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Part IV: TRANSNATIONAL PROBLEMS AND DILEMMAS
15 The Illicit Global Economy: The Dark Side of Globalization
16 Migration and Tourism: People on the Move
17 Transnational Corporations: The Governance of Foreign Investment
18 Food and Hunger: Market Failure and Injustice
19 The IPE of Energy Resources: Stuck in Transition
20 The Environment: Steering Away from Climate Change and Global Disaster
The final part of this book looks at six aspects of global problems. All show us the complex interactions
between individuals, markets, governments, and international institutions.
Chapter 15 surveys illicit transactions in the global economy, emphasizing that illegal flows of goods,
services, and people across borders pose important challenges to governments. Chapter 16 analyzes migration,
tourism, and human networks from an IPE perspective.
Chapter 17 tackles transnational corporations (TNCs), seen by some as engines of growth and by others as
tools of exploitation. Chapter 18 examines the IPE of food and hunger, with special emphasis on the roles of states
and markets as sources of food and hunger problems.
Chapter 19 brings a new focus on how a resurgence of interest in fossil fuels is making a transition to
renewable energy sources more difficult. Finally, Chapter 20 presents an analysis of the IPE of the global
environment, perhaps today’s most serious global issue. Global warming and the Copenhagen climate change
conference of 2009 are highlighted as part of a strategic moment for environmental policies that also include
deforestation.
CHAPTER 15
THE ILLICIT GLOBAL ECONOMY: THE DARK SIDE OF GLOBALIZATION
Overview:
This chapter examines the scale and scope of illicit transactions in the global economy. Illicit transactions
are transfers of goods and services across borders in defiance of the laws of at least one of the states. IPE analysts,
this chapter argues, often overlook or discount exchanges that occur in “shadow” economies, black markets, and
informal economies. Drug trafficking, human trafficking, money laundering, smuggling, and other nefarious
processes have a significant impact on economic growth, social stability, and human dignity. We hope that this
chapter will encourage readers to pay closer attention to the effects of these processes on national development and
global processes.
This chapter identifies key structural causes of illicit global activities, including globalization, greed,
technological change, and survival motives. The illicit global economy has a long historical legacy. The chapter
outlines a number of overarching arguments: (1) Ordinary consumers are complicit in illicit international markets in
many different ways; (2) government efforts to reduce illicit activities often have (negative) unintended
consequences; (3) effective international cooperation against black markets is hard to achieve; and (4) corruption is
hampering development. The chapter also provides in-depth case studies of smuggling, drug trafficking, and human
trafficking.
Learning Objectives:
• To examine the relationship between illicit and licit international markets.
• To analyze global commodity chains and link actors in those chains from the point of extraction of raw
materials and agricultural commodities to consumption of finished goods.
• To explain how illicit economies pose threats to national security, legal businesses, ethical standards, and the
environment.
• To understand why it is often difficult for states and international organizations to stop illicit international
transactions.
• To better understand how non-state actors can defy government authority through taking advantage of
weaknesses in international cooperation and international law enforcement.
• To connect illicit trading to civil conflicts around the globe.
• To gain insights on how Western governments can modify existing policies to better deal with the causes and
consequences of a variety of illicit activities.
Chapter Outline:
INTRODUCTION
a) Many “illicit” movements of goods and people occur over borders—and sometimes under them via tunnels.
b) The illicit economy is a network of trade relationships that brings goods, services, and people across
borders every day in defiance of the laws of at least one state.
c) IPE has only recently begun to study illicit economies, but this field has been broadly studied by academics
from other disciplines.
d) The three IPE perspectives help us to understand certain aspects of illicit economies but are insufficient for
analyzing this topic.
e) Globalization gives criminals new ways to profit from their cross-border business.
f) International cooperation against transnational crime is hard to sustain and often ineffective.
g) Consumers bear as much responsibility as international suppliers for nurturing illegal commerce.
h) The illicit global economy is full of non-state actors and criminals who sometimes thwart the best
intentions and institutions of even powerful countries.
i) The open commercial interchange and deregulation that liberalism promotes is supposed to lead to peace
and prosperity, but in the illicit realm unfettered trade can spread horrible conflict, pervasive coercion, and
social decay.
THE ILLICIT ECONOMY IN HISTORICAL PERSPECTIVE
a) Historians Kenneth Pomeranz and Steven Topik argue that violence used to be an important way to gain
“comparative advantage” and important commercial benefits in the world. Britain, the U.S., Spain, and
other European countries moved up the rungs of the ladder of development by engaging in land grabbing,
slavery, looting, and dope peddling in what we now call the less developed countries.
b) Marxists, too, have long recognized that the development of capitalism is rooted in processes of “primitive
accumulation” whereby classes coercively or violently seize assets (like land) from other actors.
c) History shows us that leaders of states have often participated in or sanctioned violent, illicit activities.
d) Illicit transactions today often mirror, replicate, or repeat these historical processes, even though we often
tend to give new terms to modern processes. For example, human trafficking is the modern day version of
slavery.
THE STAKES AND THE ACTORS
a) The United Nations Office on Drugs and Crime (UNODC) estimates that the annuals proceeds of drug
trafficking and transnational organized crime are equal to 3.6 percent of global gross domestic product
(GDP)—or about $2.1 trillion.
b) Raymond Baker estimates that annual, cross-border sales of illegal drugs and counterfeit goods may
amount to as high as $320 billion. Revenues from human trafficking could amount to $15 billion annually.
International smuggling of arms, cigarettes, cars, oil, timber, and art may be worth at least $110 billion
annually.
c) Illegality is a major contributor to inequality and poverty in the world. The illegal economy can also
undermine fragile new democracies.
d) Participants in illicit markets include soldiers who loot, government officials who extort, CEOs who engage
in transfer pricing, bankers who loan to Third World dictators, and consumers who buy fake Louis Vuitton
handbags.
e) Products that start out in some kind of shady operation often enter the “regular” market at a later point (and
legal items such as cigarettes often enter illegal markets). There is often no clear wall between the licit and
the illicit global economy.
STUDYING THE ILLICIT ECONOMY: KEY FINDINGS
Six Degrees of Separation
a) If we look at the human connection in global commodities chains, it is clear that none of us is completely
divorced from the illegal world. Whether at the beginning, middle, or end of a chain of market interactions,
we wittingly or unwittingly are involved in a process that may have been part of the extra-legal world.
b) Carolyn Nordstrom points out that ordinary consumers around the world are deeply complicit in smuggling.
She found that in the African war zones one can hardly survive without buying smuggled, untaxed items in
the informal economy. In developed countries consumers often know that the products they are buying are
knockoffs, pirated copies, untaxed items, or stolen property.
c) However, the fair trade coffee movement, the anti-sweatshop movement, and “socially responsible
investing” have conditioned consumers to think about the ultimate impact of their domestic purchases on
overseas workers and businesses. Similarly, businesses are keen not to be tainted by ties to illegal activities
overseas that transnational advocacy groups are publicizing.
Box: De Beers and “Blood Diamonds”
a) The recent attention to blood diamonds (also called conflict diamonds) has forced the diamond industry, as
well as governments of diamond producing and receiving nations and multilateral institutions, to better
regulate the international trade.
b) As of 2002, De Beers reportedly controlled two-thirds of the world’s annual supply of rough diamonds.
c) Due to the difficulty in tracing the origin of a diamond and the ease with which they can be moved, these
gems have become a key form of currency among illegitimate actors in the international market.
d) Illicit diamonds contributed to Sierra Leone’s bloodshed in the 1990s, as rebel groups smuggled diamonds
to neighboring nations and trading them for weapons and drugs.
e) The Kimberly Process Certification Scheme (KPCS) is a recent global public–private partnership to prevent
diamonds from conflict zones from entering retail markets in Western countries.
The Unintended Consequences of Supply-Side Policies
a) Political leaders like to target suppliers in foreign countries rather than demanders in their own country,
even though this focus has been shown in many cases to be more expensive and less effective.
b) Phil Williams points out that efforts to restrict activities create a “restriction-opportunity dilemma”: the
more that countries try to impose arms embargoes or ban substances, the more they “provide inroads for the
creation of new criminal markets.”
c) Eva Bertram and her colleagues illustrate a similar unintended outcome they call the profit paradox. When
states use law enforcement to try to prohibit drugs, the reduction of supply tends to drive up prices. This
bolsters the profits of those entrepreneurs willing to take the risk to keep on supplying the black market.
And the higher price encourages other would-be criminals to get into the business.
Globalization: The Double-Edged Sword
a) Globalization is a double-edged sword: open markets may increase global efficiency but they also empower
the bad guys.
b) Some of the weak states that emerged from the collapse of the Soviet Union gave rise to powerful mafias,
influence peddling, and old-fashioned gangsterism.
c) Naím also identifies globalization, including deregulation and privatization, as the culprit in the rise of the
illicit. Peter Andreas points out that states are also taking advantage of technological innovations to police
the bad guys.
The Problem with Coordination between States
a) One major reason for limited cooperation is sovereignty. Although illicit markets can threaten sovereignty,
sovereignty can also shield black markets. Some states “rent out” their sovereign privileges and citizenship
rights to criminals and tax evaders. This process is called the commercialization of sovereignty. Some
states offer flags of convenience (places to register ships and airlines that actually conduct all their
international business somewhere else).
b) Controversy surrounds the issue of sanctions against governments who facilitate or ignore illicit activities.
Economic sanctions sometimes backfire by weakening the institutions whose job it is to regulate and
penalize.
c) Pressure on pariah states is one way of trying to shut down illicit networks, but it is not necessarily the most
effective. The technique often backfires.
d) Illicit cross-border activities often occur precisely because laws differ from one state to another. Combating
this would require states to better harmonize their legal systems, which is politically unpopular.
e) Several things make imposing sanctions difficult, including the need to harmonize legal systems of several
countries, defections, and privacy.
f) Rival states sometimes encourage black market activities to undermine their enemies.
g) Police forces and governments are sometimes themselves complicit in illicit activities.
h) Name-and-shame campaigns bring international attention to illegal and unethical practices. know-thy-
customer rules require banks and TNCs to more carefully screen their depositors, suppliers, and
contractors.
War and Natural Resources
a) Insurgents often seek to control the extraction and export of natural resources as an important way to
guarantee a revenue flow.
b) In Sierra Leone, Cambodia, Colombia, and the Congo, rebel movements have profited from the export of
illegal drugs or illegally mined resources.
c) More governments around the world believe that pressuring companies to eliminate conflict minerals in
their supply chains is an effective way to reduce violence and war in parts of Africa. As part of the 2010
Dodd-Frank Act, U.S. companies will be required to report to the Securities and Exchange Commission
whether products they sell contain tantalum, tungsten, gold, or tin likely to have come from a conflict
region.
Corruption is Hampering Development
a) Illicit activities are closely associated with corruption of government officials.
b) The cause of corruption is not simply bad leaders in developing countries. In other words, they find that
corruption is a transnational process in which many legal and illegal actors are complicit.
CASE STUDIES IN THE ILLICIT GLOBAL ECONOMY
Smuggling
a) Some motives for smuggling include greed, state pursuit of security, and evasion of sanctions imposed by
hostile powers.
b) Many smugglers seek to justify their activities by not recognizing the legitimacy of the political authority
that is regulating trade or the legitimacy of a law that makes a particular type of trade illegal.
c) An important opportunity for smuggling arises from price differentials that sometimes result from cross-
border variations in taxes, regulations, and availability. Smugglers take advantage of differing laws and
regulations in neighboring countries to engage in arbitrage—buying a product in a lower-price market and
selling it in a higher-price market.
d) Tobacco is one of the most important smuggled products in the world. The WHO has found that major U.S.
and European tobacco companies are sometimes actually complicit in the smuggling because it is a way of
opening up new markets.
e) Another major impetus to smuggling is differential taxation—when taxes on the same product differ
significantly from country to country.
f) Countries as widespread as Greece, Italy, Bolivia, and Thailand have laws that severely restrict the export
or sale of antiquities, which are considered part of the national patrimony. Nevertheless, the huge demand
for art and antiquities in wealthy countries supports a thriving transnational trade in stolen cultural
property.
g) The illegal timber trade is causing massive deforestation in places such as Indonesia, Malaysia, and South
America. Interpol and the United Nations Environment Programme estimate that illegal logging accounts
for between 15 to 30 percent of all global logging, with higher rates in tropical countries.
h) Unfortunately, international efforts to suppress illegal deforestation have had limited effects. One treaty
that countries have used in the fight is the Convention on International Trade in Endangered Species of
Wild Fauna and Flora (CITES), which obliges signatories to regulate the import and export of certain types
of endangered tree species (as well as thousands of plant and animal species).
i) Smuggling of animals and animal parts is having a devastating effect on many species around the world.
One of the difficulties in stopping wildlife trade is that the more endangered the animal, the higher the price
for it and the greater the incentive to poach it, which accelerates its move toward extinction.
Box: Gibson Guitar and the Lacey Act
a. Federal authorities charged Gibson with importing ebony and rosewood in violation of the Lacey Act, a
long-standing law amended in 2008 to prohibit the importation of any wood product illegally sourced in a
foreign country.
b) Gibson imported ebony from Madagascar and ebony and rosewood from India, even though both countries
have banned the export of unfinished lumber to try to stop illegal logging in their own countries.
c) Gibson’s critics blamed the company for profiting from an illegal market, deliberately mislabeling import
records, and conveniently pleading ignorance about its supply chain.
d) An unlikely alliance of environmental groups, musicians, and U.S. timber companies lobbied to keep the
Lacey Act strong. The U.S. timber industry liked the Lacey Act because it served as a form of
protectionism. Environmental groups like Greenpeace saw it as a tool in the global fight against
deforestation.
Drug Trafficking
a) Drug trafficking is one of the most entrenched and lucrative illicit activities in the world. Many drug plants
like coca, marijuana, and poppies are grown in developing countries and the refined drug products mostly
consumed in rich northern countries.
b) Supply-side policies against drugs have had disappointing outcomes due partly to the “hydra effect,” where
an effort to stop drug production or trade in one area simply causes it to sprout up somewhere else.
c) Colombian economist Francisco Thoumi argues that programs to encourage farmers to switch to
alternative, legal crops have largely failed. Returns to farmers from illegal crops usually surpass potential
revenues from food crops.
d) In many parts of the world, guerrilla groups and paramilitaries have turned to drugs as an important source
of revenue.
e) Can drug trafficking be stopped? Probably not. Many public policy specialists believe that demand
reduction or harm reduction in consuming countries through public spending on health and education can
be least costly and most effective in the long run.
f) Any supply-side effort to combat elements of the drug production cycle faces two core challenges: weak
governments that struggle to implement and fulfill policies, and an end-user demand that has maintained
tremendous financial incentives to continue producing at every level of the illicit supply chain.
Human Trafficking
a) According to the International Labour Organization (ILO), 21 million people globally are subjected to
forced labor, including 4.5 million victims of forced sexual exploitation (mostly women and children).
b) The roots of sex trafficking are in economic incentives, patriarchy, and poverty.
c) In the area of migration, the U.S. and Europe are caught in a contradiction: mercantilists and zenophobes
want to restrict the flow of migrants but liberals who want flexible labor markets and low-wage favor more
migrants—legal or illegal.
d) There is a strong debate over the best ways to diminish human trafficking: through fences, guest worker
programs, decriminalization of consensual prostitution, and higher legal migrant quotas.
e) International organizations, governments, and NGOs have taken significant, albeit insufficient, steps in the
last decade to tackle trafficking in persons.
f) In 2012 the U.S. State Department determined that seventeen countries had serious human trafficking
problems and were not making concerted efforts to meet minimal standards for eliminating them, while
forty-two more had significant trafficking problems.
CONCLUSION
a) Illicit activities are sometimes an unanticipated result of global free trade, and the well-intentioned efforts
by governments to halt black markets sometimes have unintended negative consequences.
b) The illicit global economy has important effects on the state sovereignty, global security, trade, growth, the
environment, and public health.
c) It forces consumers to ask: Am I responsible for knowing where the products I buy come from? Do I have
the right to defy some state laws and social prohibitions in the name of individual freedom and economic
necessity?
d) States still tend to rely on supply-side approaches to illicit problems. Their mercantilist reflex to repress and
interdict clashes with the hidden hand of the market and the not-so-hidden power of transnational criminals.
Key Terms:
• Secrecy jurisdiction
• Primitive accumulation
• Socially responsible investing
• Restriction-opportunity dilemma
• Profit paradox
• Flags of convenience
• Commercialization of sovereignty
• Tax havens
• Know-thy-customer
• Name-and-shame campaigns
• Arbitrage
• Lacey Act
• Hydra effect
Teaching Tips:
• Ask students to recount if they have observed illicit activities in their own neighborhoods or during travels
overseas, or if others have told them about illicit global activities. To what extent do they think these activities
are rooted in international causes and involve non-citizens of their country?
• This chapter makes the argument that most consumers wittingly or unwittingly purchase a variety of products
and services that may have been part of the extra-legal world at some point in their “supply chain.” Ask students
how responsible they feel for knowing where the products they consume come from and the background of
those who provide services to them?
• Ask students to debate whether their government should try to tackle illicit problems mostly through supply
reduction or demand reduction. For which types of illicit problems are eradication and interdiction better
strategies than decriminalization and harm reduction focused on consumers?
• Students can be asked to do research on companies in their locality, seeking to understand how businesses try
to: shield themselves from illegal actors; invest and behave in a socially responsible way; and verify that their
suppliers and contractors are not tainted by illegal activities. For example, the jewelry industry has made
significant efforts to eliminate blood diamonds, and home improvement chains like Lowe’s have tried hard to
purchase lumber only from “sustainable” forests.
• This chapter provides an excellent opportunity to invite guest speakers from your area who deal with some
illicit problems. Many can talk about the global connections to local problems. Consider inviting law
enforcement officials, NGO representatives, humanitarian aid workers, public health specialists,
environmentalists, customs officials, and local business leaders, to name just a few.
• Some movies to consider showing are Lords of War (2005), Blood Diamond (2006), Maria Full of Grace
(2004), and/or Dirty Pretty Things (2002).
Sample Essay-Discussion Questions:
1. What are some of the key unintended consequences of efforts to regulate the illicit global economy?
2. What historical behavior did Western states condone and engage in that they now urge developing countries to
restrict, suppress, or eradicate?
3. What is the difference between white-listing and name-and-shame campaigns?
4. What does the text suggest are the major rationales that smugglers offer to “justify” their actions?
Sample Examination Questions:
1. Which of the following was NOT mentioned as a factor limiting coordination between states against illicit
activities?
a) flags of convenience
b) tax havens
c) name-and-shame campaigns*
d) commercialization of sovereignty
2. Which of the following arguments was NOT made by Moises Naim?
a) Democracy cannot find fertile ground in countries where there are powerful criminal networks.
b) There is no clear wall between the licit and illicit markets.
c) The breakdown of the Soviet Union created new homes for illegal operations.
d) Violence used to be an important way to gain comparative advantage in the world.*
3. Which of the following does the Lacey Act prohibit?
a) Bribing of foreign officials by American companies
b) Importation of any wood product illegally sourced in a foreign country*
c) Importation of unlicensed antiquities
d) Exporting of counterfeit goods to a member of the WTO
4. Which of the following is a correct statement?
a) Annual global sales of illegal drugs are approximately $500 billion.
b) The UNODC estimates that the annuals proceeds of drug trafficking and transnational organized crime are
equal to about $500 billion.
c) The U.S. president can impose sanctions on countries that don’t meet minimum standards in fighting
human trafficking.*
d) The UNODC estimates that between 11.1 and 13.4 percent of the world’s adult population used illegal
drugs at least once in 2010.
5. What is the Kimberley Process?
a) An effort to prevent blood diamonds from entering international trade networks.*
b) The process by which classes coercively seize assets such as land from other actors.
c) An effort by the world’s largest banks to carefully screen their depositors.
d) An elaborate program to drastically reduce coca production in Latin America.
6. What is the “hydra effect”?
a) The renting out of commercial privileges and protections to citizens and companies from other countries.
b) Another way of stating: “The bloody hands and the invisible hand often worked in concert.”
c) Stopping drugs in one area causes drug production to increase somewhere else.*
d) How the “rest and relation needs” of U.S. soldiers during the Vietnam War were a major stimulus to sex
tourism in Thailand.
7. What is “arbitrage”?
a) buying a product in a low-price market and selling it in a higher-price market*
b) restriction on the export of high-tech goods
c) a mechanism to prevent drug trafficking
d) a cause of human trafficking
8. Which of the following is NOT an unintended consequence of supply-side policies against illicit activities?
a) the restriction-opportunity dilemma
b) displacement of an activity from one place to another
c) the profit paradox
d) democratization in developing countries*
9. An analyst of the illicit global economy would probably NOT agree with which of the following statements?
a) Global integration and technological change weaken criminal actors.*
b) Opening of capital markets helps dirty money flow more easily around the world.
c) Transdniestra is a hub of trafficking and smuggling.
d) Pressure on pariah states to crack down on illicit networks often backfires.
10. What is a “secrecy jurisdiction”?
a) a place U.S. soldiers sought “rest and relaxation” during the Iraq War
b) a place wealthy tax evaders like to use*
c) a unilateral threat to withhold aid from a country that fails to fight drugs seriously
d) a bank’s obligation to know its customers and exercise due diligence with depositors
11. The idea of the “Six Degrees of Separation” refers to what?
a) The idea that there is little separation between illegal businesses and socially responsible ones.
b) The theory that states don’t cooperate against crime because sovereignty separates them.
c) The idea that a relatively small number of actors connects producers and consumers in illicit markets.*
d) The belief that animal trafficking will lead to the extinction of some animal species in a short amount of
time.
12. In approaching illicit problems, the United States federal government can most aptly be described as which of
the following?
a) over-emphasizing supply-side solutions*
b) usually unwilling to cooperate with other states
c) committed to decriminalization of many illicit acts as a form of harm reduction
d) doing little to stop human trafficking
13. Which of the following is not a practice designed to reduce global illicit activities?
a) name-and-shame campaigns
b) socially responsible investing
c) differential taxation*
d) know-thy-customer procedures
14. Which of the following is an historical process involving the violent or coercive stripping of assets from a class
in society?
a) commercialization of sovereignty
b) the Kimberly Process
c) primitive accumulation*
d) the anti-sweatshop movement
15. Which of the following is a major reason why it is so hard to eliminate illicit markets?
a) NGOs don’t care much about them
b) states jealously guard their sovereignty*
c) the squiggliness of borders
d) lack of foreign aid to developing countries
CHAPTER 16
MIGRATION AND TOURISM: PEOPLE ON THE MOVE
Overview:
As noted in Chapter 1, international political economy (IPE) is not just about states and markets.
Movements of people are every bit as controversial and important as flows of corporate bonds, auto parts,
prescription medications, and arms. Indeed, their consequences shape how states, international organizations,
nongovernmental organizations (NGOs), and local communities perceive and negotiate their relationship to people
inside and beyond national borders. Whether it is the global circulation of unskilled migrant laborers, technology
industry professionals, political refugees, tourists, terrorists, or nongovernmental organization activists, new patterns
of human flows have been a central feature of IPE.
These different forms of global movement raise questions about some of the basic precepts of IPE. For
example, what is the impact of transnational human flows on economic development in both home and host
countries? What happens when people increasingly define their identities, communities, livelihoods, politics, and
leisure activities in terms other than those related to the nation-state? And what effects do these movements have on
the four structures of IPE (security, production and trade, knowledge and technology, and money and finance)?
In response to these questions, this chapter examines how migration and tourism shape the behavior and
outcomes of international and national actors and policies. It highlights the inequalities and contradictions that
continue to structure the direction and effects of global human flows. It also examines the new strategies employed
to regulate human flows and protect individual rights as people increasingly live, work, and play in places other than
their nations of birth.
Learning Objectives:
• To highlight the significance of human movements within the international political economy.
• To explain new patterns of transnational migration.
• To describe shifting forms of citizenship globally and their importance to IPE.
• To examine the role of diasporas and their relevance to IPE.
• To illustrate the importance of tourism in the global political economy.
• To provide examples of the ways in which tourism intersects with existing political, economic, and social
patterns.
• To demonstrate that tourism deserves serious academic and policy consideration due to its widespread and
growing global significance.
• To outline the connection between tourism and economic development.
• To highlight the political, social, and cultural significance of tourism in local communities.
Chapter Outline:
INTRODUCTION
a) This chapter looks particularly at the ripple effects of human flows in the international political economy.
b) The chapter focuses on migration and tourism.
c) Migration and tourism highlight both the opportunities and inequalities that shape regional development
and undergird new global connections in the current context of economic uncertainty.
ON THE GLOBAL FAST TRACK: THE IPE OF MIGRATION
a) Migrants move from one place to another for many different reasons.
b) When we speak of migration, we are referring to a wide variety of circumstances, motives, and
experiences, each with different implications for individuals, states, and the international community as a
whole.
c) Migration has long been an integral force in shaping both individual nation-states and their relationships to
one another. It refers to movement from one place to another—to a nearby city, another region, or another
country entirely. Internal migration describes people’s movement from rural to urban areas or from one
area of a country to another—a process long associated with development.
d) Transnational migration has multiplied intensely in the latter part of the twentieth century. It refers to the
now-frequent process by which people cross state borders in search of temporary work or for other reasons.
e) Whereas previous travel routes were characterized by journeys east and west, or colonial forays south,
current migration is characterized by more south–north or even south–south migration.
f) Immigration is movement for the purpose of settling and becoming a resident, whereas circular
migration refers to the process by which migrants’ movement shifts back and forth between home and
work communities in response to different economic opportunities, employment conditions, and family
responsibilities.
g) Chain migration refers to the tendency of migrants to “link up” to family members or acquaintances
already on the ground in a migration destination.
Box: China: Bringing Development Home
a) In China there has been a mass exodus from the countryside, filling urban areas with an influx of informal
businesses and unskilled labor.
b) A significant number of Chinese are also leaving the country for places like the United States where they
dominantly occupy the sciences and engineering fields. Statistics indicate that this current trend might soon
reverse itself.
Migrating Toward Development
a) As global capitalist production becomes more mobile, migrant workers tend to move to labor markets
where there is high demand and low domestic supply.
b) States with high demand for foreign workers have developed temporary foreign worker, or guest worker,
programs that regulate the provisional admission, residence, and employment of a specific class of migrant
labor.
c) Because of their conditional labor and residency status, guest workers can be especially vulnerable to
labor rights violations, discrimination, and abuse.
d) As people increasingly live their lives in places outside their place of birth, states and IOs alike have
recognized the need for new forms of global governance that can regulate human flows and protect
individual rights.
e) Brain drain—a process by which educated members of a society migrate to more developed nations where
there are higher salaries and more employment opportunities—has been responsible for reducing the human
resources necessary for many states’ own development.
f) Perhaps the biggest reason why migration can be attractive to both migrants and sending states is the
opportunity for remittances—income earned abroad that is sent back to the home country.
g) There has been a trend towards encouraging migrants through various programs to invest and save in the
countries where they work.
h) The financial crisis has resulted in a world downturn of migration to wealthier countries, likely because of
high unemployment rates.
i) Transnational migration has clearly become a defining quality of global capitalist production.
Citizenship and the Politics of Belonging
a) Given that one of the chief functions of the modern state is to control its borders and protect its citizens’
rights, some see unauthorized migrants as a threat to the political sovereignty and security of the nation.
Irregular migrants enter a country without visas or stay on after their work visas have expired and thus
lack the necessary documentation to remain in the country legally.
b) In the EU, more developed countries have resisted freedom of workers for fear of a large influx of cheap
labor that may depress wages. This fear has mostly proven unjustified.
c) Citizenship entitles a person to full and equal rights within a state. Settler states, like the U.S. or Australia,
allow immigrants to become naturalized citizens.
d) Refugees are displaced people who are unable or unwilling to return to their country of origin because of
fear of persecution on account of race, religion, nationality, membership in a particular social group, or
political opinion.
e) People who seek asylum are also permanently displaced people who face persecution in their home
countries.
f) Citizenship and asylum are more than just legal categories; they are also the highly politicized subject of
geopolitics.
g) Instead of following a process of assimilation—whereby an immigrant takes on the values and customs of
the new prevailing culture—immigrants may retain a strong connection to their culture or nation of origin.
Diaspora refers to communities that have retained a common identification with their homeland, despite
being displaced and dispersed.
h) Regardless of type (cultural or national), diasporas are increasingly significant both for the new kinds of
social, political, and economic organizations they represent and also for the effects they have had on
political and economic processes in their home countries.
i) New information technologies that facilitate travel and the transfer of money have been crucial to
supporting the maintenance of diasporic communities globally.
j) With Islam as Europe’s fastest-growing religion, the social and political implications of an increasingly
active Muslim diaspora have become the source of much debate across the continent.
k) The term cultural citizenship effectively describes immigrants’ demands within these conflicts—that is,
they seek a sense of social belonging that is not contingent on assimilation, but rather is built on a respect
for diversity.
l) Porous state borders and fluid patterns of human movement challenge the assumption that the modern
nation is defined not only by a sovereign state but also by a singular, common history and culture.
m) Immigrants with darker skin or other phenotypical differences have been unable to shed their racial
identities even when they assume “American” values, speak English, and acquire middle-class status.
n) For some, international migration represents growing individual freedom and a globalized form of national
development while for others it signifies ongoing dependency and underdevelopment.
The IPE of Transnational Human Flows
a) Large influxes of migrants may depress wages among other things, but liberals often point to some positive
tradeoffs, like decreased prices and increased tax revenue.
b) OELs argue that migrant labor is a natural part of the free-market system and therefore should be allowed
to flow freely. HILs support migration on the basis of their belief in the individual’s right to freedom of
movement.
c) Opponents of migration these days comes from economic national-realist types who claim that migrants
pose a threat to national security in the form of lost domestic jobs and lower wages, especially for low-
skilled native workers.
d) Structuralists view increasing migration as a result of the underdevelopment produced by global inequality.
From this standpoint, the global division of labor is responsible for creating impoverished nations whose
citizens have no choice but to migrate in order to support their families.
e) Constructivist theory (see Chapter 5) would also point to multiculturalism and citizenship as elements in
the political and economic debates on immigration.
f) The question is rarely whether or not global migration should happen, but under what conditions and with
what ends.
GOING MOBILE: THE POLITICAL ECONOMY OF INTERNATIONAL TOURISM
a) Like migration, tourism refers to the movement of individuals from one location to another.
b) Voluntary travel across international borders produces the single largest transnational flow of human beings
in the world.
c) Discrepancies in wealth and power between individuals and countries, and interactions between states and
markets, determine the distribution of benefits and costs of tourism, not to mention the distribution of
actual tourists.
d) Patterns and trends in the global travel and tourism industry mirror and magnify features of the world
system.
Engine of Economic Growth or Tool of Exploitation?
a) Tourism emerged following the World War II as a result of policies that encouraged tourism and the
emergence of a middle class.
b) Tourism advocates argued that countries should use their comparative advantage in cultural traditions,
historical sites, or attractive natural landscapes in order to attract tourists and the money that they bring.
c) The most obvious economic benefit of tourism is the creation of direct revenues that flow from tourist
spending both before and during their trip.
d) The direct revenue created by the initial spending of tourists multiplies as it percolates throughout the
economy and creates linkages to industries not directly related to travel and tourism.
e) For the world economy as a whole, the travel and tourism industry generates roughly 3 percent of total
GDP. When tourism’s indirect impact on economic activities is included, this figure rises to 9 percent.
f) Many LDCs that depend on just one or two primary commodities for the bulk of their export earnings turn
to tourism as another source of national income, thereby diversifying the economy.
g) The travel and tourism industry accounts for roughly 3 percent of total world employment.
h) Tourism is seen by the vast majority of governments, organizations, and tourists themselves as an economic
panacea and “smokeless industry,” providing income and employment without requiring the construction of
polluting factories.
i) Many large IOs, such as the UNWTO, WTTC and WTO, subscribe to the economic liberal perspective that
tourism and globalization bring financial benefits.
j) The critical perspective on tourism questions the wisdom of unfettered markets, and views tourism as a
destructive force that creates more problems than it solves. This viewpoint gained some popularity in the
1960s and 70s.
k) Structuralists argue that the jobs made available by tourism are low-skilled with little room for
advancement. Revenue leakages result in tourism receipts being leaked out of an economy as repatriated
profits to foreign-owned multinational tourism corporations.
l) Dependency theory links the development of the industrial, wealthy core countries of the world to the
exploitation and underdevelopment of the poor, weak, and dependent former colonies in the periphery of
the world system. Based on a dependency approach, structuralists point out that tourist destinations in the
developing world serve as the pleasure periphery for core countries.
m) Economic liberals argue that travel is directly linked to economic prosperity. In particular, affluence leads
to higher levels of discretionary household income.
n) In the wake of the 2008 economic downturn, world tourism declined, begging the question of tourism’s
reliability as a route to economic development. However, the quick return to normal patterns of rapid
growth demonstrates the resiliency of tourism in the face of barriers to its growth.
State Management and Promotion of Tourism
a) Differences in political systems and individual governments play a key role in determining the shape of
tourism in specific locations. A growth pole is a deliberately chosen location meant to serve as an engine
of economic growth in the surrounding region.
b) Governments around the world prefer policies that promote tourism growth, placing top priority on
maximizing tourist arrivals and expenditures.
c) Governments use the power of incentives and constraints in order to concentrate tourist activities in
spatially circumscribed enclaves.
d) During the 1980s, governments, tourists, and tourism businesses responded to concerns about the negative
tourism impacts by shifting toward alternative tourism, a form of tourism that provides alternatives to
mass tourism experiences based on the standard “sun, sea, and sand” formula.
e) The most popular example of alternative tourism is ecotourism, defined by the International Ecotourism
Society as “responsible travel to natural areas that conserves the environment and improves the well-being
of local people.”
f) Though not as common, the mercantilist approach to tourism is important when one considers the ways in
which states limit access to travel within their borders.
g) Perhaps the most important role played by states insofar as tourism is concerned is the management of a
country’s international image.
h) The means by which tourists are able to travel from one country to another are also employed by
individuals intending to commit acts of terrorism.
i) Quick action on the parts of business and government can reverse the initial losses associated with tragic
events such as natural disasters, outbreaks of disease, and acts of terrorism; the evidence seems to confirm
this view.
Social and Cultural Dimensions of Travel and Tourism
a) A desire for cultural authenticity has long characterized tourism, and some scholars have even argued that
modern tourism is premised on the search for authenticity. However, the majority of international tourists
visit countries with similar cultural traits, particularly in language or religion.
b) Tourist demand stimulates both the rejuvenation of cultural traditions and the rehabilitation of historical
architectural monuments.
c) Tourism is accused by critics of increasing criminal activity, especially in destinations whose residents are
much poorer than the tourists visiting them.
d) Tourism tends to have a demonstration effect, whereby some locals, especially youth, come to desire the
material objects of wealthier foreign tourists.
e) Tourist demand for cultural artifacts and traditions perceived to be exotic, transforms certain aspects of host
cultures into commodities to be bought and sold. The commodification of culture initiated by tourism
ultimately strips the original meaning and purpose from cultural objects, customs, and festivals as locals
respond to commercial pressures and incentives.
f) Structuralists argue that a vast majority of tourists receive information from enormous multinational
tourism companies that are concerned more with profit than accurate or balanced representations of host
cultures.
g) Economic liberals argue that tourists may have inaccurate or simplistic ideas about the cultures of their
hosts, but interactions between tourist and host foster better cross-cultural understanding.
h) The most visible social cost of tourism in any destinations is prostitution. Several factors make tourism
both a target and stimulant of prostitution.
i) The most insidious side of the tourism–prostitution relationship is the sexual exploitation of children by
tourists.
CONCLUSION
a) Migration and tourism are two examples of human connections in IPE.
b) Global flows crystallize many of the inequalities inherent in globalization and are structured by national
security considerations, global markets, emerging technologies, and capital flows.
c) For both migrants and tourists, human movement highlights the connection between local cultures and
global society.
d) Migration and tourism both reflect a global exchange of goods and services, whether those goods are
mementos from a trip or the migrants (as laborers) themselves.
e) Studying new patterns of global human flows allows us to see how IPE is ultimately about human relations.
Key Terms:
• Migration
• Internal migration
• Transnational migration
• Immigration
• Circular migration
• Chain migration
• Guest worker
• Brain drain
• Remittances
• Irregular migrants
• Citizenship
• Settler states
• Refugees
• Asylum
• Assimilation
• Diaspora
• Cultural citizenship
• Revenue leakages
• Pleasure periphery
• Growth pole
• Alternative tourism
• Ecotourism
• Demonstration effect
• Commodification
Teaching Tips:
• Ask students to think about how global trends in human flows and tourism are related to the increasingly
globalized nature of production and consumption.
• To highlight the political, social, and cultural significance of migration or tourism patterns in regional and local
communities, ask students to explain what conditions or factors contribute the most to these patterns in their
communities.
• Ask students to explain and discuss how the current global financial crisis has impacted global tourism and
migration patterns in their communities.
• Ask students to explain different migration and tourism problems in their own or other communities from the
perspective of the three dominant IPE perspectives.
• You want to show students maps of regions where there are large refugee populations. Show them which
countries refugees have fled to during a civil war such as that in Syria. You might also use the UNHCR’s
Google Earth layer along with the Google Earth program to show students displaced people.
• Ask students to explain the impact of a particular diaspora on one nation, region, or local community.
Sample Essay-Discussion Questions:
1. How would liberals, mercantilists, and structuralists explain the recent shift in Chinese migration patterns and
its potential impact on the global economy?
2. What is the difference between an immigrant and a migrant? Comparing recent and historical human flows into
the United States, in which cases is that distinction useful? In which cases is it problematic and why?
3. Explain the rewards and risks of tourism according to liberals, mercantilists, and structuralists?
4. Ask students what the idea of citizenship means to them. What kinds of rights or entitlements does it entail?
What kind of relationship to their fellow citizens does it entail? What would it mean for someone to be a
“second-class” citizen?
5. For the purpose of an essay, have students explore the immigration, refugee, or tourism policies of a particular
country or region, such as the EU. Or have students study the impact of tourism on a particular developing
country or local community. As much as possible use specific examples from reading materials outside the
chapter that focus on these issues, interviews, or other materials.
6. Ask students, in small groups of three or four, to draw the stereotypical tourist on an overhead transparency.
Compare the drawings and discuss the common themes, and have them discuss why these stereotypes are so
pervasive and readily accepted.
Sample Examination Questions:
d) 30%
2. The phenomenon whereby migrants move to enclaves that are oriented around immigrant culture and practical
needs is called _____?
d) irregular migrants
3. Which of the following represent “settler states”?
a) Japan
4. One of the most important reasons why international development institutions have tried to “mainstream”
migration as a development strategy is:
5. Which of the following phenomena have IPE theories of development cited as a crucial step toward
modernization?
a) assimilation
6. Irregular migrants are distinguished within their host countries by the fact that they:
a) lack legal work permits.
7. What is one example of a country that has developed a category of non-resident citizenship for migrants
abroad?
8. Most of the significant work to protect migrant rights and resolve migration conflicts is occurring at the:
a) global level.
9. Structuralists maintain that all of the following are consequences of tourism except?
10. Tourism ranks as a top _____ export for 30 LDCs.
d) 10
11. Which of the following countries heavily restricts the growth of tourism through policies that exclude all but the
wealthiest tourists?
a) Egypt
12. The production of bastardized versions of traditional arts and crafts sold as cheap tourist trinkets in airports and
d) revenue leakage
13. Which of the following countries has NOT suffered a decline in tourism arrivals due to terrorism or natural
disasters in the last 15 years?
d) The United States
14. Ecotourism is an example of what kind of tourism?
d) cultural tourism
15. Which of the following is NOT a reason why tourists are good targets of criminal activity?
d) Tourists often possess a lack of familiarity with local norms or procedures.
