In yourInternational Economicstextbook, Carbaugh (2017, Chapter 7) provided a historical account of OPEC and its power in controlling the global petroleum supply. In a critical essay, investigate the dynamics OPEC has faced in the global market in the last ten years. You may select a member country and analyze the effects from the perspective of that jurisdiction. Support your findings with additional academic references.
Directions:
- Your essay should be 3-5 pages in length, which does not include the title page, abstract, or required reference page, which are never a part of the content minimum requirements.
- Support your submission with course material concepts, principles, and theories from the textbook andat least three scholarly, peer-reviewed journal articles
please make sure that after the paraphrasing of any information of the researchers write the citation in the same sentences in addition the sources of in the references and theplagiarism by max 25%
Microsoft Word - Module 7 material .docx Nahlah Hajla Module 7: Modernization of Trade Regulations and Policy • Chapter 7 in International Economics 1. The world bank and international monetary fund: Aiding the developing countries? Originally created to help stabilize the international monetary system and help countries maintain their balance of payments (between monetary outflows and inflows), the World Bank and International Monetary Fund (IMF)have come to have an increasing importance for the developing world. An overview of the origins and functioning of these two institutions can be found in Carbaugh's Chapter 7. With respect to developing countries, the World Bank provides loans and some grants specifically for development projects, such as hospitals, schools, highways, and dams. The IMF lends money to developing countries to finance balance of payments deficits. Loans from the IMF are predicated on conditionality. In Carbaugh's (2013) words: ...to obtain a loan, a deficit nation must agree to implement economic and financial policies as stipulated by the IMF.... The IMF has sometimes demanded that deficit nations undergo austerity programs including severe reductions in public spending, private consumption, and imports.... (p. 251). Similarly, loans from the World Bank are increasingly conditional on liberalization of domestic economies. The World Bank and other multilateral lenders have been accused of performing a highly interventionist and anti-democratic function, which has led to massive human displacement from traditional sectors that are not easily absorbed by the modern exporting sector. Conditionality is designed to serve the dual purpose of compelling developing countries to "put their economic houses in order" while serving the interests of the lending institutions that want to assure loans are paid back. Critics of conditionality argue that the burden of austerity falls primarily or entirely on the poorest in society. Moreover, IMF mandates to slash spending can hamper governments' abilities to implement Keynsian policies (such as spending to stimulate a depressed economy), possibly leaving some countries worse off as a result of IMF loans. 2. Import substitution versus export led growth Nahlah Hajla A common belief during the early post-war and decolonizing period was that the particular circumstances of the less-developed countries tended to preclude self- sustaining growth because of a chronic and structural inability to accumulate sufficient capital. The Third World's lack of saving and investment capital, it was believed, would lead to "dualism" (a condition under which a large and stagnant precapitalist sector coexists with a small, elite modern sector), or to "vicious circles" and "low-level equilibrium traps" whereby development would be chronically stalled at a constant ratio of income to population. The associated policy regime was import-substituting industrialization (ISI) by which industries producing goods that would have been imported are protected from foreign competition to facilitate growth in the protected and industrialization more broadly. It was felt that interventionist promotion of rapid industrialization was the only way for less- developed countries to break out of the existing pattern of specialization and obtain large-scale manufacturing, which was viewed as the key to sustained growth. Import substitution was practiced by virtually every developing country during the early post-war period and generally began with the protection of primary goods. As capital accumulated, protection tended to shifted to consumer durables, intermediate goods, and capital goods. The import substitution strategy was often successful to a point, but production eventually came to outstrip the local market's ability to absorb it. This, coupled with the need to import capital goods and manufactures, tended to create balance of payments deficits and the need to increase exports of primary commodities (at first), and then basic manufactures, in order to facilitate capital inflows. Check your understanding In the blackboard R e f e r e n c e s : Amsden, A. (1985). The state in Taiwan's economic development. In Evans, P., Rueschemeyer D., & Skocpol T. (Eds.), Bringing the state back in (pp. 78-106). New York, NY: Cambridge University Press. Amsden, A. (1989). Asia's next giant: South Korea and late industrialization. New York, NY: Oxford University Press. Bhagwati, J.agdish (2005). From Seattle to Hong Kong. Foreign affairs, 84(7), Article 15. Carbaugh, R. J. (2013). International Economics (14th ed.). Mason, OH: South-Western Cengage Learning.