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POLI 330N Week 6 Discussion Question 2, Global Markets

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This is a graded discussion: 20 points possible

WEEK 6: GLOBAL MARKETS

Several countries around the world are transitioning to market economies; the most significant of these are China and Russia. What do you think the impact will be on other countries around the world as these two countries become even more significant in the global economy? What are some examples of this impact?
As we focus on China and Russia to start this week’s discussion, think about what their systems used to be. Clearly Russia’s system of state-sponsored socialism (via the system of communes, or communism) and the politburo did not work and it fell apart in the 1980’s when Gorbachev enacted much-needed reforms to bring about change in the Russian economy and to recognize individual and property rights.

China, in looking toward the failed communism of the former Soviet Union, recognizes a strong market-based economy with a different approach than the U.S. system. in the U.S. most businesses are small businesses and the economy starts at the “ground level” with an entrepreneur filling a need with a new or better product and/or service. Think of Jeff Bezos who started Amazon literally out of his home selling books, and now his net worth in approx. $100 billion with Amazon employing about 270,000 individuals. The success of a product or service serves to grow the business from the “ground up” over time. In China, the market is controlled at the “top level” with a committee of officials determining in which direction their economy should go and allocating resources toward that effort. Thus, in China, businesses prosper when they serve the function of the state.

As Russia and China continue to mature their market-based economies, what do you think the implications will be for the world economy? For other countries that may consider implementing such economic systems?

Professor and class, 

As Russia and China grow and mature their market based economies, there will be both good and bad implications. In the long run, these growing economies will be great for everyone. But until everyone gets on the same page, there will be some slow growth which will have some consequences. According to Christine Lagarde from www.imf.org, (Links to an external site.) she states that one of the challenges with emerging economies is “declining commodity prices. Oil and metals prices have fallen by around two-thirds from their most recent peaks, and are likely to stay low for quite some time. As a result, many commodity-exporting emerging economies are under severe stress, and some currencies have already seen very large depreciations.” (www.imf.org (Links to an external site.)) People everywhere may “suffer” for how ever long it takes for Russia and China to mature their economies, but it will be worth the wait when it is all done.

Reference

https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp020416

Hi Angela! I like and agree with your view on the market-based economies of China and Russia. The world economy is such a delicate balancing act. Like you stated, with currency depreciating for some and the cost of metals and oils throughout the world, there is a fine line between growth and failure in regards to our world economy. Also, each country’s economy can greatly affect that of another country especially if it is based on a market economy.
Hello Kandice and Angela, I am writing you both because you both had great post! First off Angela, I like how you broke it down about the depreciating cost of oils and metal. These cost are making the cost of metals and oils rise here. For the U.S, this is not a good thing because this causes cost to rise here. I agree we all will suffer because of what they are going through. Kandice I agree, the economy is a balancing act. It does affect our growth and depicts our economies failure. I hope we all don’t have to suffer for long, I feel it is time for our economy to stop suffering and start growing! These were great post. Thanks for sharing.
Angela,

        You are so correct, every little thing that is done economy wise seems to have large consequences. If you import goods for a lower price you phase out local jobs and then people are in the same place as they were with the higher priced goods, it is so frustrating that there is absolutely no easy answer when it comes to fixing the market.

Angela, 

www.imf.org (Links to an external site.) points out that global trade has slowed down due to China’s economic slowdown in recent years and www.forbes.com (Links to an external site.) indicates China exported almost $400 billion to the US alone in 2016.  If an economic slowdown is in progress on China’s behalf, I am anxious to see how much revenue China was garner once their economy is adjusted and stabilizes.  Referencing your article again, Lagarde posts “the idea is that strong policy actions by emerging and advanced economies can be a win-win for both. A win-win for the global economy”, the powerhouses of the US and China with the finances we have, the supply and demand from both countries, with the existing matured economy of the US matched with the developing and evolving economy in China, I agree it will all be worth the wait when it is all done as you have said.

– Dana

References:

https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp020416

https://www.forbes.com/sites/judeclemente/2017/02/25/u-s-set-to-rival-russia-in-oil-and-natural-gas-exports/#78bb1b001e2e

Greetings Angela, 

The Chinese economy is undergoing unprecedented and profound changes. The innovative and green development concepts put forward by their leader not only offer solutions for China’s current outstanding economic problems, they also point out a clear direction for its long-term development. Supply-side structural reform has sparked a new development dynamic and raised the quality and effects of the country’s economic development. The strengthened efforts to promote deepened overall reforms, the simplifying of administrative procedures and the delegating of central government power to lower levels of government are all contributing to the establishing of a governance system that can ensure China’s sustainable and healthy economic development.

Marvin,

Great post.   At the 2017 World Economic Forum, many of the items you noted regarding China’s growth were noted.  It was also noted that in 2016, China actually contributed “39% to world economic growth”.  As one of the world’s largest economical developing nations, they are predicted to continue with not only their growth, but to be a large player in the overall global economy.

Michelle

References:

Jiang Jianguo, Minister of the State Council Information Office, Government of the People’s Republic of China. (n.d.). How China will impact the world economy in 2017. Retrieved December 02, 2017, from https://www.weforum.org/agenda/2017/01/inject-chinese-dividends-into-the-world-s-economic-development/

Russia and China have made significant changes because of the demand of our now global economy. They have become stronger and more stable. A report by The International College of Economics and Finance (ICEF) predicts “emerging market economies will grow almost three times faster than developed ones, accounting for an average of 65% of global economic growth through 2020.” (The Growing Role of Emerging Markets in Shaping Global Demand, 2014). These fast-growing economies have the potential of taking growth from smaller countries. Also, if they become too big too fast, they can destabilise the global economy. An example of the impact of growing economies would be that of China and its electronic and textile exports. They make products much cheaper than we can. We all enjoy the electronics and toys we do because of their affordability. If China were to destabilise, the impact would be devastating. According to the Office of the United States Trade Representative China is our most significant trade partner for goods. Their transition need be carefully monitored and we better hope they continue to stay stable.

 Angelica

The growing role of emerging markets in shaping global demand. (2014). The International College of Economics and Finance. Retrieved November 27, 2017, from http://monitor.icef.com/2014/03/the-role-of-emerging-markets-in-shaping-global-demand/ (Links to an external site.)

The People’s Republic of China. (n.d.). Office of the United States Trade Representative. Retrieved November 27, 2017, from https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china (Links to an external site.)

Professor,

You bring an interesting question actually. We are already seeing plenty of implications already for Russia and China in the world economy. China has been rising in the markets continually since adopting its form of controlled capitalism. As stated by CNN writer Rishi Iyengar from the article ‘China’s economic growth remains stable at 6.9% in the second quarter’:

“China’s speedy growth — an uptick from the 6.7% it recorded last year — will be difficult to sustain in the months to come, analysts say, as the government focuses on reining in the country’s rapidly ballooning debt.”

China, in its push to become a world power in the global market, has also been loose in its spending and where it has poured its funding into, mostly into electricity power plants and factories producing all sorts of goods that are sold worldwide. This has allowed its GDP to remain high for years, but now it has to face the debt it has been accruing, and we could see China look to branch out potentially to see its debt taken care of. This could allow for better terms of negotiation for trade with the US, but things are shaky with the current President.

With Russia, their growth has been slower and at times they were in deficits in their GDP, but they are currently on the upswing, looking to try and grow more and more with its industries taking off in different areas. Joana Ferreira, writer on ‘Russia Q2 GDP Growth Rate Confirmed at Near 5-Year High’, lists the main driving industries that led to this jump:

“Wholesale and retail trade (4.7 percent from 0.2 percent in Q1); real estate activities (2.7 percent from -0.9 percent); transportation and storage (3.7 percent from 3.3 percent); information and communication activities (4.1 percent from -2.3 percent); financial and insurance activities (2.7 percent from 0.1 percent); and administrative and related additional services (2.2 percent from -1 percent).”

The biggest thing to take away from this is that Russia is really establishing and growing their industries. With a country as large and with so many people, Russia can start making its mark in the world market like China within a decade.

All of this shows that they each adapted their own form of controlled capitalism. With Russia, much of it is still in control of the hands of Vladimir Putin, and with China, their top officials do their best to keep the country’s economy circling within it and putting out rather than taking too much in. They try to make their country a self-sustaining market and a country that outputs products rather than being a consumer nation like the United States is becoming.

When countries like Venezuela and some of the Middle Eastern countries that are still trying to find political stability in dealing with deposed or current dictators, many will seek to try to emulate what China and Russia are currently doing. Even countries like Cuba are trying to become more open to trade and export so that they can growth their country through export rather than simply by itself, cut off from the global economy like they had been through the system of communism.

 

Iyengar, R. (2017, July 17). China’s economic growth remains stable at 6.9% in the second quarter. Retrieved November 29, 2017, from http://money.cnn.com/2017/07/17/news/economy/china-gdp-growth-q2/index.html

 

Ferreira, J. (2017, September 11). Russia Q2 GDP Growth Rate Confirmed at Near 5-Year High. Retrieved November 29, 2017, from https://tradingeconomics.com/articles/09112017155319.htm

Janet,

China does have some issues with debt but they have already begun to address it and have plans to have it under control in the coming years. In addition they tightly manage their currency in a way that they can adjust to their advantage in times of need. There are many countries that have already tied their currency to the Yuan instead of the US dollar, which is having a major impact on the markets. I agree that China can no longer sustain the high level of growth as their economy stabilizes. They are aware of this and are planning for the slower growth. As for Russia, I think it is optimistic to say they could catch up to China in 10 years. While there have been some economic improvements over the last decade they do not have the same conditions as China. Russia also has a lot less stable trading relationships in the global market compared to China. They have a lot more work to do in an increasingly competitive global market.

Professor Terwillger and Class,

China and Russia have operated under a communist rule meaning there was only an illusion of freedom of religion and property complete with a belief of common ownership within the means of production and development and a lack of social classes although the existence stems from social classes of capitalism (i.e. working class, capitalist class).  A global economy became more significant for these two countries as early as 1978 for China and 1990’s for Russia.  Economic reform for these two counties included reducing poverty rates, which was significant for China in 2001 from 53% to 6% and as of 2012, oil, natural gas and precious metals accounted for over 70% of Russia’s exports.  Considering international trades was not of option for these communist economic countries prior to their interest in joining a global market.

Having large exports of oil and natural gas from Russia impacts the US by increasing interest in their exports of such materials as the US is a large exporter of natural gas.  This would drive export costs down in an effort to keep demand high from interested countries.  Production of natural gas has increased by 40% over the last 10 years in our country but with Russia considered an untapped resource at this time of new economic trade and interests, perhaps Russia would has a better supply and can afford to export for less when compared to the US?  Russia is currently the largest exporter of oil, higher than the expected Middle East who was the front runner for years.  The US is now increasing their oil exports to reach 1/3 of the global market export of oil by the year 2020 just to maintain relevance in the oil export industry.  Maintaining relevance by the US also keeps the market corner off Russia in the oil business thus lowering Russian influence regarding this product to those in need.

China is the largest exporter in the global economy, period.  Their main export currently is electronic goods, but a wide variety of market goods holds China as the major exporter to the US garnering $385 billion in revenue in 2016.  The impact to the US would be without their global market economy adjustments having been made, the US would be lacking a significant amount of imported goods each year.

Overall, it has been said in our lecture that a country’s politics do play a significant part in their economy and how imports and exports are handled.  Watching the trend of imports and exports between large countries and how economies are affected directly is one way to monitor the relationship between the two parties involved.  I am interested to see in the coming years if the trends continue to lean the same way with Russia being a major oil player while China being our major exporter and how the US maintains relations with those countries to keep our homeland thriving the way we are.

Dana

References:

https://www.forbes.com/sites/judeclemente/2017/02/25/u-s-set-to-rival-russia-in-oil-and-natural-gas-exports/#724cfb531e2e (Links to an external site.)

https://atlas.media.mit.edu/en/profile/country/chn/ (Links to an external site.)

Lesson 6: https://devryu.instructure.com/courses/17705/pages/week-6-lesson?module_item_id=1901917

Dana:

Thank you for your post on China and Russia in the global economy. Your statistics is hard to believe that China had reduced its poverty level to only 6%. If this was the reduction from 1978 to 2001 taking over 23 years to get there, they have really helped the economy.  2015 has China at a poverty level of 5.7% almost the 6% of 2001.  They have slowed down in their change.  The United States as of 2015 was 13.5 %. You would think in the U.S. we would be better than China, but we still lag.  What can we do to improve this level and get people off the assistance they receive? Does the rule that they have been under in the past help this out with the thought of common ownership?

Thanks

Rory

The World Bank, Poverty & Equity Data Portal, 2017. http://povertydata.worldbank.org/poverty/country/CHN (Links to an external site.)

United States Census Bureau, Income, and Poverty in the United States, September 2017. https://www.census.gov/library/publications/2017/demo/p60-259.html (Links to an external site.)

Hey Dana,

Thanks for such an interesting and factual post. The growing economic giants in the world seem to relate and focused on development as joining the international trade was not an option for the two. With the current trend, Russia would still remain the largest oil player and China the main exporter for a couple of years to come.

Hello Professor and classmates! I think China and Russia transitioning to market economies and becoming more significant in the global economy will have a positive and more competitive impact on other countries around the world. Both China and Russia have transitioned away from a communist economy; however, China has been more successful in its transition from a planned socialist economy to a market economy compared to Russia. China embraced a gradual reform while Russia went forward with a radical reform. This is one area where people feel that China surpasses Russia in the market economy; experts feel that China’s pace on their policy choice of a gradual change had a positive impact on their economy. Russia was abrupt with their change and has not had as a positive impact on their economy. “Though the policy choice of China and Russia did contribute to relative success of the economies, this study argues that the initial conditions were the determining factors in the relative success of China and relative failure of Russia” (Kim, 5/2015). Even though China and Russia have taken different paths on their way to economic reform, both should flourish in the long run. Inflation, banking and property rights are some examples of what will be influenced by their market economies.

Reference:

Kim, Y. C., PhD. (2015, May). Economic Transition in China and Russia. Retrieved November 26, 2017, from https://www.eujournal.org/index.php/esj/article/viewFile/5570/5365

Kandice,

     Thank you for your thought provoking and interesting post. I appreciate the fact that you mention that, while taking different paths to economic reform, both China and Russia should flourish in the long run. This economic reform and increase in international trade has contributed to the globalization of economies. This should be considered a universal good, but is it …? There is now an increased interdependence in trade among nations, some nations appear to be determined to wield more influence and power than others. Russia and China are two that come to mind. This newfound Capitalist income could be used for good (to elevate the standard of living for the populace) or it could be bad, using economic power as geopolitical leverage. Let’s look at Russia. Headed by Putin (a very rich and powerful man and former head of the Benevolent Society of the KGB). Under his guidance the vast majority of natural gas flowing to Western Europe is now under the control of Russia. One flick of a switch and Europe freezes. With large oil exports, the world has added Russia as one of its major suppliers. Shut off that supply and the world markets dive. And now we learn of Russia’s purchase of a large percentage of U.S. held uranium (20% …?) and we see a country bent on accumulating massive mineral wealth with the potential to exploit its economic power to control foreign interests (not that Communist countries – or former Communist countries – are known for that sort of thing). Wars are typically won by those with the strongest economies. Manipulating or destroying your enemies economically, rather than by force, is so much more in vogue nowadays. Sometimes economic reform leads to unintended consequences. China, for instance, is helping to support North Korea by buying coal from that country in record amounts. Monies from China’s coal fired industrial complex is being funneled into North Korea, and Its nuclear program, in staggering amounts. One could argue that Kim Jung Un is the only man on the planet capable of sporting a “coal powered” nuclear arsenal. China’s economic reform has inadvertently funded North Korea’s nuclear ambition. So, with all of this economic reform, will it ultimately be used for good, or to simply foster the goals that the Cold War failed to bring these two countries. As Ikenberry (2007) states, as China gets more powerful and the United States’ position erodes, two things are likely to happen: China will try to use its growing influence to reshape the rules and institutions of the international system to better serve its interests. Then, other states will start to see China as a growing security threat. The result of these developments will be tension, distrust, and conflict, the typical features of a power transition. Let’s hope the end of the Cold War (and the economic reforms that resulted) won’t usher in an era of Economic War.

Thank You,

Gordon

Reference:

Ikenberry, G. (2008). The rise of china and the future of the west: Can

the liberal system survive? Foreign Affairs, 87(1). Retrieved from

http://www.jstor.org/stable/20020265 (Links to an external site.)

Hi Gordon! Wow, that post of yours was a good read. I admire your views and ideas on China and Russia. I can understand your weariness of putting trust in those two countries being as how we have crossed paths in the past in not the nicest of ways, to put it nicely. It is true that if used for the right reasons a market economy could help to make other countries prosper but it used for the wrong reasons, it could be detrimental to a country. What though are we supposed to do? There are only so many areas in the world that produce the oil that every country seeks. And until someone can come up with a cheaper and easier alternative, these countries are at the mercy of the countries supplying what we need. That is the sad truth about supply and demand. It is unfortunate how this type of economy can make people greedy and malicious.

Kandice,

     Thanks for reading my post. I can sympathize with your lament about finding trustworthy trade partners. I guess trade in the international markets will always be a dirty business. But, historically, we’ve traded with some pretty unsavory characters. I look at our trade with Germany during WW1. We sold them goods for their war machine right up to the time when we started actually shooting at them. Economics makes for strange partners. Money talks. I guess it will always be profits over principles …

Thanks,

Gordon

It’s a scary thought to me that China and Russia are becoming such tremendous players in the global economy, but I do think it is good for their citizens in creating a middle class. The Pew Research Center finds that a thriving middle class is linked with support for democracy (The Global Middle Class, 2009). I hope that these countries may eventually be ready to be democracies and give their citizens the freedoms we enjoy of self-rule and choosing their governments. The United States will have to keep up with the global economy for us to keep our place in the world as we know it.

Angelica

The Global Middle Class. (2009). The Pew Research Center. Retrieved November 30, 2017, from http://www.pewglobal.org/2009/02/12/the-global-middle-class/ (Links to an external site.)

Hey Angelica, great post. I have a question, why do you think it will be scary for China and Russia becoming tremendous players in the global economy? I honestly feel this will be a positive aspect for everyone. I think it will build our relationship with and neighboring countries. I also think it will benefit them as well. This will create more jobs thus creating more products for us. I have to admit I think it will be hard in the beginning but I think we all will bounce back and it will be a huge benefit for everyone. Wouldn’t it be an awesome experience for them to experience what we experience and sometimes take for granted on a daily basis! Great thought provoking post!

Aesha,

Nice post and I also have historically agreed with your post.  I am not a political person, but in my reading and research for this discussion, had come to agree with Russia and China’s positive role in global economy and growth.

After reading other posts, like Gordon’s, and the corresponding citations, I can now see the hesitation to a stance that this is as you mentioned, “A positive for everyone”.

In the end I still believe it is a positive, but have a cautionary reserved stance.

Michelle

Angelica:

Thank you for the post and I agree that is scary to think that China and Russia are becoming more in global economics. It is stated in most articles that by 2020 emerging economies will rise in importance and China will have overtaken the USA to lead the list of the worlds’ top ten largest economies by GDP, states the Euromonitor international article. Currently, as of 2010 India, Russia and Brazil are advancing with their economies and are in the top ten., It appears that China will be number one, the USA number two and Russian will be number six.  Like stated before it is scary to think about as we are decline and need to keep top notch in the global systems.  If we do this, it will also keep our politics top notch and be the leader we are.

Thanks

Rory

http://blog.euromonitor.com/2010/07/special-report-top-10-largest-economies-in-2020.html (Links to an external site.)

It is hard to believe that China is taking over and becoming number one but that seems to be where they are headed. The United States is the world’s premier market economy. One reason for its success is the U.S. Constitution. It has provisions that facilitate and protect the market economy’s six characteristics. Here are the most important:

  • Article I, Section 8 protects innovation as property by establishing a copyright clause.
  • Article I, Sections 9 and 10 protects free enterprise and freedom of choice by prohibiting states from taxing each others’ goods and services.
  • Amendment IV protects private property and limits government powers by protecting people from unreasonable searches and seizures.
  • Amendment V protects the ownership of private property.  Amendment XIV prohibits the state from taking away property without due process of law.
  • Amendments IX and X limit the government’s power to interfere in any rights not expressly outlined in the Constitution.

Some believe ” Russia and China [can] lead this new global movement to balance the power in the world, so they can build new world order where no more unilateral, aggressive or even colonial methodology [is] being put into a sovereign nation such as Libya.” (www.rt.com (Links to an external site.))

www.thebalance.com

Gordon, Great post! I agree with questioning the trust of the two up and coming superpowers. Although these countries appear to be reformed from their communist ways, looks can be deceiving. We as a country are very giving and forgiving to others in our superpower position, but would either of these countries act the same way if they had such a powerful position as the United States does currently? Great thoughts on the power transition.

Gordon,

Great post and very enlightening read.  You touched on a real driving force in global economics and that is money driving both economic and foreign policy.  I think we can turn on CNN or Fox news any day and see how this impact is real and at times scary.  Even allied nations have had turmoil and or controversy based off economical change and decisions.  Its a fact of life…..money talks and drives all.

Michelle

Kandice,

I find it interesting that we both found the same article. I did not realize you had cited this article until after I had read it and then began reading your post. I think it is interesting how Russia has been so slow to develop into a market system. The “Shock Therapy” they experienced was a radical shock to the country that it has taken longer for them to recover and grow than China, who experienced “Gradualism” (Kim, 2015). The gradual change to a market system allowed China to make changes along the way that allowed them to acclimate to the new system easier and quicker. The final thought from Kim (2015) is that Russia should not be discounted from becoming more of a player in the world economy and gaining more power than China now that they have overcome their issues from the initial shock of change.

A possible impact from Russia and China becoming super powers in the global economy is that they can produce more exports, decreasing the prices of the products they supply due to an over-abundance.

Leona

Kim, Y.C. (2015). Economic Transition in China and Russia. European Scietific Journal, Sp ed.(1). Retrieved from: https://www.eujournal.org/index.php/esj/article/viewFile/5570/5365

 Hi Leona! That is quite funny that we both found that article; it was a good read and very informative! I like how you stated that China was able to adapt a little better than Russia during their changes to a market economy because they changed gradually and were able to change with the times. It seems like many things work better when you have time to develop them as you go. Sometimes ideas need to change and adapt in order to survive. This holds true for a market economy. It is difficult to just start one up rather than just gradually doing it. When you are able to do things gradually, you can learn from any mistakes, correct them, and make improvements.
Professor Terwilliger,

     Several countries around the world are transitioning to market economies; the most significant of these are China and Russia.

What do you think the impact will be on other countries around the world as these two countries become even more significant in the global economy?

According to our text, Roskin (2014), credits Karl Marx and other classical economists in coining the term political economy. Political economy refers to the influence of politics on the economy and vice versa. The political structure of both China and Russia along with the guiding ideology of Communism placed their economies at a disadvantage. Competition in business was scant, profits technically non-existent, and inefficiencies rampant (and that was just their domestic economic woes). Couple that with the idea that these countries had to compete in a free market, along with the rest of the world, for goods and materials at a price that the free market established. This made price controls, important within a Communist economy, difficult, as the world economy established commodity prices. There were many factors (internal and external) that caused the demise of Communism. Fortunately, both China and Russia have learned from previous mistakes and have developed political and economic reforms (China moving away from an agrarian society – cherished by Communism – and toward industrialization and Russia abandoning political corruption for free market profit). What we see is an increase in the world economy, as these countries add to the world markets as both buyer and seller of goods and materials. Some economists claim that a nation’s true wealth comes from indigenous natural resources. Both China and Russia are rich in natural resources. And now that communist era restrictions on exports are off, we see not only their own economies growing, but also economies around the world are growing, as more goods and materials are available at lower prices. Say what you will about capitalism (it’s not perfect), but it has lifted the world market as China, Russia, and a whole host of other countries have recently revamped the way they do business. Competition is good … Profits are even better.

What are some examples of this impact?

We see economic improvement not only on a worldwide scale, but also on national levels. India, for instance is doing a brisk business with both China and Russia. This has lifted India’s economy. We now see globalization in business, stock markets, and in increased international trade. We also now view many countries as trading partners. Countries, such as Vietman, have entered the world markets as a trade partner. There is also a large peace dividend. As nations are now more concerned about profits and remaining marketable, we see less adherence to political ideologies that are oppressive. Stable economies lead to stable governments, which lead to stable societies. Winning in the market is now more valued than winning on the battlefield.

Thank You,

Gordon

Reference:

Roskin, M, Cord, R, Medeiros, J, & Jones, W. (2014). Political Science:

An introduction (13th ed). Hoboken, N.J.: Pearson.

Greetings Gordon,

Great Post. Russia and China have been for some in the last decade or so become valuable and integral parts of our global economy. Russia has several billionaires invested in multiple international business affairs as well as China with its exports of multiple products specifically electronics and material goods. Since several items in the U.S are outsourced these two countries can become a assets or hinderance in the near future for the global market.

  I was just wondering also if this transition of power will benefit us in a way related to our imports of goods, or if some how it is going to turn around and bite us in the rear with this new onset of a transition in power. It is so hard to trust anything in relation to power and wealth in my personal opinion. Scary
Hey Gordon,

Thanks for such a great and interesting post. China and Russia have become major players in our global economy. Russia has struggled and become a major in oil while China has become a major exporter. This therefore makes them key players in shaping the economy. The United States can outsource from these countries and even partner in the near future.

Hi everyone!

I believe with Russia and China transitioning into the global economy, competition will be significant.  Not only will the freedom allow for more competitive prices, it will also allow for the business owners to have more of a decision when selling items at unset prices, thus, allowing consumers to have more of a choice on where they wish to buy products from.  Russia and China are both transitioning from an area of capitalism where distribution of wealth was unfair and everything was regulated by the government.  While China has chosen the transition on a gradual basis, Russia elected to enforce a radical change.  One is not necessarily better than the other, but economist feel that China has surpassed Russia in stabilizing the economy because of their gradual change. Proof may lay in that “China is already Russia’s largest trading partner, comprising $88 trillion in combined export and import volume in 2015” (Hsu, 2016). In exchange, “China now imports 550,000 barrels of oil per day from Russia or 27 million tons per year, making Russia the largest crude oil exporter to China” (Hsu, 2016).

Reference:

Hsu, S. (2016, November 09). Is A Russia-China Economic Alliance On The Horizon? Retrieved November 26, 2017, from https://www.forbes.com/sites/sarahsu/2016/11/07/is-a-russia-china-economic-alliance-on-the-horizon/#7d595d9b1542

Amber, 

The changes that Russia and China are going through are significant. It will change things for consumers all over the world. It will most definitely give everyone more options to buy and sell their products. I think that China made the wiser decision by changing gradually and adjusting to those changes as they are made. It might not be ideal because it is taking longer, but this process is making their economy more stable that way.

Professor and class,

What do you think the impact will be on other countries around the world as these two countries become even more significant in the global economy? What are some examples of this impact?

Russia was under rule of command socialism longer than any other country, and had no experience with market capitalism. This has made the transition that much harder. Their transition was intended to be a rapid one, but has taken more time than originally planned. “While it is now an ally of the United States, Russia still possesses the nuclear capability to destroy life on earth. Its success in making the transition to market capitalism and joining as a full partner in the world community thus has special significance for peace (Economies in Transition).” This is a very big impact on the world, and as their focus shifts from weapons to economy, the safety and securities of other countries become more pronounced.

China has been had a slow progression to market capitalism. But its transformation has been a very successful one. “Between 1980 and 2011, China had one of the fastest-growing economies in the world. Its per capita output, measured in dollars of constant purchasing power, more than quadrupled (Economics in Transition)”. China is a world giant in many ways. It is larger than the continental us and has a population of over 1.3 billion people. Having this giant being more competitive in the world’s trade, boost the benefits for all.

Scott

References:

Economies in Transition: China and Russia. (n.d.). Retrieved from https://2012books.lardbucket.org/books/macroeconomics-principles-v2.0/s23-03-economies-in-transition-china-.html

William,

Beyond nuclear capabilities, Russia also maintains the position of largest crude oil exporter in the world barreling up to 11 million barrels daily to export, as of 2015.  The US imports about that many barrels daily from around the world with one of our main imports being from Russia.  Furthermore, China’s exports to the US garnered almost $400 billion each year.  I agree with you how incredible China is when discussing world trade and how competitive their involvement will become over the coming years.  Additionally, I agree that Russia is a powerhouse of weapons making their exports more financially beneficial to their home economy and making imports to outside countries more costly.  Between those two countries and their economic capabilities, the US no longer maintains an appearance of the strongest country in the world on every aspect, an opinion most Americans and foreigners believed, including myself.  Perhaps were at the mercy of what we need and not always what we have.

Dana,

I also agree that the US is no longer the strongest country in all aspects. It is surprising how dependent one nation can be upon another. As you stated we rely on these two countries for a multitude of imports. So many things we purchase in America is made by the Chinese. And our use of oil is astonishing. I think Americans are not only at the mercy of what we need, but also what we want, but do not have.

Hi Dana and Scott!

Another great discussion between the two of you.  I agree that the US is no longer as strong as it was in the 1960’s.  By using gross economic product (GDP), each country is ranked based on their contribution to the global economy. In the 1960’s the US GDP was 40% of global GDP, in the 1980’s it was 26%, in 2001 it was 32%, and as continually declined from there.  Today, the US GDP is about 20% (Patton, 2016). While there are many things that have affected this trend, such as the American economy, corporate taxes, and cheaper labor in other areas of the world, we must also consider the competition with other countries such as Russia and China who seem to export a little fast and sell things a little cheaper.  In order to be valuable in the global market, the US needs to change and adapt, or we have the potential to fall further and further behind the rest of the world.

As a side note, there is a great show on the VICE channel called Abandoned.  A documentary crew goes to areas of the US, such as Detroit and St. Louise, which were once booming, and documents how and why changes have occurred.  It’s a great show that correlates to this discussion on a local level.

Reference

Patton, M. (2016, February 29). U.S. Role In Global Economy Declines Nearly 50%. Retrieved November 28, 2017, from https://www.forbes.com/sites/mikepatton/2016/02/29/u-s-role-in-global-economy-declines-nearly-50/#156853dc5e9e

Amber,

Many feels threatened by the relationship growing between Russia and China. Could these two countries become a super power? The threat to America’s power is often considered. But are they really partnering together or are they still competitors? If they were to partner together, would they be a threat to the US? China depends largely on the US to support their economy. Russia depends largely on Europe to support theirs. If the two were to act upon their dislike for the west it could be detrimental for their economies. “Only a strong common threat from the West could push China and Russia to move closer economically and militarily. This is in the hands of U.S. policymakers (Huiyun, 2015).”

Scott

Huiyun Feng, The Diplomat. (2015, March). China and Russia vs. the United States? Retrieved from https://thediplomat.com/2015/03/china-and-russia-vs-the-united-states/

Should consumers in, say, the U.S. be required to purchase only goods manufactured in the U.S. even if those goods cost more to produce?

As you know, recent trends in political rhetoric and trade indicate a movement away from a global marketplace and more toward protectionist trade policies. Is this a good or bad thing? Explain your answer.

Hello,

Protectionism are policies that keep foreign trade and goods out.  It helps to makes sure that jobs remain in the country.  It also promotes nationalism and pride.  It helps preserve a countries identity by limiting foreign influence and outside culture.  Which can also be seen as a negative.  By limiting foreign trade, a country isolates itself.  Which as we see lately in the world, there is a tit for tat respond.  If the US blocks imports from one country, that country may in turn block imports from the US.  Also protectionism would cause a increase the price of homemade goods.  When manufacturing is outsourced, products are produced at a significantly lower cost due to cheaper labor. This is because of less restrictive or a lack of labor laws. A manufacturing may  pay its workers in an outsources country 2$ per hour.  In the US, the manufacturer would have to a worker 10$ per hour to produce the same product.  So now instead of pay 4$ for an item, you now pay 20$.  It the item is not a necessity, most people will find a cheaper alternative, or not by the product at all, which leads to decrease sales, then decrease product production, and then to lay offs.  Then you’re back where you started.

Robyn

I feel like Americans should have the freedom to choose what products and goods to buy. We should not be limited to only buying what our country produces. According to an article I came across with, countries use different strategies to protect their trade. One way is for them to enact tariffs that tax imports leaving the retail prices of these imported goods at a higher price (Amadeo, 2017). On one hand, these acts of trade protectionism will protect a country from its foreign competitors thus giving local businesses and companies the opportunity to strive. It also creates jobs for the American people since it allows companies to hire locally. However, looking at things in the long term, I think that it will no longer give local companies the incentive to innovate leading to job outsourcing and decline in economic growth.

Reference:

Amadeo, K. (2017, July 07). Trade Protectionism: 4 Methods with Examples, Pros and Cons. Retrieved November 28, 2017, from https://www.thebalance.com/what-is-trade-protectionism-3305896

Greeting Professor, 

This theory sounds idea for a country that should be united in unifying our markers in the U.S and bring more jobs to the country, but the reality is that labor costs in other countries don’t compare to the U.S and consumers are looking for a bargain. For example with pharmaceutical medications many citizens purchase there medications in other countries for a third of the cost willing to take the risk of no stamp of effectiveness or safety from the FDA.  The money market in the U.S is not concerned with mass production locally but more so consumer saving globally.

Marvin,

Speaking of pharmaceuticals, I have helped with mission programs in third world countries. The group consisted of all medical professionals and took medical supplies to these less fortunate areas. I assisted in counting pills and dividing into single patient doses. All recipients received vitamins, antibiotics, among many other medications. This group was able to purchase these medications from pharmaceutical companies “at cost”. I was amazed at the difference in cost and retail prices. We received $30,000 worth of medications for about $8,000! That is almost a quarter of the retail price. It makes one wonder why we are required to pay almost 4 times what it takes to make these meds.

Scott

Protectionism is “policy of keeping out foreign goods to protect domestic producers”, (Roskin, p. 301). I agree with this to a certain extent as I love to see “made in America” on the products I purchase but I also  think that we should have the option to purchase goods from wherever we want. This policy keeps people employed in their own country; however, if the “WTO system breaks down and the world goes back to protected markets, we could see another depression” (Roskin, p. 301).

Roskin, M. G.; Cord, R. L.; Medeiros, J. A.; Jones, W. S. (2013). Political Science: An Introduction, 13th Ed. Pearson.

  • Desiree

    Absolutely, We not only need to protect our markets and producers. We also need to protect our consumers as well. If Americans refuse to purchase poorly manufactured chinese products. It is very likely that if the products are cheaper than products made in the US. It is produced with cheaper raw materials and possibly child labor. The product made in China can be sold at a much cheaper cost. If there is no demand for these mass produced products  the supply wil be reduced.

    Hello Professor and class,

    Protectionist trade policies is good and bad. Good for local businesses but creates stagnation. Theres no progress in getting wealthy or progressing. There are many developing/underdeveloped countries that want to use protectionism to develop (as many developed countries have done), but making these decisions results in and throwing sanctions at them, and therefore not allowing them to develop. Developed countries want to keep the underdeveloped countries where they are, because that benefits them (the developed countries). It’s called, Climbing the ladder then kicking it.

    Reference:

    YOUTUBE-HOW TO ENRICH A COUNTRY: FREE TRADE OR PROTECTIONISM?

    Roskin, M, Cord, R, Medeiros, J, & Jones, W. (2014). Political Science:

    An introduction (13th ed). Hoboken, N.J.: Pearson.

    • Lelany

      I completely agree. Protectionism can cause more harm than help!

      Professor, 

      I feel like if we look at countries like China, they look to promote their exports as well keep many of their products within their country. They have a lot of their own household and entertainment products from their own factories within their country. However, they still face a budget issue of their own from the government promoting their domestic products rather than importing from elsewhere.

      Overall, I think a solid strategy is to balance where and what kind of products are most efficient for our country to produce, and import where trying to establish a marketplace for that area would prove more costly than good.

      I believe trying to make Americans purchase only American made products is a bad thing, as there are simply some products that are made more efficiently in other countries and some Americans specifically look at other countries to purchase their goods.

      Buying U.S. goods is always recommended to boost revenue in our own country. However, there are some items that aren’t available in the United States. Also our country only did business within it would hurt relationships with other countries. There are many reasons to purchase good in the United States:

      10) Foreign labor standards allow unsafe worker conditions in many countries. When you buy American you support not only American manufacturers but also American workers, safe working conditions, and child labor laws.

      9) Jobs shipped abroad almost never return. When you buy goods made in the USA, you help keep the American economy growing.

      8) US manufacturing processes are much cleaner for the environment than many other countries; many brands sold here are produced in countries using dangerous, heavily polluting processes. When you purchase American-made product, you know that you’re helping to keep the world a little cleaner for your children.

      7) Many countries have no minimum wage restrictions, or the minimum wage is outrageously low. When you choose products made in the USA, you contribute to the payment of an honest day’s wages for an honest day’s work.

      6) The growing lack of USA ability to manufacture many products is strategically unsound. When you seek out American-made goods, you foster American independence.

      5) The huge US trade deficit leads to massive, unsustainable borrowing from other countries. Debt isn’t good for you and it isn’t good for America.

      4) Foreign product safety standards are low. For example, poisonous levels of lead are in tens of millions of toys shipped to the USA. When you buy toys and other goods made in the USA, you can be confident that American consumer protection laws and safety standards are in place to protect your family.

      3) Lack of minimum wage, worker safety, or environmental pollution controls in many countries undermines the concept of “fair and free trade”. No Western nation can ultimately compete on price with a country willing to massively exploit and pollute its own people. When you buy only American-made products, you insist on a higher standard.

      2) Factories and money are shifting to countries not friendly to the USA or democracy. When you avoid imported goods in favor of American-made items, you help ensure that the United States doesn’t find its access to vital goods impacted by political conflict.

      1) As the US manufacturing ability fades, future generations of US citizens will be unable to find relevant jobs. Buy American and help keep your friends and neighbors-and even yourself-earning a living wage.

      www.madeinusaforever.com

      Dana

      In reading your post about the appearance of the US not maintaining it’s strong image,  I read an article on why the US remains the World’s Unchallenged Superpower. The US receives about 1 million immigrants a year than any other country. The US leads the world in high technology, finance and business, the movies and higher education than any other in the world. The US has the most powerful Military and last the US has the greatest Global Leadership. The US still has more money than any other country. It’s GDP (gross natural product) is more than twice the size of china’s emerging gdp. (Visual Capitalist).

      Damaris

      Yes the Chinese have been very successful in their economic growth. This has also led them to have 16 of the most polluted cities in the world. The are consuming massive amounts of water for production and farming. Although the consumption per capita is less than the U.S., their population is so much larger that this makes it a big problem. China has also seen  a large increase in plastic bottles for water. This economic growth has also allowed the people to surpass the U.S. in buying cars. China is making efforts for green energy with wind farms. If china goes through there resources to quickly and pollution to high than will there be economic collapse if people can’t breathe to work. This could have a major effect on the world economy.

      reference: https://www.thedailybeast.com/chinas-economic-growth-and-environmental-problems

      Hi Travis.

      Thanks for the thought provoking post.  I never even considered that being strong in the global system would result in so much change at the environmental level, but it make sense that resources would be used faster, smog would accumulate quicker, and chaos may begin.  I like to think that numbers have a big impact on understanding the big picture, so I did some additional research on topics you spoke on.  When considering just the size and population of China, it can have an impact on health, environment and social challenges. According to Yanzhong Huang (2103), author of China: The Dark Side, smog has reached 40x the maximum level allowed by the World Health Organization (WHO), which was shown that this level of pollution contributed to 1.2 million premature deaths in China.  It is expected that by 2025 the air quality will become 70% worse due to increased vehicle and industrial emissions and coal burning.   The WHO also states that nearly ¼ of the population doesn’t have access to clean water, more than 70% of lakes/rivers are polluted, and nearly 40% of those are considered “seriously polluted.” Annually, approximately 100k people die from water pollution related illnesses and 94 million people become sick due to bacterial foodborne diseases.  “Overall, China has had an 80 percent increase in cancer rates compared with 30 years ago” (Huang, 2013).  How can China become one of the top global leaders if there isn’t clean air to breath or uncontaminated water to drink?

       

      Reference:

      Huang, Y. (2013, June 06). China: The Dark Side of Growth. Retrieved November 30, 2017, from https://yaleglobal.yale.edu/content/china-dark-side-growth

      Professor Terwilliger,

      I think the impact of these two countries on the world economy will be profound. As Russia has increased it’s GDP by the exporting of oil and metals, it has also allowed privatization of companies and people have more rights to the land for farming and development. As the communist parties and states have collapsed they have become more reliant on using other countries resources, allowing for more open trade. China’s transition was aided by outsourcing its low-cost workers to Taiwan and Hong Kong that these two countries were in short supply of. This allowed regional economies to surge and thus helped stabilize china’s transitioning economy. Russia has had a big impact with the availability of there oil. They have challenged the OPEC countries which has increased there GDP and a place in the world market. This was boosted by changing old policies which led to receiving funds through the IMF. This has had a tremendous effect on regions surrounding these two countries as it opened trade routed that were previously closed off. Although volatility still remains I think it will only become stronger around these two countries economies as globalization continues to grow (Young Choul Kim, 2015).

      REFERENCES

      Young Choul Kim, P. (2015). Professor of Political Science . European Scientific Journal, 355-366.

      Travis,

      You have made some great observations! It makes sense that Russia will become a globally dominant country because of the supply of oil they can provide. They have been a closed off nation for so many years that they have not had their oil supply diminished like other countries in OPEC. China is already a large player in the world economy because they made the gradual change and figured out how to develop into the world market quicker than Russia.

      Leona

       (1 like)

      Both countries transitioning to market-based economies will be of an advantage to other countries.China, for example, has become the third largest importing as well as exporting country, the fourth largest economy in the world (after the United States, Japan and Germany), and one of the top three destinations of foreign direct investment. The figures of its increasing world export market share in the period of 1985 to 2000 show that China has profited more. The impressive growth of the biggest developing country in the world is currently a key economic and political issue. China’s high rate of economic expansion is based on a development model that combines a modernization of state-led economic organization and regulation with a gradual, controlled neoliberalization in which (foreign) transnational companies play a central role.

      More importantly, with its industrialization and growth, China is turning into an important market for primary products. China’s growing need for natural resources forms a major opportunity for other developing countries; the Chinese are willing to invest large amounts in sectors like oil and minerals (e.g. iron ore, copper, nickel). China’s contribution to the expanding global demand has driven up the prices of these and other primary commodities (e.g. natural rubber, wood, and soy beans). These changes in the terms of trade are especially positive for the many developing countries depending on the export of one or a few of these commodities. The expansion of China has already brought about important changes for developing regions, and these changes are likely to continue in the years to come. The rapid growth of China and some other (emerging) economies in the East and the South is creating a new global economic outlook for developing countries. Over the past few years, the world has become aware of the importance of China’s ongoing expansion. China has become a central place for production, investment, import, and export, which are all heavily tied to China’s role as “the factory to the world.” Russia on the other hand, are not doing that well in economics, judging from the fact that they took a different radical method. However, its transition will greatly benefit the rest of the world.

      Retrieved from http://apjjf.org/-Alex-E.-Fernandez/2611/article.html

      The U.S. leads the world in technology advancements, and China leads the world in making those things that the U.S. invents. For example, computers, smartphones and many electronics are invented and patented in the U.S. but are manufactured in China because of cheap labor costs and the absence of union labor.

      More broadly, our global economy means that our products have originations in many different countries. Let’s talk about differing standards of living in different countries.

      You recall some years ago that Nike and Apple were large companies that were found to have allegedly “looked the other way” when working with overseas manufacturers of their products that employed child labor. As a result, these companies engage in routine oversight of their manufacturing partners to ensure that no children or used to make their products.

      The universal condemnation of child labor is not necessarily enforced by all companies and in all countries and international treaties attempt to prevent the exploitation of children for labor. These type of laws are recognized as a “near universal truth,” i..e, child labor is exploitative and destroys nations over time as children should learn and grow, not be used as sources of cheap and expendable labor.

      Given this, we have a number of international treaties to ban child labor. Do you think these treaties are effective? What about other types of labor, i.e., in some nation-states people work 14 hr. days, 7 days a week? Should this too be illegal under the law of the international global marketplace? Should the work ethics/morals of one country be subject to the ethics and morals of another collective body of countries with differing views?

      I think that these treaties are effective for most countries and companies but it is almost impossible to ensure the banning of child labor throughout the world as many parts are not monitored and documented the way that the U.S. is. For example, ‘the prevalence of child labor is highest in sub-Saharan Africa. In the least developed countries, nearly one in four children (ages 5 to 14) are engaged in labor that is considered detrimental to their health and development’ (Website). This was a statistic from 2017 and it is unfortunately a reality for too many children out there. They are sources of cheap or no pay labor that countries and companies take advantage of. Therefore, there should be more following up with less developed countries to make sure that these international treaties are being implemented.

      Continuing on, I definitely believe that people working 14 hour days, 7 days a week should be illegal under the law of the international global marketplace. This is abuse of employees’s labor and should be grouped in the same category as child labor. There is no reason that a person should not have 48 hours off per week unless they are choosing to work more and receive overtime pay. Which makes me wonder… do these nation-states also not have overtime pay policies? Is that not a thing for them either?

      With this being said, I do not necessarily believe that the work ethics/morals of one country should be held under the EXACT same umbrella of another collective body of countries if they have differing views as long as there is no harm to its citizens and the inhabitants of said country are okay with what is being expected of them and how they are being treated. If this is compromised, my personal opinion would look for change and fairness in comparison to the way other countries do things. The U.S. has plenty of flaws in their work laws but we do not have the same extreme issues as less fortunate countries/nation-states have and that is something to be grateful for.

      Hello,

      I think treaties are effective in countries that actually enforce them, but some only enforce them when someones else is looking or its in their benefit. Thailand has made efforts to eliminate child labor, but the problem still exist, especially when it comes to children sold into sex trade.  ”

      In 2016, Thailand made a significant advancement in efforts to eliminate the worst forms of child labor. The Government adopted an amendment to the penal code that increases penalties for individuals who use children to commit crimes. Thailand also established a new taskforce to investigate crimes involving the commercial sexual exploitation of children perpetrated using the Internet. In collaboration with multiple stakeholders, the Government began implementing a new project to prevent and reduce child labor and forced labor in the fishing and seafood industry. In addition, the Government is working with the International Labor Organization to collect data and produce nationally representative child labor estimates. However, children in Thailand engage in the worst forms of child labor, including in fishing and shrimp and seafood processing, and in commercial sexual exploitation. An insufficient number of inspectors and inadequate training on child labor issues hampered the labor inspectorate’s capacity to enforce child labor laws, particularly in the informal sector and home-based workplaces. Some children in Thailand face challenges in accessing education, which increases their vulnerability to the worst forms of child labor” (Department of Labor 2016).

      Work ethics and morals should be universal for children.  Children are innocent and can not protect themselves.  They did not ask to be born, so it is the responsibility of adults to care for and protect them.

      https://www.dol.gov/agencies/ilab/resources/reports/child-labor/thailand

      Robyn

      Hello professor and class,

      The global market is affected by both China and Russia. As we all know it is very hard to find products made in the US.  A majority of our products are made in China. This helps boost their economy while decreasing jobs in ours. According to the World Economic Forum, China has made several advancements in regard to global economy (weforum.org, 2017). The article goes on to showcase how China has set up several new ports closer to the ocean and constructed Three Gorges Dam. While these are not the only ones China has increased jobs and decreased poverty rates(weforum.org). Russia affects the global economy by building it ‘s global defense market. In an article by Center for Strategic and International Studies, it states that Russia is the second largest arms supplier behind the US(csis.org). This makes them another major player in the global economy. The US needs to keep trying to advance in technology to gain a larger percentage of the global economy.

      Thanks, A’lon

      Source:

      How China will impact the world economy in 2017. https://www.weforum.org/agenda/2017/01/inject-chinese-dividends-into-the-world-s-economic-development/ (Links to an external site.)

      Russia in the Global Arms Market (2017). https://www.csis.org/analysis/russia-global-arms-market (Links to an external site.)

      Alon,

      The United States will surely fall behind if we don’t keep advancing our technologies. We are already “behind” compared to other countries. If we allow China and Russia to surpass our economy, who knows where we will land when they are at the top of their game. The United States, I feel, should always be one step ahead of the game, to stay in the game.

      On a macro-economy scale, what role does economics play in the political realm? Why do we care what types of markets China and Russia have? Can any of you provide an example of how this influences your daily life? Thoughts?
      • There are two diametrically opposite viewpoints about the economic role of government. One is the laissez-faire view as propounded by Adam Smith. According to this, a government that interferes lest with the economy is the best. In such an economy, everyone acts according to his or her own self-interest. But the invisible hand operating through the market mechanism ensures that social interest gets promoted in this process. In striking contract is the view held by Karl Marx and his group of scientific scoliosis. According to the Marxists, centralized planning with public ownership of the means of production leads to an ideal economic and social set up.

        The type of market China and Russia have influences the economy of other countries. China and Russia have a centralized economy where all the means of production is controlled by the government . All economic decisions are done by the government and market forces do not have any control over economic decision making. The economices of China and Russia are highly regulated by the government and as a result doing business in these countries poses a challenge to firms from other countries. China and Russia are not open to doing business with firms from other nations but on the other hand China is the largest exporter of manufactured goods .

        If we take the example of pricing Gasoline in a country like India ,we see that the price of gasoline is fixed by the government.The government decides what price the consumers pay. If we analyse the price of gasoline in a country like United states , the price is fixed by the market forces i.e the law of demand and supply is responsible for fixing the price of gasoline.

      Professor Terwilliger

      Russia’s decline as compared to China was its poor quality of involvement with global economy. China on the other hand embraced globalization as an opportunity to catch up with other countries as well as to overtake them. Some examples of this impact is exports investments, Technology which the Chinese report meant rent seeking opportunities.  Russia has significant influence on Oil & Natural gas prices. China is the largest exporter & second largest importer of goods. “The Chinese word for economy means for society to prosper and benefit the people” according to Jiang Jianguo Minister of the State Council Information Office, China. China is expected to reap economic prospects in 2017. They plan to formulate and implement major policy measures, which will bring the market and society positive and stable expectations. (China Daily.Com). As for Russia’s economic success, signs of recovery to economic growth is unlikely to be strong and healthy as oil growth projections remain questionable. (The World Bank).

      Reference

      China Daily: https://www.chinadaily.com (Links to an external site.)

      The World Bank: https://www.theworldbank.org (Links to an external site.)

      China has set to become one of the world’s largest economy. It has topped in both importing and exporting and economists are starting to predict that China will overtake the United States probably by 2015-2017. Russia, has been trying to take major steps in restructuring and transforming its country into a market economy, however it has not been as successful as China due to corruption (Aven,2013). In Russia there is a small group of extremely wealthy elites who were able to amass enormous wealth resulting in the privatization of the country which exacerbated economic inequality but increased the efficiency of the market (Aven,2013).

      As these country’s have become even more significant in the global economy, I think that other countries will undergo major changes and adjustments. As china creates more jobs for its people, the abundance of cheap labor allows for them to become a major competition for other countries. I think one good example is the United states and China. Major companies based in the U.S hire Chinese workers to produce their products leaving a lot of Americans jobless. A Forbes article written by Kenneth Rapoza emphasizes, the economic damage these rapidly growing countries is causing was become widespread (2016). As Rapoza has mentioned, in the US election this year, Donald Trump’s campaign states that the Chinese have destroyed American Manufacturing. Countries like Japan who are practically handling money out to their customers and Korea who is really high in household debts are also just some of great examples that show China’s impact.

      Reference:

      Aven, D. (2013, April 02). Russia’s Economic Transition: Challenges, Results and Overhang. Retrieved November 28, 2017, from http://www.yaleeconomicreview.org/archives/380 (Links to an external site.)

      Rapoza, K. (2016, April 14). Just How Big Is China’s Impact On The World Economy? Retrieved November 28, 2017, from https://www.forbes.com/sites/kenrapoza/2016/04/14/just-how-big-is-chinas-impact-on-the-world-economy/ (Links to an external site.)

      Let’s summarize this particular discussion by comparing “top-down” economic decision-making (China) with consumer-drive economic decision-making (any capitalistic country). China is an authoritarian regime that determines “winners” and “losers” in the market. China’s participation in the world market depends on a heavily centralized and controlling political party or bureaucracy. What this means is that a small, select group of persons determines what China will produce, who they will sell it to, and what products China will import into their economy. This is centralized market planning and execution.

      On the flip side, capitalistic economies depend on a “groundswell” or decentralized set of forces to determine what gets made, exported, imported, and so on. All these decentralized forces of production and capital allocation are based on a single premise: consumers choose what products and services to buy (and, in fact, whether to participate in the economy by spending versus saving their money in the first place).

      So, in countries that have true capitalism such as the U.S., Britain, France, Germany, Australia, etc., consumers drive choices and pick the winners and the losers. Note that countries with the strongest human rights and property rights laws are those with decentralized capital markets. Is there a link between encouraging individual consumer choices and behavior with strong human rights and freedoms?

      Hello,

      Yes, there is a strong link individual consumer choices and human rights and freedom.  The fact people have a choice on how to spend their money, tends to lead to more spending.  People will just chose not to spend money if they are forced to spend it on certain items  Political analyst Anthony Kim wrote, “The cause of freedom has swept around the world over the last century. It is the compelling force of economic freedom that empowers people, unleashes powerful forces of choice and opportunity, and gives nourishment to other liberties” (Kim 2007).

      http://www.heritage.org/report/the-link-between-economic-freedom-and-human-rights

      Robyn

      Hi professor and class,

      Yes, I believe there is a strong connection between the freedom to choose what to buy and what’s being manufactured for purchase. By giving the freedom of choice, it helps drive up consumer spending. When choices are limited many will save their money often times spending less. Scruggs (2011) talks about how consumers spend more time deciding what to buy than on political elections. It goes on to talk about how individual identity is reflected in the items we choose to buy (Scruggs, 2011). With all this decision making going on it helps increase the amount of money spent therefore boosting the economy.

      Thanks, A’lon

      Source:

      Scruggs, L. (2011). Information, Choice and Political Consumption: Human Rights in the Checkout Lane. http://web.uconn.edu/polisci/people/faculty/hertel/hertel%20et%20al.pdf (Links to an external site.)

      China was the first to transition to capitalist economy and have been extremely successful.

      Russia has changed since the collapse of the Soviet Union. Like China both countries moved from a Centrally planned economy to a somewhat market based system. Russia is one of the worlds leading producers of natural gas and is also a top exporter of metals such as such as steel. In 2016 China was the largest economy of the world passing the US for the first time in modern history. .

      According to Forbes Magazine ‘China’s importance to the US and World economy cannot be understated. The Chinese economy became a significant driver to the economic growth of the US and Europe when they were crashing”, The Russian and Chinese influence is growing . The Chinese currency will become a part of the IMF’s Special Drawing Rights in October, making it the only emerging market currency in the basket, giving emerging markets like Russia and Brazil another currency to hold in its central bank reserves other than the dollar and euro

      China has also impacted STEM as they produce five times more science, technology, engineering and math graduates than the US.

      “For generations, the global influence of the US was captured by the old adage that “when America sneezes, the world catches a cold” Today, those symptoms appear when China sneezes.

      Reference

      Let’s examine market regulation more closely.

      A few years ago the Economist ran a well-research article documenting China’s poor quality control and/or manufacturing oversight due to lax government controls or standards. From the article:

      The recent scandals about poisoned baby milk, contaminated pet food and dangerous [lead painted] toys from China have raised questions about manufacturing standards in the country that has become factory to the world.

      The Economist, May 14th, 2009: “Poorly Made. Why so many Chinese products are born to be bad.”

      Since then the Chinese government has worked hard to address these issues.

      In the U.S. we have a myriad number of federal and state agencies that inspect and regulate manufacturing, including for example food production, pharmaceuticals, and so on. When a product is made poorly a recall is issued and the company faces liability from consumers.

      Given this, should there more a world wide system of regulation in the marketplace insofar as the inspection and oversight of products and services is implemented? Or, should countries be responsible for the companies within their jurisdiction with the marketplace determining the winners and the losers?

      Professor,

      It seems as if this issue has been one for the books for many years. It seems like everyday there is some type of recall on merchandise, whether made in the United Stated or in china. When looking at it closer it is also important to recognized that many of the product labeled “made in the USA” may contain parts that were otherwise manufactured within China or other countries that can produce mass quantities for low costs. This being said, I think that any product that is shipped into the United States must be manufactured under the U.S. regulations. Although this may seem like a far fetched idea, by doing so it can help to ensure that the products that are being distributed within our country are safe for us consumers. Today’s world is filled with companies who are money hungry. By outsourcing their products, some may be able to use a process of manufacturing that is much more cost effective, but does not label a products nearly as safe as if it were processed in the U.S. Therefore not only are they putting American citizens out of jobs, but they are also risking the safety of every individual they are targeting their product for. By trying to implement a form of regulation for any outsourced good or service could potentially prevent many products from being outsourced, in addition to ensuring all the safety laws put in place for our country are followed.

      Hi Marissa and class,

      You brought up some great points in your post. Finding products made entirely in the US is very tough. I’m from Michigan we have a few stores that produce items strictly from Michigan, but they are at a higher purchase price than similar items made elsewhere. I think having a global regulation on products being exported to different countries is a terrific idea. At this global regulation center representatives from each country the product is being exported to should have a say in standards acceptable to that specific country. I agree with you that by companies being money hungry that put US consumers a risk and all the outsourcing has made the unemployment rate increase. Perhaps those in political power can implement some tax breaks for companies that don’t outsource but stay in the US.

      Thanks, A’lon

      Professor, Yes I think there should be a world wide system of regulation in the marketplace. I say this because those products are being shipped all over. As some of my classmates have mentioned, the trade market is not always as “clean” as people make it out to be. Some of the products, if not made properly, could malfunction and be hurtful to someone. So yes I think their should be inspections and oversights of products. We can never be too sure of products from anywhere. So in order to ensure safety I think this should be implemented. Better safe than sorry!
      https://www.forbes.com/sitesjudeclemente/2017/02/25/us-set-to (Links to an external site.)-rival-in-oil-and-natral-gas-exports
      Professor Terwillinger and Classmates:

      The erosion of communism in China and Russia has to lead to their increase in the global economy.  We know from our text that politics has great influence on the economy of the world.  The countries with the move away from communism has made them more able to compete in the free market.  Each of these countries has made many reforms to help them grow.  They are each rich in natural resources that allow them to export these to other countries.  If they continue to allow the flow of these products out and other countries buy, the economy will become better and more stable in the economy.

      Index Mundi gives the following statistics on the economy in both countries:

      ChinaRussiaUnited States
      GDP(Purchasing Power)$21.14 Trillion (2016 est.)3.751 trillion (2016 est.)18.56 Trillion (2016 est.)
      Population below poverty line3.3%13.3%15.1 % (2010)
      Inflation Rate2% (2016 est.)5.8% (2016 est.)1.3% (2016 est.)
      Labor Force907.5 Million76.9 Million158.6 Million
      Unemployment Rate4% (206 est.)5.3% (2016 est.)4.7% (2016 est.)
      Exports2.098 trillion (2016 est.)385.5 billion (2016 est.)1.471 trillion (2016 est.)
      Imports1.587 trillion (2016 est.)182.3 billion (206 est.)2.205 trillion (2016 est.)

       

      These numbers are intreating and we can see the impact that each of them has in the world.  We will see continued economic stability and growth throughout the world. I feel that this will make our society and world a much better place, except for the few that want to join everyone on the political power like North Korea.

      Rory

      Reference:

      Roskin, M, Cord, R, Medeiros, J, & Jones, W. (2014). Political Science:

      An introduction (13th ed). Hoboken, N.J.: Pearson.

      Week 6: Lesson Politics and Economics Introduction, Chamberlain University.

      http://www.indexmundi.com/factbook/compare/china.russia/economy

      Rory

      Very well placed post and statistical Index Mundi chart  information!  How can anyone argue numbers? The proof is there and as you mentioned we are headed in the right direction towards stability and economic growth.  Keep the US as the strongest country ever! China is called The sleeping giant, will they beat America? They could if the President does not make wise decisions for trade. We need to maintain competitiveness in order to be sure China does not become an empowered entity in the trade industry.

      In reading our Professors info, I agree that China has been known to be unethical and cleanliness is not part of their vocabulary. Do we want to have Chinas products at the risk of obtaining medical conditions that potentially could critically harm us? I definitely do not. Developing a World Wide system of regulation is in order. We as consumers should not allow for the companies to make those decisions. An educated consumer is the worst customer! Get informed on everything, it is the best policy.

      Damaris:

      Thank you.  China being unethical and clean not being part of their vocabulary.  I look at what Wisconsin has done in the past couple of months.  They provided a deal to Foxconn to build a plant in southeast Wisconsin.  The local, state governments have given them some very good incentive.  The Milwaukee Journal Sentinel reports, “The Racine County Board voted, 19-0, to provide up to $764 million in local funds for the Foxconn development in Mount Pleasant.”  I know the company is a Taiwanese company.  They have 15 plants in China and these plants have been under investigation for the treatment of its employees and working conditions.  They have had a rare increase in suicides just from these plants. I hope and pray that these conditions do not happen in the State of Wisconsin and that our inspectors make sure that the 13,000 people it may hire are in safe working conditions.

      In helping the State of Wisconsin economic growth in this situation. It is stated that the taxes alone will be at least $1.4 billion by the year 2023 which is guaranteed by Foxconn. This will assure that all the infrastructure is paid off in this county. The board, in this case, did their fair diligence in researching and assure to the people that this will happen. You are correct the consumer has to be educated and be informed.

      Thanks

      Rory

      Stein, Jason. Racine County Board unanimously approves Foxconn deal. November 29, 2017. https://www.jsonline.com/story/news/politics/2017/11/28/racine-county-board-vote-multi-billion-dollar-foxconn-deal/901881001/ (Links to an external site.)

      Professor and class,

      China is on the way to becoming the world’s largest economy. It is just a matter of time and by what measure. When the country is adjusted for Purchasing power parity (PPP), it is believed that China will overtake the United States in a few years. A majority of the leaders are all ready for a major economic and political shift which is believed t impact the rest of the century. However, it is utterly difficult to understand the implications to the rise of china as the world’s largest economy (Iyengar, 2017). The United States is still baffled with the reality becoming the most powerful economic force in the world.

      Russia on the other hand have taken major steps into transforming their economy and being one of the best economy in the world. However, the country has not been able to initiate its reforms and development in a coherent manner. One of the main reason for the failed reforms is due to corruption which has become endemic. A section of the population were able to amass great wealth in the early years of privatization hence making it difficult for domestic and foreign investors to conduct their businesses.

      When the two countries continue to become significant in the global economy, this will have a positive impact on other nations. This is because countries that will engage in any trade or business with these two nation would experience economic growth as well. For instance, when United States engages in trade with China, their market would sync boosting one another.

      References

      Iyengar, R. (2017, July 17). China’s economic growth remains stable at 6.9% in the second quarter. Retrieved November 29, 2017, from http://money.cnn.com/2017/07/17/news/economy/china-gdp-growth-q2/index.html

      Lucia,

      Great insight into why China and Russia have developed at different paces! I did not realize that Russia has taken longer to develop because of corruption in the early years of reform. This makes sense. However, if Russia wants to become a major economic player in the world market, they must figure out how to develop relations with other countries and companies to develop better trade deals.

      As you pointed out, nations who trade with China or Russian will in turn experience growth. That is how should work. We provide something China needs or wants, and they provide something we need or want. It is a trade to develop relationships to grow the economy as a whole.

      Leona

      A market economy or a free market is an economic system in which production and prices are based on unlimited competition between privately owned businesses determined by supply and demand and uninfluenced by the government (dictonary,2017). According to the world bank 2017, China, which has recently shifted from a centrally-planned to a market-based economy, and has been experiencing a rapid economic and social growth. Although there have been many positives for switching to a free market, there have also been challenges as well. Some of these are high inequality; rapid urbanization; challenges to environmental sustainability; and external imbalances. Another major issue relates to the aging population as this system is solely based on competition and leaves a gap for those that are at a competitive disadvantage. This also includes children and the disabled which leave a large part of the population in a bad place. Unfortunatly, I feel for the countries that import goods from them, they may raise prices dramatically, which will lead to an inability to afford items, which then will lead to less importing.

      References:

      http://www.worldbank.org/en/country/china/overview (Links to an external site.)

      dictionary.com

      https://www.thebalance.com/market-economy-characteristics-examples-pros-cons-3305586 (Links to an external site.)

       

      Hello Professor and Class,

      A market economy is “where decisions on production follow from people’s decisions in the market. In the market economy, emphasis is laid on the freedom of the individual, both as a consumer and as the owner of resources” (Jowsey, 2015). How this will impact other countries around the world is that “if consumers do not want a particular good, its price falls, producers make a loss, and resources leave the industry; consumers control the economy” (Jowsey, 2015). There are other problems that may arise with this system such as: “community goods, such as defence, may not be provided; competition, upon which the efficiency of the market economy depends, may break down; imperfect knowledge may impair the working of the price system; externalities or ‘spillover effects’ such as pollution may occur; great inequalities of income can arise” (Jowsey, 2015). On the other hand, it may be a positive impact on other countries “If consumers want more of the goods than is being supplied at the current price, this is indicated by their ‘bidding up’ the price. This increases the profits of firms and the earnings of factors producing that good” (Jowsey, 2015).

      http://search.credoreference.com.chamberlainuniversity.idm.oclc.org/content/entry/routreal/market_command_and_mixed_economies_6_5/0 (Links to an external site.)

      Dear Professor and Classmates, 

      Market economy’s are those, such as the United States, who produce goods that are desired by the population therefore the people are willing to pay higher prices to get what they want, and companies attempt to produce these products at the lowest prices possible. Russia and China in the past were both communist economies that have transitions in recent years to a capitalist or market economy. China has transitioned much more smoothly than Russia has into this market type economy and this is felt to be due to their differences in choice of government. “While China avoided the breakdown of economic coordination because of its strong government, the result of the partial reform in Russia was the breakdown of economic coordination” (ESJ, pg. 359). One major difference in the two countries growth as market economies is that Russia started as a very powerful country with high wages and a very industrialized population where as china did not. After each fell from communism they recovered differently, Russia was very hard to restructure and grow whereas China was very poor and had much room to grow and build as an economy. “It may seem that China’s path of dictatorship and gradualism is superior economically to Russia’s path of swift transformation to capitalism” (ESJ ,pg. 365).

      China is a very large part of the global economy, while Russia is present but not a key part just yet. “Many economists expect that on PPP calculations, China will overtake the United States long before 2020, probably by 2015-17” (GE.com). While china is in transition to be the largest economic force in the world, Russia is also in line to become a second superpower in the world. There are many concerns if China or Russia were to over take America as superpowers. If the ideal of a strong America is in relation to the strong dollar as it is believed to be, then what may happen to the American dollar. America is also believed to be the protector of peace and democracy, what will become of the world if America were no longer the main superpower? Will China fill Americas shoes and protect the world as we have done, or choose to keep their financial benefits only for themselves. “For the American people in particular, I believe these changes will be so profound, that as with the British after 1945, it could take up to 50 years for America to find it’s authentic voice again, not as the greatest nation on earth, but as the second, or maybe even after India by then, the third greatest nation on earth, measured on simple PPP terms” (GE.com).

      References:
      European Scientific Journal. (2015, May). Economic transition in china and russia. Vol.1 ISSN: 1857 – 7881 (Print) e – ISSN 1857- 7431 pg. 355-366. Retrieved from https://eujournal.org/index.php/esj/article/viewFile/5570/5365

      Roskin, M. Cord, R. Medeiros, J. And Jones, W. (2014) Political science an introduction. (Thirteenth edition). Pearson

      GlobalExchange.com. (2015). China as a worlds dominate superpower: impact on America Russia and eu. Retrieved from https://m.globalchange.com/china-as-worlds-dominant-superpower-impact-on-america-russia-and-eu.htm

      Professor and class, I think with China and Russia transitioning into market economies will have a negative and positive impact. I say it will be a negative impact because the market has to balance itself in the beginning. The U.S and surrounding countries will feel the negative impact because China is considered an ally. China is a big electronic supplier, not just for the U.S but for other countries as well. I think it will be a positive impact because once China and Russia markets balance itself, they will become bigger allies to neighboring countries and be a benefit instead of a problem. Russia is growing their market economy, but at a slower rate than China. This is Russia’s biggest issue. Once Russia’s market economy is established they also will be a bigger asset to their neighboring countries, thus growing their own economy.  Some impacts of this economic shift such as, declines in car imports have affected Germany. Declines in computer and audio equipment demand has hurt Japan as China’s home-grown equipment market replaces it (Forbes, 2016). This has also left families in Korea and Brazil in overwhelming debt. The impact will be costly, but once things balance out, the end result will be greater than we imagined.

      Reference

      https://www.forbes.com/sites/kenrapoza/2016/04/14/just-how-big-is-chinas-impact-on-the-world-economy/#3216fe217b9d (Links to an external site.)

      Let’s wrap up this thread by comparing “top-down” economic decision-making (China) with consumer-drive economic decision-making (any capitalistic country). China is an authoritarian regime that determines “winners” and “losers” in the market. China’s participation in the world market depends on a heavily centralized and controlling political party or bureaucracy. What this means is that a small, select group of persons determines what China will produce, who they will sell it to, and what products China will import into their economy. This is centralized market planning and execution.

      On the flip side, capitalistic economies depend on a “groundswell” or decentralized set of forces to determine what gets made, exported, imported, and so on. All these decentralized forces of production and capital allocation are based on a single premise: consumers choose what products and services to buy (and, in fact, whether to participate in the economy by spending versus saving their money in the first place).

      So, in countries that have true capitalism such as the U.S., Britain, France, Germany, Australia, etc., consumers drive choices and pick the winners and the losers.

      Aesha, 

      I completely agree with your discussion. The US and others will be negatively impacted, while china and Russia will have a positive impact and growth from this transition. I also feel that this is a somewhat scary transition for all as these countries have previously led strikes against the US.

      China and Russia becoming major contenders in the market economies could have both positive and negative. The more I read I see how intricately the global market is intertwined. Recently, China had a decline in their stock market which was soon followed by Europe, Asia, and the U.S. I can’t help to think this is a small snippet of what we would see the more these countries transition.

      As China an Russia become more independent and less reliable on import the effects of the smaller countries depending on that trade could be devastating. Also, the market will become flooded with certain commodities and that will affect the global market on a different level.

      Reference:

      Best, R. (2016, January 28). 4 Ways China Influences Global Economics. Retrieved November 29, 2017, from https://www.investopedia.com/articles/investing/012816/4-ways-china-influences-global-economics.asp
      As you know Great Britain voted in support of a “Brexit” from the European Union, and recently they filed the official “divorce papers” of dissolution from the EU.

      Brexit is viewed in response, to among other things, resistance to a global or centralized “supranational” governing body to determine what rules and regulations should be enforced in the various local and national economies. This same thought process is said to be true for the recent election of Donald Trump as US president.

      What are your thoughts? Is there growing resistance to a “world body” that governs macroeconomic polices? Is this just a temporary hiccup toward globalization of trade and free markets?

      Professor,

      I think with the recent election of President Trump, there has been in increase in resistance to creating a globalized governing body. It seems as if he wants to create our government in a way that is superior to all other governments, instead of trying to work with these other countries to be on the same page. I think that in order for our world to be on the same page in regards to economics, there must be some sort of regulating body to keep each country on track. It is hard to tell as this point whether or not there is any type of temporary hiccup, or whether or not there is more to come that we cannot see yet.

      Marissa

      I do not think the idea that President Trump has in mind is to make or create resistance weaker or less effective. What he is doing may seem foolhardy to many, trade experts warn that blowing up international trade law may be the only way the Trump administration can pursue it unrealistic or shall I say unrealistic goal of eliminating some of the trade deficits it has with other countries. If the US leaves NAFTA it is quite possible that it’s deficit it has with Mexico will swell rather than shrink. Any thing that President Trump attempts to do to solve the situation at hand will create lots of opinions and unhappy people will be coming out of the woodwork.  I do not believe President Trump is an idiot, I actually respect his intelligence in business. Will his strategies aid the US, it truly is unclear at this very moment to actually confirm what social media is actually provoking the public to direct one’s mind towards. Only time will tell.

      If we are to believe everything being said or reported than I will post a site that a person can go to for perhaps Doomsday Predictions . They compare former President Obama with President Trumps comments on globalization.

      Globalist Obama: “And we can only realize the promise of this institutions (UN) founding to replace the ravages of war with cooperation”. This is globalization.

      Anti-Globalist Trump: “The most important difference between our plan and that of our opponents is that our plan will put America first. Americanism, not globalism, will be our credo”. This is anti-globalism.

      Reference

      End Time: https://www.endtimeministries.org (Links to an external site.)

      Damaris

      Professor,

      I believe that there has always been a resistance to a large entity controlling the affairs of local and domestic policies. Even our own country struggled with this, as it worked out how much power the federal government can hold in the place of state and local government. The Articles of Confederation were the rough draft where they tried to keep the federal powers at a minimum, but in the end didn’t have the funds or the power to raise the taxes to produce funds.

      Even today, we see this is a broader sense, with Euro-nation and OSHA and the UN. These are all forms of a larger entity controlling the policies of this time nations instead of state governments. It is a risky thing to give power to a large entity that may not have the best interests in mind for your particular country, therefore the resistance is going to always be there, but I still believe a globalization of the trade and free markets will eventually come to fruition regardless of the efforts of resisting them.

      Hello Professor and classmates, 

      I think as China and Russia become more significant in the global economy they can and will continue to take business from small countries.  The US already imports so much from China!  It is hard to find any products made in the US at stores.  I feel that these large countries rising in the global economy it could make the market unstable.

      Christina 

      Very recently the World Trade Organization (WTO) – comprised of 161 various nation-states including the U.S., Canada, Russia, members of the EU, various Caribbean nations, various South American countries, Australia, Japan, China, and others – voted to deny China status as a “market economy” under global trading rules (China itself did not vote on this matter).

      What this means is that China could be subject to higher taxes and related duties on its exports to those countries deemed as having a market economy.  The reason for this is that market economy nation-states believe that a nation-state which exercises authoritarian control over the means of production and grossly subsidizes its exports unfairly advantages that non-market economy to the detriment of a fair and global economy.  Essentially, market economy nation-states reserve the right to reject prices or costs for goods produced by a nation-state that are not determined under market economy conditions. Obviously, China objects to this determination.

      What do you think? 

      I think that it is fair to hold off on allowing China to be considered a ‘market economy.’ They have proven that they are capable of great growth but the hesitancy is valid in looking ahead at where their economy seems to be heading in years to come. This is and will continue to be a hot topic in the news as there are differing opinions on how this subject should be handled.

      An article that I found stated that, ‘Market Economy Status (MES) would give China’s competitors less opportunity to initiate anti-dumping measures on Chinese exports. The precise change would center on how prices are calculated; whether by reference to domestic prices and costs in China, or by comparison with an ‘analogue country’ (Website). This statement was a little complicated for me to understand, as I am not savvy in this kind of stuff, but from what I gathered… keeping China below MES is smart because removing trade barriers between two economies allows for the market to distribute factors of production efficiently across a wider economic space.

      It is clear why China would be pushing for market economy status to be theirs as they would have more control over pricing and their success in general. But from what I’ve taken from the research is that it’s a better option to keep China at bay where the U.S. is concerned as they are already surpassing us by a lot in regards to trade and exportation of goods. So, we’ll see what decisions are made.

      https://www.forbes.com/sites/douglasbulloch/2016/05/17/granting-china-market-economy-status-will-make-the-whole-world-less-of-a-market-economy/#41d528315a51

      After reading about the WTO and finding out just what the values and goals of the global organization are I do agree with the decision regarding China. The WTO is comprised of the nation-states as members that are willing to establish a set of trade agreements or rules that are agreed upon by nations. If China is unable to see the value in the trade agreement and continues to undermine what other countries come together and set forth, there should be ramifications to their decisions. This is especially true if they are wanting to become a market economy. When China became a WTO member in September of 2001, they agreed to many trade rules. I found many of them to be very appropriate and fair. I found this one in particular interesting and appropriate, “China will eliminate dual pricing practices as well as differences in treatment accorded to goods produced for sale in China in comparison to those produced for export (www.wto.org).” (Links to an external site.)

      Reference:

      WORLD TRADE ORGANIZATION. (n.d.). Retrieved December 02, 2017, from https://www.wto.org/english/news_e/pres01_e/pr243_e.htm
      • If China wants to play with the big boys then they need to play by the rules they all play by. China is a communist country and has total control over its people and what they produce and export. They should abide by the laws the WTO is proposing in order to keep everyone on the same playing field.

        Angelica

        Good Morning Professor and Class,

        The impact of China and Russia on other countries around the world as these two countries become even more significant in the global economy, believe it or not,  drastic. They both have room to maneuver and foundation for future cooperation that can hurt Americas’ interest. “Specifically, the two nations could opt for one of two possible new courses. One would be to pursue an informal alliance to counter U.S. power, which they see as threatening their vital interests. This path might prove difficult, given competing interests that have burdened relations between Russia and China in the past. Still, stranger things have happened in history between two nations that confront similar challenges. But there is a second possibility. They could play a game of triangular diplomacy similar to the Nixon/Kissinger strategy of the 1970s. In this scenario, Moscow and Beijing could dangle the prospect of a potential alliance or ad hoc cooperative arrangement with the other to gain leverage over Washington and put the United States at a bargaining and power disadvantage.” Unintended consequences like foreign policies. History is repeating its self, with competing powers and crashing values.

        True enough, much stands in the way of a genuine Chinese-Russian alliance: a history of mutual mistrust; the combination of China’s sense of superiority and Russia’s imperial nostalgia; China’s declining need for Russian technology, including military hardware; Russia’s wariness of substantial Chinese investment in Siberia’s energy development; and the fact that in the long run, China and Russia alike need more from the United States and the European Union than from each other.

        References

        Gelb, L. H., & Simes, D. K. (2013). Beware Collusion of China, Russia. National Interest, (126), 5.

        Great discusison everybody!

        As noted in your posts, nation-states that become more affluent in turn want to be treated as equal partners at the global economic bargaining table. A nation-state that is perceived to engage in unfair or illegal economic practices will raise the ire of other nation-states. Hence, the reasoning behind the WTO’s stance to not recognize China as a market economy.

        Along this same analysis, nation-states that are “left behind” due to their own failed internal political processes (i.e., Venezuela, North Korea, Cuba) will resent those other nation-states that have gained affluence and power on the international stage due to their successful economies (i.e., North America, the EU, Pan-Asia countries).

        Given this, is there a duty or obligation for the more affluent and successful nation-states to help other nation-states gain a seat at the global economic table? Why or why not?

        Adequate development strategies and policies to be applied in the developing countries to eradicate poverty have been on trial with no effect ever since the era of structural adjustment programs. The state of underdevelopment of most African countries and many developing countries can be accounted to a variety of factors, many of which are those supposed to bring about remedy. The paper examines, the nature, the relevance of foreign aid given to developing countries and assesses level of influence of other alternatives to development available for the continent. Foreign Aid has been contracted for development projects’ support, supplementing national budget, debt relief, aid to attain the set Millennium Development Goals… which were supposed to lead those countries to middle income status etc. Loans and grants given to accelerate poverty reduction programs have shown little aptitude to reduce poverty. The study showed that the given aid is shrouded with hidden agenda from donors who set unbearable conditionality, hard to meet to yield desired results. At one hand, the inefficacy of foreign aid to eradicate poverty was seen as inherent to its nature and at the other hand, as results of its management and cycling by recipients. Far to bear fruits, the conditionalities attached to some of contacted economic bail out ( from the IMF and WB) to address economic crisis countries can face, it was rather seen as harmful to vulnerable citizens due to its stringent austerity measures and though it may bring about economic stabilization, no indices of economic growth and people’s welfare could be measured. Despite diversified kinds of intervention of the non-governmental organizations and civil societies in their variety social services delivery (in health, mass education and mobilization, education, human rights preservation…), their capacity to lead our nations to macroeconomic growth were not evident as in their good work, face numerous barriers from both donors and governments recipients. Their problem solving strategies fail to be counted on for a sustained macroeconomic development. The New Partnership for African Development (NEPAD) which came as a well thought and designed new re-engagement to lay solid foundation for the renewal of African condition, despite its efforts to eradicate poverty, to put African countries on the path of sustainable growth, to halt the marginalization of the African continent in the globalization process, to integrate the continent in the global economy and accelerate the women’s role in development agenda. These beautiful verbiage formulations are yet to be seen on the ground and it seems it had failed to get to its desired destination. The paper recommends a new reawakening in the realm of cooperation and integration among African nations. If foreign aid it to yield good results, the paper suggest casts off the recourse to unfruitful conditionalities which was seen rather harmful. Other development entities such as nonprofit making organizations should help countries invest in long term projects in full workable public-private partnerships model while the state’s role should avoid be investing in both infrastructure and human capital, embark on monetary and fiscal discipline and create enabling environment for business and institutional administrations for aid to produce good results.

        Retrieved from https://www.omicsonline.org/open-access/failure-of-foreign-aid-in-developing-countries-a-quest-for-alternatives-2151-6219-1000231.php?aid=80040

        Students, 

        How do you think the Russian or Chinese economies will impact your field or career in the near future? Do you think this is a good or a bad impact? In what ways is your field responding to these pressures?

        I don’t think Russia’s or the Chinese emerging economies will impact my career anytime in the near future. I work in a hospital as a nurse. Where I do see possible changes is if trade policy changes with China and makes their goods more expensive. Should that happen the cost of healthcare would rise even more as we do use many items that are disposable and many electronic devices in medical care.

        Angelica

        In the near future, I intend to work in the healthcare field as a nurse. I think that russian and chinese economies will only impact my career field if more tariffs are put that  increase tax on imported products or if these countries charge more on the products that they export. Most of the things that are sold or that people use here in the United States, even american brands, are made in China. Even hospitals and other healthcare institutions make use of machines, tools and equipment that are produced and made in China. If prices hike up and change, it may affect hospitals gravely pushing them to increase charges and cut off spending on other areas.
        Professor,

        As I am studying to become a nurse, I do not think that there will be a direct impact on my career as Russian or Chinese economies continue to grow. The reasoning for this is that there will always be unhealthy individuals that require direct care within the hospital setting. On the other hand, it can effect the economics portion of my career. If equipment begins to become outsourced and prices rise, then there could be an increase in hospital expenditure which can then affect wages, or hospital census numbers. For example, if materials begin to increase in price, then the hospital would then have to increase the charges associated with a hospital service. As these prices increase, insurance companies would then begin to increase their rates, or decrease the amount they cover. When this happens it will then force less individuals to seek care for their illness, in turn reducing the amount of income a hospital makes. With all of this being said, it is easy to see how one factor can then effect the lives of all healthcare workers more than what we realize.

        I currently work in healthcare. I believe as China and Russia continue to grow their economies so will improvement in healthcare. As increase funds come into any country a strong pursuit of innovation and technologies as well. In the world of healthcare this could be life changing. Anytime a medical invention or training comes along it is seen around the world. Expanding economies for both of these countries could have positive impacts in innovation for our own healthcare practices.

        I do not think that either economy has much potential to directly affect my field or career in the near future as I am studying to be a nurse. The only bad impact that I foresee is the possibility for substantial increases on medical device products that we receive from China in large quantities. The medical device market is one of the fastest growing market sectors in China, which has an average growth rate of 20% within the last decade (Website). Therefore, as China becomes more powerful in the coming years there is true risk for them to increase their product prices which would then force American healthcare to become even more expensive and the rest would be a domino effect. Hopefully if something like this happens, the U.S. will be able to come back and use our own resources to work on developing our own successful medical device industry. The population in our country is quickly aging which will require more hospital staff and more need for a surplus of various medical items which is why I think the field of nursing will be alright even with said changes.

        https://2016.export.gov/industry/health/healthcareresourceguide/eg_main_092229.asp

        The way I see Russia or China impacting my field in nursing is if they have pharmaceuticals, diagnostic testing or medical technology that cures cancer, diabetes, high blood pressure, obesity.  Also, if they offer cheaper healthcare, better health systems etc.
        Hello Class,

        When I think of China and Russia I realize how them transitioning into a market company is vital to the U.S. and other countries. Russia’s main exports are energy (oil and petroleum products). I believe the impact on other countries around the world will suffer greatly due to China and Russia becoming more significant in the global economy. The U.S. trades with China and it is said that China is currently our largest goods trading partner. This makes it hard for other countries to export due to the competition with these two countries. Other countries need to export in order to care for their citizens. Whatever the issue- health care, environment, energy, or welfare- it will be connected to the economy. (Roskin, 2014, p. 261)

        • Roskin, M, Cord, R, Medeiros, J, & Jones, W. (2014). Political Science: An introduction (13th ed). Hoboken, N.J.: Pearso

Professor Terwilliger,

Protectionism can be good for short term periods. This allows sunrise industries to develop technology to compete on the world market. It does sound good as we have had high levels of unemployment over the last several years. I also think it is important to buy local and have pride in what you country builds. The downfall to this type of policy is other countries will close their trade also and now you will see inflation. The price of the dollar increases and other countries can’t afford to buy our products. This leads to decreased production and people still lose their jobs. So it can be a good short term action but in the long run you lose more than you gain. The bigger importance is retraining the workforce to keep up with changes in the world. The danger is if products quality decline due to lack of competition and the price increases you won’t be able to sell on the market making you irrelevant.

Reference: https://www.thebalance.com/what-is-trade-protectionism-3305896 (Links to an external site.)

Professor Terwilliger,

Recent trends in political rhetoric and trade indicate a movement away from a global marketplace and more toward protectionist trade policies. Is this a good or bad thing?

Protectionist policies are not good or bad. They simply will not work long term. Like the old saying goes: “With all things being equal, nothing is equal” … Since the dawn of trade, one side is looking for advantage over the other. A wise (?) man once said: “You show me a man willing to fight fair, and I’ll show you a man who has lost the fight”. Countries are no different. They are always looking to gain an edge on their competition. The idea of fair trade in the international marketplace has never really existed. Communist countries had price controls and state sponsored industries. Countries, like Japan, heavily subsidized their steel and auto industries, giving them the advantage of selling a quality product at low market prices. Tariffs are another way that countries prevent cheap imports from overtaking domestic markets for the same goods. Protectionist trade policies can be an effective short term tool for leverage in the international marketplace. However, these strategies rarely work long term. The global market sees to that by levelling the playing field. If one country raises tariffs, others retaliate, potentially harming both economies. Countries have a choice in trade partners, so if one country goes totally protectionist, in a bid to boost their economy, the world will simply take their trade elsewhere. Global marketplace competition is now healthy and fairly self-regulating. A good example of that is when OPEC nations try to boost prices by cutting oil production. Nice try, but this has a minimal effect on global prices as countries like Russia and the U.S. can boost production and keep the market prices in check. Competition keeps things fair. And open and fair trade practices benefit everyone. As Rodriguez and Rodrik (2000) state, more open and outward-oriented economies consistently outperform countries with restrictive trade and foreign investment regimes.

Thank You,

Gordon

Reference:

Rodriguez, F. & Rodrik, D. (2000). Trade policy and economic growth: A

skeptic’s guide to the cross-national evidence. NBER

Macroeconomics Annual. Retrieved from

https://doi.org/10.1086/654419 (Links to an external site.)

  • Professor and Class:

    According the 2017 World Economic Forum, China’s economy had significant growth in 2016, millions of new jobs and huge decreases in poverty.  In addition they also have had large impacts on global growth as noted by the International Monetary Fund.

    Market economies as seen in China and Russia have had a huge impact on global economy.  An example is the substantial goods manufactured in these areas in which countries globally depend on and also increase competitions.   Another good example is the Foreign Direct Investment, Kuepper (n.d.) notes its vast contributions to global economy “By acquiring a controlling interest in foreign assets, corporations can quickly acquire new products and technologies, as well as sell their existing products to new markets. And by encouraging foreign direct investment, governments can create jobs and improve economic growth” (para. 1).

    Michelle

    References:

    Jiang Jianguo, Minister of the State Council Information Office, Government of the People’s Republic of China. (n.d.). How China will impact the world economy in 2017. Retrieved December 02, 2017, from https://www.weforum.org/agenda/2017/01/inject-chinese-dividends-into-the-world-s-economic-development/

    Kuepper, J. (n.d.). Foreign Direct Investment and Its Impact on Investors. Retrieved December 02, 2017, from https://www.thebalance.com/what-is-foreign-direct-investment-1979197

    Roskin, M. G., Cord, R. L., James A. Medeiros, Jones, W. S. (10/2013). Political Science: An Introduction, 13th Edition. [Bookshelf Online]. Retrieved from https://online.vitalsource.com/#/books/9781269724821/

    A market economy is a system where the laws of supply and demand direct the production of goods and services. Supply includes natural resources, capital, and labor. Demand includes purchases by consumers, businesses and the government. This state is run by a single party with a small leadership group at its top, a group that claims to make wise economic decisions without the distraction and mess of democracy. Prime example: China, which abandoned Marx and Mao but aims to build China’s wealth and power. Russia runs along similar lines but with less success. Some people, especially in developing countries, are attracted to this authoritarian capitalist model.(Roskin, 2013, p. 49) An advantage of a market economy is Since a market economy allows the free interplay of supply and demand, it ensures the most desired goods and services are produced. That’s because consumers are willing to pay the highest price for the things they want the most. A disadvantage is The key mechanism of a market economy is competition. As a result, it has no system to care for those who are at an inherent competitive disadvantage. That includes the elderly, children and people with mental or physical disabilities.(www.thebalance.com (Links to an external site.))Free market economies and command economies exist more as abstract concepts than as tangible realities; almost all of the world’s economies feature elements of both systems. For example, while the U.S. allows companies to set prices, and workers negotiate wages, the government establishes parameters, such as minimum wages  and antitrust laws, that must be followed.

    Roskin, M, Cord, R, Medeiros, J, & Jones, W. (2014). Political Science:

    An introduction (13th ed). Hoboken, N.J.: Pearson.

    www.thebalance.com

    Hello, 

    I think the impact will eventually be a positive one that fosters growth in the global economy. For example, due to China’s huge consumer market they have the ability to make a product hugely successful just by having a Chinese celebrity take a photo with it as in the case of Bobbie Bear. The size of their consumer market makes China more of a force to be reckoned with and gives them more bargaining power when they make trade agreements (www.diplomat.com, 2017).

    Reference:

    Lomas, M. (2017, April 06). Chinese Consumers Will Change the Global Economy. Retrieved December 01,

    2017, from https://thediplomat.com/2017/04/chinese-consumers-will-change-the-global-economy/

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