experienced adverse effects.

Despite the negative impact of lost jobs for American workers in Mexico, globalization continued to progress swiftly. The global economy was growing more interconnected, and the passage of NAFTA in 1994 would soon put this to the test. On that same day, rebels in southern Mexican state Chiapas began a rebellion.

Unstable conditions in Mexico have led to a decline in foreign investment, putting the value of the Peso at risk. Furthermore, it is anticipated that around 9 million undocumented Mexican immigrants will move to the United States in search of employment opportunities, potentially having a significant impact on the country.

During the 1990s, Mexico received a $50 billion loan from the Clinton administration to revive its economy. This loan assisted in paying off debts and sustaining the value of Peso, yet it set a negative precedent for risky investments by promoting government intervention. Meanwhile, globalization had positive effects on Asia which experienced economic growth known as the 'Asian Tiger' phenomenon.

The video showcased China, Thailand, Singapore, and Malaysia as individual countries in Asia. China experienced a substantial influence that elevated approximately 300 million individuals from poverty. All nations uncovered their markets and started exporting diverse products like cars and computers, resulting in a yearly growth rate of 10% by the mid-1990s. Nevertheless, this degree of financial progress was not

viable since incidents in Thailand during 1997 initiated the decline of the 'Asian Tiger' economies presently labeled as 'contagion'.

Thai businesses obtained foreign loans worth more than $200 billion in 1997, a figure three times greater than earlier. Nevertheless, it subsequently became evident that there was an issue with the banking system as Thai banks granted loans for precarious undertakings such as unoccupied buildings and a metropolis resembling Boston. Furthermore, the Thai central bank connected its currency, the baht, to that of the United States.

Because of risky loans and a currency tied to the U.S. dollar, Thai people opted to obtain U.S. dollars from banks instead of using their own currency, the baht.

In July 1997, the Thai government responded to the demands of its citizens by distributing US dollars, but this action swiftly drained their foreign reserves. Consequently, the baht experienced strong market stress and was targeted by hedge fund managers who engaged in short selling forcing Thailand to decrease the value of its currency.

This marked the inception of a downward spiral for the ‘Asian Tiger’ economies, which came to be known as ‘contagion’. Contrary to its intervention in Mexico, the U.S. refrained from providing a bailout, considering Thailand to be an insignificant market.

Despite acknowledging that Thailand was not a major market, S. failed to fully recognize the impact of the Thai currency devaluation on neighboring Asian countries, resulting in a contagion effect that spread to Malaysia, Indonesia, and South Korea. This ultimately caused Southeast Asian economies to suffer losses totaling $116 billion. The International Monetary Fund (IMF) intervened by providing large loans under conditions requiring these nations to reduce government spending, increase interest rates and

eliminate corruption. However, several Asian leaders saw these terms as an example of modern colonialism.

From a certain perspective, the terms imposed by the IMF on impoverished countries seeking aid during this new wave of colonialism aimed to overtake those nations' policies. In December 1997, South Korea was hit by the same series of events that had previously affected Thailand just five months earlier. Like Mexico, South Korea received a massive $55 billion bailout; this ended the Southeast Asian contagion but also caused poverty to resurface in developing Asian economies. While the crisis in Asia had concluded, it had not yet impacted other parts of the globe. Investors regarded Russia as a low-risk target due to its status as a former superpower with significant atomic weaponry, and the crisis would therefore strike there next.

The investors believed that if a financial crisis occurred, wealthy countries would save Russia to prevent turmoil. However, their assumption was incorrect. Russia ended up defaulting on its loans with no assistance from affluent nations. As a result, the investors' risk tolerance shifted from high to low. The crisis eventually reached America when the relatively unknown hedge fund LCTM (Long Term Capital Management) approached bankruptcy.

With assets worth $100 billion under its control, LCTM had a strong presence in global markets such as Tokyo, Singapore, London, and Hong Kong. However, when these markets experienced a decline, LCTM suffered significant losses that exacerbated its downward spiral. This ultimately led to the spread of contagion to Wall Street, but given that LCTM was a private fund, the government was unable to provide any bailout assistance.

Thankfully, LCTM was rescued by American banks, thereby avoiding catastrophe. Although Brazil

was the ultimate target of the worldwide financial crisis, a loan arrangement had been implemented in advance, stipulating that Brazil reduce expenditures. This plan was effective and led to the stabilization of Brazil's economy. The end of global contagion marked the start of discussions on globalization and the need for fresh regulations to prevent a recurrence of the late 1990s contagion.

In 1999, the discussion regarding the fairness of global markets sparked violent demonstrations at the World Trade Organization (WTO) gathering in Seattle. The protestors came from a variety of backgrounds, including both radical groups and traditional union workers. Specifically, union representatives argued that unrestricted international trade put American laborers at a disadvantage due to their lack of union protection, competing against foreign employees who did not have similar representation. Developing nations in attendance also expressed hesitation towards aligning with the U.S. stance.

Tanzania and other countries accuse the U.S. of favoring safeguarding its own markets over advancing trade, an action that could potentially reduce poverty in developing nations.

Shifting their focus from unions to grassroots movements, protestors are now primarily concerned with poverty. There is disagreement over the causes of global poverty - some believe it is a result of globalization, while others argue that globalization only worsens the existing income disparity. Hernando De Soto's view on globalization suggests that capitalism requires laws, particularly property rights, in order to function effectively. In developing nations, individuals living in poverty often face difficulties accessing loans and credit due to inadequate property rights which limits their participation in the global economy.

After the 2001 terrorist attacks, focus shifted towards meeting developing countries' needs. It is crucial to evaluate

if NAFTA has impacted the present and future state of the U.S. economy.

Although there may be differing viewpoints on the consequences of NAFTA based on one's stance, it is crucial to assess its pros and cons for every nation concerned, including the United States.

Assessing the success or failure of NAFTA encompasses both the viewpoints of businesses/investors and workers. Regarding businesses/investors, NAFTA has mostly been prosperous. The Canadian Center for Policy Alternatives encapsulated the reason behind this success in 2006, stating that NAFTA's impact extended beyond trade deregulation and into the liberation of capital mobility, stretching deep into domestic policy-making.

The Canadian Center for Policy Alternatives asserts that NAFTA functions as an economic constitution, granting enforceable rights to investors while restricting government powers and impeding the ability of future governments to make changes. The primary aim of this treaty is to transfer economic power from laborers and governments to corporations. Additionally, a thorough analysis of the NAFTA document reveals specific provisions entitling investors to compensation for lost investments and potential profits resulting from government regulation alterations. Thus far, 27 cases have been examined under this clause, with payments made and regulations removed in certain instances.

According to the information given, foreign investment from American businesses and investors has grown as a result of NAFTA, indicating an increase in corporate power.

Between 1993 and 2002, the United States saw a noteworthy surge in direct foreign investment into Mexico, which led to a rise in funds from $23 billion to $124 billion. Similarly, Canada also witnessed an expansion in direct foreign investments during this period of time with an increase from $44 billion to $202 billion. Furthermore, roughly 879,280

jobs were transferred from high-cost regions within the US.

S. shifted its focus towards lower priced goods in Mexico during 1993 to 2002. As a result, Mexican and Canadian businesses and investors experienced a significant impact which can be demonstrated by the subsequent data:

• Mexico witnessed a surge in manufactured exports to NAFTA nations, raising its percentage share of GDP from 10.6% in 1994 to 20.5% in 2005.
• Mexico also observed an increase in foreign direct investment stock as a percentage of GDP from 7.

During the period from 1994 to 2006, Canada underwent noteworthy transformations in its economic indicators. The portion of GDP derived from exports of manufactured goods to NAFTA nations surged from 25% to 40%. Likewise, Canadian corporate profits escalated by a staggering amount of 105% within the years spanning from 1998 until 2002, even though there was a reduction in workforce by about 15%. Additionally, the percentage share of exports relative to GDP expanded significantly, rising from merely a modest figure of 9% during the year of 1994 up until as high as approximately 27.3% by the year ending in 2006.

Workers in the United States, Canada, and Mexico all agree that NAFTA has been unsuccessful, despite the positive impact it has had on businesses and investors. The overall consequences of this agreement will be assessed.

The impact of NAFTA on the American labor force involves job displacement to other member countries, particularly Mexico. Additionally, it leads to rising income inequality and wage depression. Statistics illustrate that between 1993 and 2002, the US incurred a net loss of 879,280 jobs.

As per a report from 2002, the migration of manufacturing jobs to Mexico leads to a decline

in the income of American manufacturing laborers. This consequently adds to the rise in income inequality since about 72% of the United States' workforce is employed within this industry. The report highlights that these workers encountered a reduction in wages by approximately 13%.

Increased import competition has reduced labor union bargaining power, affecting worker wages. The absence of labor rights provisions in Mexico under NAFTA has caused a decrease in wages for their workforce. Nevertheless, the manufacturing sector in maquiladora factories along the border has created more than 1 million jobs despite this adverse effect.

NAFTA caused a growth in job opportunities in both the United States and Mexico, but it also led to a 20% decrease in worker wages within the manufacturing sector between 1993 and 1999. Furthermore, Mexican agriculture workers were negatively impacted as small farmers struggled to compete with their U.S. counterparts.

The implementation of NAFTA had a significant impact on North America, leading to business closures and job losses for many workers. In Mexico, the agreement caused over 2 million farmers to lose their livelihoods. Canadian workers also experienced job loss, with 276,000 jobs lost between 1989 and 1997, which included the pre-existing free trade agreement between Canada and the United States prior to NAFTA.

< p > Similar to the United States, Canada is also facing a trend of wage suppression and income inequality. Although NAFTA has had positive macroeconomic effects on the U.S. economy, as shown by data on the previous page, it has resulted in job loss and an increase in income disparity at a microeconomic level. < /p>

Provide an explanation of the three most crucial challenges encountered by both WTO and

World Bank, and analyze their implications for the U.S. These three issues comprise: 1. Dispute settlement measures in the WTO 2. Intellectual property rights within the WTO 3. Ineffective policies in reducing poverty in developing countries for the World Bank.

The procedures for settling disputes in the WTO were established in 1948 within the General Agreement on Trades and Tariffs (GATT). Modifications were made during the Uruguay round of talks in 1994, resulting in the current process which includes specific schedules and mechanisms to prevent non-compliance with rulings. The primary focus of disputes within the WTO pertains to violations of agreed-upon obligations.

WTO members have agreed to settle disputes among fellow members through the multilateral system rather than taking unilateral action if they suspect trade rule violations. This requires following agreed procedures and accepting judgments. However, the problem with the WTO dispute resolution process is that it is founded on the efficiency model of free trade, which assumes that reducing government regulations hindering trade will boost economic welfare. Nevertheless, this model fails to distinguish between regulations targeting economic objectives and those serving non-economic goals such as environmental protection. A federalist-style dispute resolution system is proposed to give member states greater say. The current dispute process leads to reduced sovereignty for the United States.

The WTO finalized the 'Trade-Related Aspects of Intellectual Property Rights' (TRIPS) agreement in 1994 during the Uruguay round. The agreement mandates that each government provide minimal levels of protection for the intellectual property belonging to fellow WTO members. However, critics argue that the patent protections within the agreement hinder innovation in developing countries. TRIPS includes 20-year patent protection and endeavors to

prevent counterfeit products.

Oxfam International's report highlights how TRIPS limits competition and hinders the growth of developing nations' economies by increasing the cost of importing knowledge-rich goods. This results in developing countries paying higher royalties and license fees to patent holders in industrialized nations. Such payments have significantly risen since the mid-1980s, with the US alone receiving a net surplus of over US$23bn from their IP exports in 1998.

The negative effects of TRIPS, compounded by the problematic dispute resolution process previously mentioned, are alarming to the WTO. Reduced competition of goods affects developed nations, including the U.S. Meanwhile, despite its aim to alleviate poverty through promoting economic growth in developing nations, World Bank policies have proven ineffective.

Half of the World Bank's efforts made between 2001 and 2005 were considered unsatisfactory, according to a recent assessment report. Rural development received $9.6 billion in loans during this period, accounting for one-tenth of total lending. Only two out of five borrowing countries experienced continuous per capita income growth from 2000 to 2005, while just one out of five saw growth from 1995 to 2005. The bank's prioritization of economic growth over distribution was identified as the primary cause for these failures. To address this issue, a cultural shift is necessary within the World Bank so that its economic programs align with its mission to assist those in need.

The World Bank's inefficient policies have two negative outcomes: a suboptimal return on the U.S.'s yearly contribution of around $2.75 billion and the loss of potential consumers for American products.

United States goods.