Liberal international economic order
Encyclopedia
In international relations
, the liberal international economic order (LIEO) is the global free trade
establishment. Critics sometimes refer to LIEO as the Washington Consensus
, which implies that this system works mostly in the favor of the United States
at the expense of smaller countries.
LIEO is said to be shaped by supranational institutions. The World Trade Organization
, for example, creates and implements free trade agreements, while the World Bank
issues structural adjustment loans to Third World governments that include conditions ranging from opening up their markets to Western businesses to privatizing public utilities.
Among the firmest underlying assumptions of free market
thinking is that as regulations are removed, global trade becomes more efficient and peoples' needs are better met, allegedly resulting in less poverty, and consequently, stability and peace.
Critics point to rampant abuses of laborers and citizens in the Third World by multinational corporations, as well as the negative effects on public health caused by privatizing public utilities.
Third World countries are particularly incensed by the continuing existence of tariff
s on United States and Europe
an agricultural products, which they claim run counter to the spirit of free trade and prevent them from taking full advantage of the global marketplace.
International relations
International relations is the study of relationships between countries, including the roles of states, inter-governmental organizations , international nongovernmental organizations , non-governmental organizations and multinational corporations...
, the liberal international economic order (LIEO) is the global free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
establishment. Critics sometimes refer to LIEO as the Washington Consensus
Washington Consensus
The term Washington Consensus was coined in 1989 by the economist John Williamson to describe a set of ten relatively specific economic policy prescriptions that he considered constituted the "standard" reform package promoted for crisis-wracked developing countries...
, which implies that this system works mostly in the favor of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
at the expense of smaller countries.
LIEO is said to be shaped by supranational institutions. The World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
, for example, creates and implements free trade agreements, while the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
issues structural adjustment loans to Third World governments that include conditions ranging from opening up their markets to Western businesses to privatizing public utilities.
Among the firmest underlying assumptions of free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
thinking is that as regulations are removed, global trade becomes more efficient and peoples' needs are better met, allegedly resulting in less poverty, and consequently, stability and peace.
Critics point to rampant abuses of laborers and citizens in the Third World by multinational corporations, as well as the negative effects on public health caused by privatizing public utilities.
Third World countries are particularly incensed by the continuing existence of tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s on United States and Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an agricultural products, which they claim run counter to the spirit of free trade and prevent them from taking full advantage of the global marketplace.
External links
- Structure of the Liberal International Economic Order
- The Case of Texaco in Ecuador -- an example of what can happen when multinational corporations visit countries with governments unwilling (or unable) to regulate them.