Introduction Flashcards
Comparative political economy
Focuses on the differences in domestic economic policies
- Industrial policies
- Different types of capitalist systems
- Drivers of economic growth and development
- Variation in institutions -> variation in domestic economic policy
International political economy
Studies the politics of the flows of production, distribution, and consumption across national border
- International trade
- International financial flows
- Sovereign debt
- Migration
- International aid
What affects the politics of international economic flows (how are they affected)
- Domestic institutions
- International institutions
- Domestic and foreign businesses
- Distributional interests of voters
- Ideas and norms
- Influence international economic policy and how international economic flows influence domestic policies
What are the 3 old school approaches to IPE
- Mercantilist school
- Liberal school
- Marxist school
Mercantilism
Similar to IR’s realism
- Focuses on the state rather than subnational interests
Assumption: states use economic policy to increase power
- National power comes from economic power
– Used to reference how much gold and silver a state had
– Exports bring money in and increase power, imports send money out and decrease power by strengthening other states
– Exports vary in their importance (manufacture goods are superior)
Implications of mercantalism
Implication: The economy “should” be controlled in order to gain power
- Countries that export win, countries that import lose (zero-sum game)
- Pessimistic about whether countries can cooperate
Liberalism
Countries and individuals gain from trade by exploiting comparative advantage
- Focuses mainly on individual welfare, do individuals have more money and thus can spend more?
- No harm in engaging in trade
– “A rising tide lifts all boats”
– All trade is good, not just positive balance (ie. exports > imports)
Implication of liberalism
Implication: The role of the state “should” be limited
Marxism
NOT referencing the policy prescriptions but instead the theory underlying them
- Two central factors (players):
– Capital (means of production, owned by bourgeoisie) and Wage Labor (the proletariat)
- Subsistence wages for laborers, capitalists keep the surplus
- Capital becomes more concentrated and less profitable over time (thus increasing inequality over time)
- Increasing inequality and eventual workers’ revolution abolishes private property
- The state exists to protect Capital
- Internationally: Imperial exploitation of the South by the North
Implication of marxism
Implication: Capitalism and government that support it are “bad” for the distribution of wealth
A/The Modern approach to IPE
Interests, Ideas, and Institutions
- The interaction between societal interests, how people interpret them, and the political institutions that aggregate them into policy
- We use assumptions about interests, ideas, and institutions to build models that help us explain an outcome
What drives political behavior?
Material (Societal)
- Qui bono: Whose welfare increases/decreases with different policy options
Ideational
- How do people/decision makers interpret their material interests/the state of the economy
Political (Institutional)
- What will keep leaders in political office, and what checks and balances are they subjected to
Interests in modern approach to IPE
- How things impact people
- Do they win or lose from a certain policy or proposed policy
- Material interests can be shaped by endowments
– Factor of production (land, labor, capital)
– Industry (what kind of industry employ you (sector), eg. import-competing, export-oriented, unemployed)
—> Tell me where you work, and I’ll tell you your political preferences - The interests that matter depend on the question we are trying to answer
- Sometimes interests are hard to identify
Ideas in modern approach to IPE
IPE scholars often start with the assumption of “objective” economic (and political) interests, often quite accurate (a useful simplification of messy reality)
- However ideas and ideology can also matter
- Interpret the facts
– Even among macro-economics there is no agreed-upon economic theory
- What economic theory decision makers believe informs policy choices
- Individuals often use simplified mental models to understand the economy (eg. private vs governments “households”)
- Actions depend on whos interests you care about and how long your time horizon is
Sometimes people act against their objective economic self-interest for ideological reasons
Ideas in modern approach to IPE
IPE scholars often start with the assumption of “objective” economic (and political) interests, often quite accurate (a useful simplification of messy reality)
- However ideas and ideology can also matter
- Interpret the facts
– Even among macro-economics there is no agreed-upon economic theory
- What economic theory decision makers believe informs policy choices
- Individuals often use simplified mental models to understand the economy (eg. private vs governments “households”)
- Actions depend on whos interests you care about and how long your time horizon is
Sometimes people act against their objective economic self-interest for ideological reasons
