Chapter 9: International Political Economy Flashcards
Globalization
the inexorable integration of markets, nation-states and technologies with other countries
mercantilism/economic realism
Relationship between economics and politics: politics decisive
- Main actors/units of analysis: states
- The nature of economic relations: conflictual, zero-sum game
- Economic goals: state power
Relation with politics: focuses on building economic wealth
economic wealth = power
want to export than imports
high tariffs
Main actors: humans are aggressive, conflicted tendencies
Nature of economic relations: intl econ is conflicting; insecurity of anarchy breeds competition; state will defend itself
Economic goals: build economy as an instrument of state power
Economic Liberalism
Adam Smith
Relationship between economics and politics: economics autonomous
Main actors/units of analysis: individuals
The nature of economic relations: cooperative, positive-sum game
Economic goals: maximum individual and social well-being
Relationship in politics: When individuals act rationally, markets are created to produce distribute and consume goods
Market works best when free gov. interference
No tariffs
Main actors: Acts rationally to maximize self interest
Nature of intl economic relations: international wealth is maximized with free exchange of goods and services, everyone wins
Goals: maximize international wealth with free exchange of goods and services
Radicalism/Marxism
Relationship between economics and politics: economics decisive
Main actors/units of analysis: classes
The nature of economic relations: conflictual, zero-sum game
Economic goals: class interes
Relationship between politics: competition comes from owners of wealth and laborers
Group relations are conflicting and exploitive
Main actors: naturally cooperative as individuals
Conflictual in groups
Nature of econ intl relations: conflicting relationships because the expansion of capitalism
Goals:Seeks radical change for the economic system
STRATIFICATION IN INTL SYSTEM:
World Bank
Designed to facilitate economic reconstruction after WW2
Loan funds to states for economic development projects such as infrastructure or debt
IMF
International Monetary Fund
Provides short term loans to states needing temporary assistance
- lender of last resort
- sets terms to loan— conditions from washington consensus
Ex: if i loan to u then u have to raise taxes and deregulate trade
GATT
General Agreement on Trade and Tariffs
Global trade agreements:
- lowered barriers but goal is not complete liberalization
- non-discrimination in trade — the most favored nation (MFN) principle
- final round: uruguay round in 1986
- final issues such as services (insurance) intellectual property rights(copyrights, trademarks) agriculture
WTO
World trade organization
Formerly GATT
- supports trade liberalization
- 1946 to 1990 trade reduced from 40% - 5%
- members treat equally on trade
- WTO empowered to sanction those who break rules
- members give preferential access in developed markets to products from developing countries
GATT vs WTO
WTO has more members, 90% of the world
WTO can enforce provisions, authorize sanctions for violators, monitors compliance
GATT deals with trade in goods while WTO deals in trade in services and intellectual property as well
Dispute settlement less efficient with WTO and in GATT is more faster and automatic
Comparative Advantage
David Ricardo
Is the ability of a country or a firm to produce a particular good or service more efficiently
US and Canada (car and truck production)
- US can make more, and export to canada
Should specialize in one thing
Economic Regionalization
necessary instrument of national economic planning by territory and is an important condition for improving the territorial organization of productive forces and economic management.
International Trade
The exchange of goods or services along international borders
Post WW2 Economic Institutions: The Bretton Woods System
The purpose of the Bretton Woods meeting was to set up a new system of rules, regulations, and procedures for the major economies of the world to ensure their economic stability. To do this, Bretton Woods established The International Monetary Fund (IMF) and the World Bank.
Did not survive because the US were in a deficit
Dollars were no longer exchangeable for gold
European Union: Single Market
Reduces tariffs to zero between members
and establishes common external tariff
Single Market: establishes a free flow of factors of production
labor capital and goods/services
economic union involves an agreement to economic policies
CRISIS: 17 members of the eurozone could no longer use exchange or interest rates
Greece joining EU for economic liberalization but they did not improve as they got worse and they may not be able to recover
Eurozone
consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain
