Introduction to IPE

Question 1

Define GPE

Answer 1

• Interrelationship between public and private power in the allocation of scarce resourcES

Question 2

what is the view on markets for economics

Answer 2

Allow efficient distribution and allocation

Individuals are informed and make mutually advantageous exchanges through markets

Question 3

explain view on markets of IPE

Answer 3

Not natural mechanism Embedded in social relations,
Form and function shaped by political, social, cultural and religious practices and norms
E.g. market participants, e.g. property market not allowing woman

Question 4

What two events resulted in the separation of politics and economics

Answer 4

Marginal revolution of 1870s
• Focus on individuals, marginal utility

Neoclassical economics from 1970s
• Politics=hinders in market of efficient outcomes // marginalised

Question 5

what are the three core assumptions of IPE (Underhill)

Answer 5

a. Political and economic domains cannot be separated
b. Political interactions are central to structure of markets
c. Domestic and international spheres cannot be meaningfully separated

Question 6

what are the 8 stages of the history of the global economy

Answer 6

1. early 16th cent
2. industrial revolution (classical liberalism)
3. WWI + inter war period
4. Great depression
5. WWII to late 60s (embedded liberalism)
6. post war growth
7. nixon shock (neoliberalism)
8. decline of welfare state

Question 7

describe 16th century global economy

Answer 7

• Competition among European monarchs to amass wealth (and power) by extending their markets through building of empires
  o = enmeshment of communities across glove in European economies (=Eurocentric economy)
  mercantilism

Question 8

what is mercantilism

Answer 8

power= wealth

Question 9

what were the basic points of the global economy during the industrial revolution

Answer 9

• global integration increase through technology developments= enabled movement of goods, people (migration) and ideas
• little pattern of trade shift (bilateral, not dependant on institutions, tariffs remained to protect domestic producers)

Question 10

explain the institutional arrangmements of the industrial revolution

Answer 10

• despite Expansion of economic integration but also lack of institutionalization
  o Only the gold standard: price of currency converted to price of gold
  o Fixed exchange rate= Provided certainty for traders

Question 11

What era of liberalism was there during the industrial rev

Answer 11

classical

Question 12

explain the global economy during WWI and inter war years

Answer 12

• Ended era of intensified trade (world trade declined 2/3 by ‘34
  o Chaos reflection of inability of govs to agree on measures to restore stability + beggar thy neighbour policies
• Fundamental problem: inability of states to construct viable international financial system
• Collapse of gold standard
  o Saw limited certainty
  -

Question 13

why did international trade collapse during the great depression in 1929

Answer 13

• International trade collapsed as governments pursued protectionist measures in an attempt to strengthen domestic recoveries

Question 14

what era of liberalism was during WWII to late 60s

Answer 14

embedded

Question 15

when was the bretton woods conference

Answer 15

wwii after

Question 16

what occurred and was established during BW

Answer 16

• Parties agreed to the dollar standard (foreign currencies fixed to US dollar, and US dollar fixed to its gold holdings)
• Establish IMF and International Bank for Reconstruction and Development (and World Bank) to facilitate global trade and finance

Question 17

What was the agreements of BW structured around

Answer 17

compromises (multilateralism)

1. governments opened economies to international trade and investment,
2. but retained capacity to intervene domestically (manage domestic economic policy), especially to maintain full employment (safeguarding domestic objectives)

Question 18

Explain post war growth

Answer 18

economic growth - but UNEQAUL

• production through TNCs
• intra-industry trade
• NGOs

Question 19

what era of liberalisation was the nixon shock

Answer 19

neoliberalism

Question 20

explain nixon shock

Answer 20

• Pressures on US dollar= US gov (Nixon) to leave gold-dollar standard
• Allowed countries to ‘float’ currency (determined by supply and demand of certain currency)
• Series of energy crises (1973-1979)
o OPEC impose embargo in response to US support for Israel in Yom Kippur War
o Price of crude oil rose from $3 barrel in 1973 to $12 barrel in 1974
• Raise in oil + Nixon shock = stock market crash and recession in 1970s
• Prolonged economic decline
o Characterised by stagflation (high unemployment AND inflation- these generally occur separately)

Question 21

explain decline of welfare state

Answer 21

• Following recession- shift to conservative politics (Thatcher and Reagan) to target inflation through economic policy
• High income countries shift economic politics away from targeting welfare objectives of post-war period, and towards preparing citizens and corporations for international competition
o More flexible labour markets
o Private sector more flexible
o But reduced state support to welfare

Question 22

explain differences of IE, IR and IPE

Answer 22

o IE- efficiency, resources allocated to most efficient outcome
o IR: power, how does an actor achieve its power (who gets what, when and how?)
o IPE: how are power and wealth related in the allocation of scarce resources

Question 23

Consequences of conceptualising IR and IE as distinct social spheres

Answer 23

a. Political interactions are central to the structure of markets
b. Governments make economic and political comprimises domestically to ensure global economy remains intact and functioning

c. Power is often attributed to wealth
o If not studied as linked // unable to see past and current trends
o Economic interest often define political agendas

Question 24

what are the preconditions for markets

Answer 24

1. property= rights over things
2. buyers and sellers
3. money - (medium of exchange) fiat money
4. information

Question 25

explain embeddedness of markets

Answer 25

markets coexist with, shaped by, and depend on other social relations

Question 26

2 ways markets are embedded

Answer 26

formal: government actions
informal: family ties

Question 27

how was the 2008 financial crises different from the 30s

Answer 27

o Recovery= reflection of effectiveness of concerted responses at national and global levels
o Still implemented domestic focus, the beggar-thy-neighbor protectionist policies avoided

Question 28

major consequences of globalisation of finance

Answer 28

1. A national problem > global crisis (through global market and foreign investment)
2. Complexity of financial instruments exacerbated problem of panic (bc uncertainty created in transaction among financial institutions)