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Summary Issues in Global Economics
Full summary of the course Issues in Global Economics , given by Guido Erreygers at the University of Antwerp. Powerpoints are combined with own lecture notes.
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Issues in global economicsInhoudsopgave
Lecture 1: Introduc.on; What is Development ................................................................................................ 1
1. What is development? .............................................................................................................................. 1
2. Global policy issues ................................................................................................................................... 2
3. Two “big forces”: demography & the new economy ................................................................................. 2
4. Types of global issues ................................................................................................................................ 3
5. Key players ................................................................................................................................................ 4
6. New realiHes and challenges .................................................................................................................... 4
7. Instruments of governance ....................................................................................................................... 5
8. Global turning points ................................................................................................................................ 6
9. To sum up .................................................................................................................................................. 6
Lecture 2: Wealth and Poverty ........................................................................................................................ 7
PART I: POVERTY: The concept of poverty ........................................................................................................... 7
2. Extreme poverty trends .................................................................................................................................. 8
3. The millennium development goals (2000-2015) ........................................................................................... 8
4. Sustainable Development Goals (2015-2030) ................................................................................................ 9
5. CriHcism of MDG’s and SDG’s ....................................................................................................................... 10
5. The Malthusian trap and the industrial revoluHon ....................................................................................... 10
6. Poverty trap and ways out ............................................................................................................................ 11
PART II: INCOME: facts on global income ......................................................................................................... 12
2. Differences between countries...................................................................................................................... 13
3. Global income inequality .............................................................................................................................. 13
4. Income and other dimensions....................................................................................................................... 14
5. Geography and development ....................................................................................................................... 14
6. Approaches to development (policy) ............................................................................................................ 14
6.1. The market approach to development (ac5on taken by free people) .................................................. 14
3.2. The state approach to development (state takes decisions)................................................................. 15
3.3. State capitalism or blended approach (elements of both combined) .................................................. 16
7. GlobalizaHon ................................................................................................................................................. 17
8. To sum up...................................................................................................................................................... 18
Chapter 3: Popula.on ................................................................................................................................... 19
1. Global populaHon, growth, age structure and urbanisaHon ........................................................................ 19
1.1. Demographic trends ............................................................................................................................. 19
1.2. Size and growth..................................................................................................................................... 19
1.3. Life expectancy (at birth) ...................................................................................................................... 20
1.4. Age structure ........................................................................................................................................ 21
1.5. fer5lity .................................................................................................................................................. 21
1.6. Impact of the pandemic ........................................................................................................................ 22
1.7. Urbanisa5on ......................................................................................................................................... 22
2. Causes of populaHon growth ........................................................................................................................ 22
3. Economic theory of the family ...................................................................................................................... 23
4. “SubopHmal” populaHon growth.................................................................................................................. 24
5. PopulaHon policies ........................................................................................................................................ 25
6. Future outlook .............................................................................................................................................. 26
7. To sum up...................................................................................................................................................... 27
Chapter 4: Food, hunger and malnutri.on .................................................................................................... 29
1. Food producHon, hunger, malnutriHon ......................................................................................................... 29
1.1. World food security .............................................................................................................................. 30
1.2. Global hunger index .............................................................................................................................. 31
1.3. Child malnutri5on ................................................................................................................................. 32
2. Causes of hunger and famines ...................................................................................................................... 32
3. Agricultural economics, policies and poliHcs ................................................................................................ 33
, 4. How food affects development ..................................................................................................................... 35
5. How development affects food ..................................................................................................................... 36
6. The Green RevoluHon.................................................................................................................................... 37
7. Food policies and poliHcs .............................................................................................................................. 38
8. Future outlook .............................................................................................................................................. 38
9. To sum up:..................................................................................................................................................... 39
Chapter 5: Energy.......................................................................................................................................... 41
1. Facts about energy supply and consumpHon ............................................................................................... 41
2. Energy crisis .................................................................................................................................................. 43
3. Government responses to the energy crises ................................................................................................. 44
4. Economics and energy .................................................................................................................................. 45
5. External effects and depleHon of non-renewables........................................................................................ 46
6. The energy transiHon .................................................................................................................................... 46
6.1. Non-renewable energy sources ............................................................................................................ 47
7.2. Renewable sources ............................................................................................................................... 48
7. To sum up...................................................................................................................................................... 49
Chapter 6: Climate Change and the Environment .......................................................................................... 51
Part I: Climate Change ...................................................................................................................................... 51
1. Facts on carbon dioxide emissions ................................................................................................................ 51
2. Greenhouse gases and climate change ........................................................................................................ 51
2. Evidence of climate change .......................................................................................................................... 52
4. AcHon on climate change ............................................................................................................................. 54
4.1. Kyoto protocol (1997) ........................................................................................................................... 54
4.2. COP21 (Paris, 2015) .............................................................................................................................. 54
4.3. COP26 (Glasgow, 2021) ......................................................................................................................... 55
4.4. COP27 (Sharm el-Sheik, 2022) .............................................................................................................. 55
5. Economics of climate change........................................................................................................................ 55
Part II - The Environment .................................................................................................................................. 56
1. some basic facts............................................................................................................................................ 56
2. UN conferences and the rise of environmental concerns .............................................................................. 57
3. Air ................................................................................................................................................................. 58
3.1. Smog ..................................................................................................................................................... 58
3.2. Airborne lead ........................................................................................................................................ 58
3.3. Acid rain ................................................................................................................................................ 58
3.4. Ozone deple5on.................................................................................................................................... 59
4. Water ............................................................................................................................................................ 60
4.1. Water pollu5on ..................................................................................................................................... 60
4.2. Water scarcity ....................................................................................................................................... 60
5. Land .............................................................................................................................................................. 61
5.1 (Over) use of minerals............................................................................................................................ 61
5.2. Deforesta5on ........................................................................................................................................ 62
6. Waste ............................................................................................................................................................ 62
7. The exHncHon of species ............................................................................................................................... 63
8. The exHncHon of cultures.............................................................................................................................. 63
9. Environmental poliHcs .................................................................................................................................. 64
10. To sum up.................................................................................................................................................... 64
Chapter 7: Technology................................................................................................................................... 65
1. Benefits of technology .................................................................................................................................. 65
2. The tragedy of the commons and technology .............................................................................................. 65
3. UnanHcipated consequences of technology ................................................................................................. 66
4. Inappropriate uses of technology ................................................................................................................. 67
5. Limits to the “technological fix”.................................................................................................................... 67
6. War and technology ..................................................................................................................................... 68
7. To sum up...................................................................................................................................................... 69
Chapter 8: A Look into the Future ................................................................................................................. 71
1. What about the future? ................................................................................................................................ 71
2. Current outlook: business as usual ............................................................................................................... 71
, 2.1. key trends ............................................................................................................................................. 71
2.2. “Business as usual” scenario ................................................................................................................. 72
3. The living planet report ................................................................................................................................ 72
3.1. Living Planet Report 2022 ..................................................................................................................... 73
3.2. Ecological Footprint and Biocapacity .................................................................................................... 74
3.3. Cri5cism of the Ecological Footprint ..................................................................................................... 75
4. Collapse and sustainable development ........................................................................................................ 75
4.1. Governance ........................................................................................................................................... 75
5. To sum up...................................................................................................................................................... 75
,
,Chapter 1: Introduc1on; What is Development
1. What is development?
Development refers to the ways in which economies progress through their socie6es to improve well-
being
How do we define well-being? How do we measure progress?
• More stuff? Longer lives? Be;er health? Smarter people? Greater happiness?
The United NaBons (UN) defines human development as the enlarging of human capabiliBes and
choices (not materialisBc)
Human Development Index
• In a yearly publicaBon the UN ranks naBons based on the human development index, which
measures what countries achieve in terms of health (life expectancy), knowledge
(educaBonal a;ainment) and standard of living (gross naBonal income)
• Doesn't just look at possession
20th century approach: Development as economic growth
• For much of the 20th century, development was idenBfied with economic growth
• Gross naBonal product (GNP) or per capita income were seen as measures of economic
development.
• MaterialisBc approach, for a long Bme seen as the one indicator for economic development.
• Broadly speaking, in the second half of the 20th century two types of policies were pursued
to encourage development:
o Government approach: policies focused on creaBng jobs and providing social services
to meet basic needs; strong intervenBon by the government.
o Market approach: minimizing government influences, deregulaBon, private sector
soluBons for public services; less intervenBon of the government.
• Does this kind of development work for everyone? Think of poverty, inequality,
environmental issues, ...
21st century approach: Developing towards sustainability
• From the 1970s onwards there was increased a;enBon for the negaBve effects of economic
growth on social and environmental aspects
• This led to the noBon of sustainable development
• “Sustainable development is development that meets the needs of the present without
compromising the ability of future genera6ons to meet their own needs.” (Brundtland
Commission, Our Common Future, 1987)
o We have to take into account that there is only one earth
o We have to look further than what we have now, we have to think avout the people
that came a`er us
1
,Millennium and Sustainable Development Goals
“Thus the norma6ve side of sustainable development envisions four
basic objec6ves of a good society: economic prosperity; social
inclusion and cohesion; environmental sustainability; and good
governance by major social actors, including governments and
business.” (Jeffrey Sachs, The Age of Sustainable Society, 2015, p. 4)
• The UN adopted the Millennium Development Goals
(MDGs) (1990- 2015) and the Sustainable Development
Goals (2015-2030)
2. Global policy issues
Global policy issues are about large-scale changes creaBng problems requiring mulBnaBonal or global
collecBve acBon
• E.g., global warming, acid rain, ...
• Global changes usually imply systemic interacBons between economic, social, demographic,
environmental and geopoliBcal variables
• Complexity and uncertainty are characterisBcs of global policy issues
3. Two “big forces”: demography & the new economy
The demographic explosion (8.065 billion as of now) stretches the planet to the limit and leads to
unprecedented stresses.
• Land and resource use: urbanizaBon, deforestaBon, reduced biodiversity, food, energy,
depleBon of fisheries, ...
• Social issues: conflict, poverty, migraBon, ageing, ...
The globalized world economy driven by technological progress and “hyper-globalizaBon” (Rodrik,
2011)
• The whole world is connected, something that happens in one place, has an impact on the
rest
• Technological change with opportuniBes for faster, cheaper, new and innovaBve products,
services and processes (companies have to follow)
• Broadly unregulated internaBonal trade and capital markets, but huge barriers to mobility of
people (trade barriers removed)
The “new” world economy
• Three developments created the poliBcal space for a “hyper-globalised” world economy
(except for labour mobility)
o The end of the Bre;on Woods framework (1944-1971)
o The blind belief in the market (neo-liberalism of the Reagan-Thatcher era of the
1980s)
o The end of communism (Berlin 1989 and 1990s)
• The reality check of 2008
o Financial crisis, economic crises, ...
• The reality check of the pandemic (2020-2022)
2
,The “new” world economy has four features:
1. Bent on speed and agility
o You have to react fast so you don’t miss the train
2. Capital and goods (but not people) flowing across naBonal boundaries
3. High degree of knowledge and informaBon intensity
o Ex: because of the internet
4. HypercompeBBve
Unprecedented stresses: increasing inequaliFes
• (Growing) dispariBes between rich and poor
• Pressure on resources (climate, resources, food, water, ...)
• Pressure on social structures (volaBlity, turbulence and fragility)
The need for individuals, businesses, civil society and governments to adapt to rapidly changing rules
of the game: the fact that a country is successful now, doesn’t mean it will be in the future
Unprecedented challenges
The demography and the new world economy create unprecedented urgent challenges for
civilisaBons
• To be faced within decades
• With (effect on) acBon delay Bmes of many years
• Requiring decisions
o with a global or large-scale impact
o in a VUCA world (volaBle, uncertain, complex, ambiguous)
“The Great AcceleraFon”
• The situaBon has changed very fast a`er 1950
• Is there a risk that society will collapse?
o Garre; Hardin, “The tragedy of the commons”, Science (1968)
o Jared Diamond, Collapse: How SocieBes Choose to Fail or Succeed (2005)
o Katherine Richardson et al., “Earth beyond six of nine planetary boundaries”, Science
Advances (2023)
• A`er 1950 the populaBon has increased
much faster than before
• Everything else has changed too
4. Four types of global issues
1. Issues that have to do with how we share
our planet
o “global commons” issues: global
warming, biodiversity & ecosystem
losses, fisheries depleBon, deforestaBon, water deficits, ...
2. Issues that have to do with how we share our humanity
o social and economic issues: poverty, peace & conflict, health, natural disaster
prevenBon and miBgaBon, ...
3. Issues that have to do with how we share our rule book
o legal and regulatory issues: global financial architecture, trade, labour & migraBon,
intellectual property rights, ...
4. Issues that have to do with how we share our values
o human rights, gender equality, democracy, liberty, ...
3
,5. Key players
States are (sBll) major players (but not the only ones) in search of soluBons or management of global
policy issues
• NaBons are people of the same ethnicity, language, religion, customs, history, ...
• States have four characterisBcs: territory, government (legiBmacy), patrioBsm, internaBonal
recogniBon
Other players are businesses, civil society (NGOs, trade unions, consumer organisaBons, acBon
groups, ...), social network groupings (using Facebook, X, WhatsApp, ...) and mulBnaBonal
organisaBons
The struggling state
• The state is the tradiBonal insBtuBon to cope with internaBonal (global) issues but is
struggling with the new reality
• The state is a 17th century invenBon (concept of sovereignty - “each country be ruled as its
ruler desires” – Treaty of Westphalen, 1648)
o But a state (territory, government, patrioBsm, recogniBon) is not a naBon
• Most states are mulBnaBonal and mulBcultural (globalisaBon, immigraBon, ...)
6. New realiIes and challenges
The tradiFonal state
• The tradiBonal state has sovereignty over
o Its (territorial) environment
o Its economic system
o Its poliBcal system
• RelaBons with other sovereign states are organized by
o Diplomacy
o Trade agreements
o TreaBes
o ...
• Governance is in the hands of a (legiBmate) government.
o Democracy
o Anocracy (mix of democracy and autocracy)
o Totalitarian regime (autocracy)
New reality and the state
• New reality implies a state with less sovereignty over its
o Environment
o PoliBcal system
o Economic system
• Governance is shared with
o Other states or alliances (e.g., EU)
o Business (MNE and local)
o Civil society (e.g., unions)
4
,Challenges to the (Westphalian) internaFonal system
1. The state as a unit of defence?
o Nuclear weapons and interconBnental missiles put an end to the idea that one’s
armed forces are powerful enough to defend the naBonal heartland
o Military policies have to be coordinated with other military policies
2. The state as a unit of authority?
o Sovereignty is eroded by the Universal DeclaraBon of Human Rights (1948), the
Genocide ConvenBon (1948), the doctrine of humanitarian intervenBon (1990s), the
establishment of the InternaBonal Criminal Court (1998), alliances (NATO, ...),
economic unions (EU, ...), etc.
3. The state as a unit of collecBve idenBty?
o The state as a relaBvely homogenous enBty is undermined by migraBon, devoluBon,
globalisaBon, global civil society groups, ...
4. The state as a unit of economic acBvity?
o The dynamics of globalisaBon throws up quesBons about power and authority
(especially over businesses)
5. The state as unit of poliBcal independence?
o No alternaBve to interdependence and growth of internaBonal insBtuBons and global
governance (UN, intergovernmental insBtuBons, NGOs, ...)
Four views on “World Order” (H. Kissinger, World Order, 2014)
• European view: Westphalian Peace born of 17th century Europe
o balance in internaBonal affairs
• Islamic view: religious supremacy of poliBcal Islam
o expansion over regions populated by unbelievers
• Chinese view: central imperium philosophy
o “all under Heaven” tributary
• American view: democraBc idealism
o “shining city on a hill”, beacon of universal values
o Lead the world by example
7. Instruments of governance
1. TreaBes and convenBons
• Work well for bilateral and regional ma;ers, but mixed record for global ma;ers
• Slow process of government agreement, raBficaBon, implementaBon, control, enforcement
o E.g., TPP (Trans-Pacific Partnership: started in 2006, ...), TTIP (TransatlanBc Trade and
Investment Partnership; ... )
2. Intergovernmental conferences (IGCs)
• Specific issues
• EffecBve for raising awareness, but weak on global problem solving or management
o E.g., BIIC (BriBsh-Irish IC – started in 1999 a`er the Good Friday Agreement)
3. G7, G8, G20 and similar groupings of countries
• O`en reacBve, too broad scope, exclusiveness, ...
4. Global mulBlaterals
• UN, OECD, ... (poliBcal)
• IMF, World Bank, WTO, ... (ruling)
5. Networked governance
• EU and the Open Method of CoordinaBon
5
, 8. Global turning points
Economy & business
• “Emerging economies” are growing fast
o RedistribuBon of geo-economic power
o ReducBon in poverty
• Emerging and developing economies hold more and more foreign exchange reserves
o PotenBal for systemic global financial disrupBon
• An increasing number of mulBnaBonal firms are emerging-market mulBnaBonals
o Enhanced compeBBon in global industries
o New hubs of decision making
Society & demography
• In many countries the populaBon is ageing (inverted age pyramids)
o Changes in consumer, social and poliBcal behaviour
• More people live in ciBes than in rural areas
o Growing urban challenges
• Africa and South Asia have the fastest growing populaBons
o Global redistribuBon of consumpBon and geo-economic power
• More people suffer from obesity than from hunger
• Income inequality within countries is on the rise
o Growing social problems and poliBcal strife
• Poverty is on the decline
o Improved life opportuniBes
PoliFcs
• Budget deficits and sovereign debt are bigger problems in rich than in emerging and
developing countries
o Further austerity
o Decline in state capacity
o Financial tensions
• The legiBmacy and capacity of the state are declining
o Reduced ability to deal with problems, local and global
o Social unrest; poliBcal revolts; state retrenchment; inequality
o Failed states
9. To sum up
• Global policy issues are challenges due to large scale changes and requiring global collecBve
acBon
• Some global issues are concerned with sharing our resources, our humanity, our rule book
and our values
• Two big forces change our world: demography and the new economy
• The role of the naBon state has changed fundamentally
• Different instruments of global governance are available to cope with global policy issues
• Global turning points in economy, business, demography, society and poliBcs are changing
the old realiBes
6
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