chapter 11 the international economy: a global road map
TRANSCRIPT
Chapter 11
The International Economy: A Global Road Map
Theories of International Political Economy
Economic Nationalism: Economic Statecraft or Mercantilism
Realist approachIPE as zero-sum game Emphasis on political goals
PracticesImperialism/neoimperialismEconomic incentives and disincentivesProtectionism and domestic economic support
Economic Internationalism
Capitalism, laissez-faire, liberalism, or free trade
Idealist approach
IPE as nonzero-sum game
Practices
Separate politics from economics Adam Smith's exposition of capital theory: The Wealth of Nations (1776)
Keynesian economicsUse IGOs and national governments to regulate international economic interchangeIMF, GATT and other organizations to promote trade
Two main goals of IGOs:Ensure spread of capitalism and free tradeEase worst inequities
Economic Structuralism: Focus on Economic Structure
Haves (EDCs) exploit have-nots (LDCs)
Marxism
Economic order determines political and social relationshipsDialectical materialism: history, current situation, and future are determined by economic struggle
Dependencia theory (neo-Marxist theory or economic radical theory)
LDCs kept economically and politically dependent on EDCs
Hierarchical structure of international politics
South produces primary productsEDCs produce high-profit manufactured goodsNeocolonialism
Two Economic Worlds: North and South
Two Economic Worlds: Analyzing the Data
Economic strength of NorthEconomic weakness of South
Greater focus on agriculture, raw materials
Problems with classifications
Not a clear dichotomyNewly industrializing countries (NICs)Countries in transition (CITs)Inaccurate statisticsQuestionable relevance of data (GNP), GNP-PPP
Economic vulnerability
Common political experiences among LDCs
History of domination
Two Economic Worlds: Human Conditions
Disparities LLDCs
• Lower life expectancy• Lower literacy rate• Poor health• Less access to food, water, and sanitation
services
Declining conditions in some LLDCs
Two Economic Worlds: Approaches to North-South Relations
Circumstances
Industrialization first in NorthNationalism led to colonialism
Economic nationalism: Current rules adequate
National self-interestPolitical economy viewed as a zero-sum gameSelf-helpLifeboat analogy
Economic internationalism: Prosperity for all through economic exchange
Free tradeForeign investmentLoans and aidGlobal economy viewed as a nonzero-sum game
Economic structuralism: Current system must be altered
The Growth and Extent of International Political Economy
Trade
General pattern of expanding tradeMerchandise tradeServices trade
Trade expansion
Productive technologyResource requirementsMaterialismTransportationFree trade philosophy
Uneven patterns of trade: North and South
Dominated by NorthLDCs dependent on EDCs for export earningsLDCs rely on primary products
International Investment
Foreign direct investmentStake in foreign companies or real estate
Foreign portfolio investmentDoes not involve control of companies
International investment and multinational corporations (MNCs)
Private enterprisesSubsidiaries operating in more than one stateOwnership of plants and/or resource extraction in other countriesMost based in North
Monetary RelationsGlobalization of money
Four main banking centers: Germany, Japan, United Kingdom, United States
Globalization of financial servicesNorth-South patterns of money and banking
Dominated by North
Exchange ratesBalance of payments
CreditsDebits
The Impact of Expanded Economic Interchange
Increased economic interdependence
TradeForeign direct investmentForeign portfolio investmentsDomestic portfolio investments
Autarky--an unrealistic concept