POLS2094 Week 12 Semester Review Flashcards

Flashcards for POLS2094 Week 12 Lecture Review

International Political Economy (IPE)

Study of how domestic and international politics shape who benefits from ongoing economic transformations.

Economic Nationalism

Theoretical perspective that prioritizes 'politics over economics' and emphasizes 'state primacy'.

Liberalism

Theoretical perspective that emphasizes 'market superiority' and 'voluntary transactions'.

Marxism

Theoretical perspective where 'economics drives politics' and emphasizes 'class conflict'.

Open Economy Politics (OEP)

Analytical framework considering interests, institutions, and international bargaining.

Hegemonic Stability Theory

Theory about stability in international systems

Dunning's OLI Paradigm

Framework considering ownership, location, and internationalization advantages.

Mundell's Monetary Trilemma

A country cannot simultaneously maintain fixed exchange rates, independent monetary policy, and free capital mobility.

Feldstein and Horioka Puzzle

National savings rates and investment rates remain highly correlated across countries.

Minsky's Financial Instability Theory

Financial crises follow a predictable pattern.

Capitalism

Economic system based on wage labor in which the means of production is controlled by private or corporate interests for the purpose of profit, with prices determined largely by competition in a free market.

Global Value Chains

Fragment production across borders, reshaping trade politics beyond traditional domestic interests.

Financialization

Private rating agencies, institutional investors, and accounting firms exercise enormous power in global governance.

Bretton Woods System

Post-WWII international financial system designed to promote economic stability and cooperation.

Frieden's Central Question

Is global capitalism desirable? Will it last? Should it last?

IPE Analytical Framework

Interests, institutions, and international bargaining interact to provide a framework for analysing future challenges.

Embedded Liberalism

Compromise between free markets and state intervention.

Washington Consensus

Set of neoliberal economic policies promoted by international institutions.

Transnational Corporations (TNCs)

Firms that control assets and operations in multiple countries.

Foreign Direct Investment (FDI)

Investment made by a company or entity based in one country into a company or entity based in another country.

Portfolio Investment

Investment in the financial assets of a foreign country.

Exchange Rate

The price of one currency expressed in terms of another.

Balance of Payments

Record of all economic transactions between a country and the rest of the world in one year

Current Account

Part of the balance of payments that records trade in goods and services, as well as income and current transfers.

Capital Account

Part of the balance of payments that records the change in physical or financial assets ownership for a nation

Financial Account

Part of the balance of payments that records investment flows.

remittances

funds sent from one country to another

store of value

money

spot exchange rate

• the price to exchange one currency for another for immediate delivery

• the SOR can change through depreciation and appreciation particularly if the currencies in the bilateral exchange rate are not fixed

floating exchange rate

a system where the value of a currency is determined by its supply and demand in the market that is exchanged by players in the market

medium of exchange

The US dollar serves as the primary international medium of exchange for several reasons:

It is used in pricing and settling international trade (especially commodities).

It dominates interbank transactions.

It is widely accepted across borders even in informal transactions.

crawling peg

whne a country fixes its ER at regular intervals

pegged within a band

a country specified a central ER with a percentagable deviation as a plus or minus of a percentgage

dollarisation

Dollarization is the process of adopting a foreign currency either fully or partially to help a nation's economy

fiscal policy

government decsisions about spending to influence the economy

cyptocurrency

financial crisis

control finanicialisation

A strategy used by governments to regulate the economy by managing fiscal policies such as taxation and spending.

Minksy’ financial instability theory

A theory that suggests financial markets are inherently unstable and prone to cycles of boom and bust, primarily due to speculative behavior among investors.

banking crisis

When major portions of the banking sector become insolvent

dependent financialisation

Dependency on U.S. dollar-denominated loans

Vulnerability to commodity price fluctuations

Pressure to accumulate foreign exchange reserves

Limited ability to implement independent monetary policy

ZAMBIA

Issue: zambia has defualted on its foreign debt in november 2020 and struggles to reach a consensus with their creditors leaving the state in a state of tourmoil with high unemployment, lack of infrastrucutre, health, education and social services issues

currency crisis

When a currency experiences sharp depreciation

inflation crisis

When governments print money to address other crises

feldstein -horioka puzzle

Feldstein and Horioka (1980) find that national savings rates and investment rates remain highly correlated across countries ALTHOUGH THEORY SUGGESTS OTHERWISE

assymterical information

profit financialisation

of the financial and nonfinancial sectors, a consequence of fglobal financial integration

adverse selection

When sellers know more about assets than buyers, leading to market dysfunction (e.g.Theranos).

moral hazard

When the provision of insurance (like bailouts) encourages riskier behaviour

such as states taking risks in investments, knowing that they could obtain a bailout if they are unsuccessfull

bank of international settlements

Setting international banking standards

bank for central banks

and forum for cooperation

imf

IMF provides short-term loans to countries with balance of payment issues.

g7

Purpose and mandate—charged with promoting international financial stability, improving the functioning of markets, and reducing systemic risk.

rating agency

Credit rating agencies are agencies which provide ratings to represent objective analyses and independent assessments of companies, entities or countries that issue such debt securities.

international accounung standard board

international financial reporting standards

economic development

human development

gross domestic product

gross national income

The total income generated by a country's residents and businesses, including any income earned abroad, divided by its population. capital a

capital acumulation

inequality

GINI coefficient

measures inequality with perfect equality being 0 and perfect inquality being 100

developing countries have higher inequality

Lorenz curve

the total national income is plotted against the distribution of wealth

UN Millenium Declaration

gross national happiness

A measure of a country's development that takes into account the well-being and happiness of its citizens, rather than just economic performance.

property rights

Legal rights to own, use, and transfer property, providing security and incentives for investment.

dependency theory

Developing countries structurally dependent on developed economies

import-substitution industriazation

policy refers to an economic strategy where a country promotes domestic production to replace imports, aiming for self-sufficiency and reduced foreign dependence

export oriented industralization

It's a development strategy where a country's economy focuses on producing and exporting goods, often in manufacturing, to other countries.

regional development bank

development banks plays a key role in aid, with the basic rationale being that private capital flows does not have the resources to finance long-term infrastructure projects

debt-trap diplomacy

offering moeny to pay a debt which leads to an ongoing cycle of reliance and growing debt

market distortion

Aid can undermine local institutions and markets.

corporate social responsibility

privade aid

human development index

transboundary problem

most problems transcne border, hence transboundary responses are necesssary howe,ver impediments exist

international envionmental agreement

4 MAIN FUNCTIONS

• STANDARDS AND COORDINATION

• informationa and monitoring

• reduce transaction costs

• maintains reputation

includes UNFCC

Kyoto Protocol, Montreal Protocal and Paris CA

ozone layer

ozone layer is a belt of the earth wtih naturally occurn gas which serves as a shielfd from harmful ultraviolet radiation from the sun

depletion

detoriated due to pollution

negative externalities

a cost that si sufferede by a third party as a result of economic transaction between the 2 parties - in relation to transboundary problem

fixed exchange rate

the country announces its currency is pegged to the currency of another country or a basket of currencies

distributional conflict

• participants believing that the goods will be distributed evenly

• This may occur when a large emitter is obliged to voluntarily reduce its emissions and thus incurs huge costs in doing so, which in turn provides benefits to all other nations that will enjoy cleaner air.

Montreal Protocol

Tragedy of the commons

a problem that occurs when individuals acting in their self-interest exploit a resource to the extent that demands overwhelms supply and the resource becomes unavailable to others in society

Noncompliance

Deforestation

the remove of a forest to an alternative permanent non-forested land, such as for agriculture or urban development

Free Riding

some parties bears the cost of actions while others enjoy the benefits without bearing any of the burden

Energy sector

biodiversity loss

Within your lifetime the world has experienced unprecedented species and biodiversity loss due to human induced intensivity

negative financial flows

energy security

turnover cycle

Turnover cycle for fossil fuel consuming capital like cars and power plants are slow.

regulatory arbitrage

the disparity between states with implemented policies and those that have not. (solution carbon tariffs?)

resources nationalism

market concentration

carbon tax

carbon tariff

supply chain vulnerability

carbon market

non-derogation

illicit markets

markets that are not authorised by the law however operate