International Political Economy Flashcards
Economics
science of wealth.
Politics
science of power
Political economy
Relationship between politics and economics.
Liberalism
Adam Smith
David Ricardo
Marxism
Karl Marx
Friedrich Engels
Mercantilism
Alexander Hamilton
Charles de Gaulle
Liberalism
- Harmonious.
- Economics not zero-sum.
- Harmony between national interest & economic interest.
- State should not interfere with economic relations.
Mercantilists & Marxists
Conflictual.
* No underlying harmony in economic relations.
* Nature of the conflict varies:
* Between class: Marxist
* Between state: Mercantilist
* Zero-sum.
Goals
Liberalism: Efficient use of resources
Marxism and mercantilism:
Redistribution of wealth and power.
Actors and the State
Liberalism: State aggregates private interests
Marxism: State pursues interests of ruling class.
Mercantilism: States “real” actors.
Economics – Politics
Liberalism:* Pursuit of wealth should determine political order. Economic integration goal.
Marxism: Mode of production (including relations) does determine political relations. Technological advances necessitate enlarged political organization.
Mercantilism: Politics determines economics. Emphasis on national security.
Exports
Goods and services leaving the territory of a country.
Imports
Goods and services entering the territory of a country.
Balance of Trade
Exports – Imports
Political Determinants of Trade
- Military alliances.
- International conflict.
- Regime type.
- Colonial ties
- Migration
Trade integration.
Measure of growth rate in trade vs. growth rate in GDP.
International Finance
- Exchange rates / monetary policy.
- FDI.
International Monetary System:
Procedures to calculate value of currencies and credit when capital
moves across borders.
Capital
Cash or goods used to generate income.
Wealth of a business.
FDI:
Transfer of physical assets or facilities to a foreign country.
* Control to recipient country
Dutch Disease
One export becomes popular and the country focuses on that export
Arbitrage
Selling of one currency
and purchase of another
to make a profit on
changing exchange
rates
Capital Mobility
Free flow of money across borders has globalized finance
capital.
* Financial markets not centered around states.
* States lose some control.
Monetary System
Process determining rate that each state’s currency is
valued against currency of all other states.
Exchange rate:
Price of national currency relative to another.
Monetary Policy
Regulation of money supply & interest rates by a central
bank.
Money supply
currency + bank $
Interest
Fee charged for use of money (%).
International Monetary Fund
- Maintain equilibrium in BOP and stable exchange rates.
- Approved when states could change exchange rates.
- Provide loans to states making BOP adjustments.
World Bank
- Aid recovery from war.
- Finance growth and reduce poverty through loans.
Financial Intergovermental organisations
Initially weak.
* US filled void.
* Exchange dollars for gold.
* Dollar became accepted currency.
* Marshall Plan.
Globalization
The continual increase in transnational economic, social,
and cultural interactions that transcend state boundaries
Causes of Globalisation
Reduced costs to transportation & communication.
* Reduced policy barriers to trade & investment.
