international political economy

what is IPE?

bridging of intl politics and the economy, power is thought to be economic and political

why and when did IPE emerge?

it emerged post cold war because people saw that economic and financial policies can affect global stability

why is IPE important?

political economists view the economy as having powerful economic and state actors

What are the major IPE concerns?

1. how political forces shape systems shape systems through which economic interactions are expressed

2. effect that economic interactions have on political structure and outcomes

what are IPE major factors?

social/political/economic arrangements affecting production and distribution

what are broader IPE issues?

efficiency

why is economic inequality so important to IPE?

because it influences power dynamics, access to resources, and policy decisions + the question of equal or outcome/opportunity

economists are…

1. concerned with efficiency

2. regards markets as self-regulating and immune from politics

3. assume that exchange occurs because it benefits all parties involved

4. unconcerned with institutions and focus on rational behavior in economic decision-making.

what is economic liberalism?

belief that only free production, trade, and consumption can produce the best economic results and lead to a peaceful, prosperous world, is against government intervention (the “big bad”)

what does economic liberalism say about war?

if everyone is making money and the economy is good, then people will not want to screw it up with war

what is the equality of outcome?

everyone has the same outcome regardless of their resources or how hard they workw

what is equality of oppurtunity?

everyones outcome is unknown but everyone has the same resources/opportunity

modernization theory

economic development causes political development

what percentage of the worlds millionaires are american?

40%

how many of the american millionaires are first gen wealth?

81%

what did friedman and norberg argue?

government should have a limited role in the economy

what does economic liberalism say states are moving towards?

they ar emoving towards economic independence

what is GDP and why does it differ state-to-state?

gdp (gross domestic product) is the total market value of all the goods/resources produced within a certain time period and it differs from state-to-state because all states have difference economies, imports, and exports

what are the positives and negatives of financial globalization/trade?

pros are that the ablity to use credit cards and transfer funds overseas has been made much easier, but that also means fraud and tax evasion has skyrocketed as well as terrorist orgnaizations (online)

who are the major players in IPE?

US, china, japan, UK, germany, italy; india is the fastest growing

production

creation of goods/services with market value

imports

products/services a state gets from abroad

consumption

selection, adoption, use, disposal, and recycling o f goods/services

waste/pollution

byproducts of consumption that have become global problems

historically what did a states financial resources consist of?

they consisted of gold reserves

who used to dominate the financial system?

great britain but they fell off post wwii (US assumed the role post wwii)

currency

system of money in general use in a particular state (the dollar, euro, yuan, pesos, etc.)

what was the gold standard?

main mechanism of 19th century + early 20th century of regulating exchange rates; national money (espec paper money) was exchanged for its corresponding weight in gold

why and when did the gold standard fail?

it failed in the 1930s because of the great depression

bretton woods system

developed at the 1944 UN Monetary and Financial Conference to support economic liberalism + restore the gold standard, from 1945→1971 the us dollar was fixed to the price of gold

currency shake system

1972 leading western European states made it so the lfuctuation between their currencies would not exceed 2.25% but it did not work because fluctuations grew, financial spectators would trade one currency against another causing volatility

financial globalization

the growing interdependence of states economies

how have states adopted to financial glboalization?

most try to adjust exchange rates, some fix their currency against others to ensure their prices do not drop in foreign markets

balance of trade

difference between the size of a states exports vs its imports, more exports = high, more imports = low (pre 1970s US was high but bc of oil imports we are low)

development

process by which states improve their social well being adn global economic standing

BRICS

the five largest emerging global ecnomies (brazil, russia, india, china, and south africa)

what is mercantilism?

economic view that emphasizes a states accumulation of resources, capital, and state regulation; calls for the accumulation + protection of available resources; aims for a high balance of trade and one sided trade

what does mercantilism say states should do?

1. compete for territories

2. aim at accumulating natural resources and gold

3. expand territory

4. establish exclusive trade with colonies

5. get money from defeated enemies

what is protectionism?

policy of restricting/discouraging imports and encouraging domestic production

did the US ever have protectionist policies?

yes, up until the great depression (also when the gold standard died)

tarrifs

fees on imports that make them more expensive

economic sanctions

deliberate withdrawal/threat of withdrawal of customary trade and financial relations to pressure a government into changing policies, used to precede or follow a war but now they are used as an alternate to violence

embargos

prohibition of trade (US had embargos w cuba 1960→2014 + iran 1979→present)

autarky

long term policy of national self-sufficiency + rejection of imports, economic aid, and cooperation

why is mercantilism making a comeback?

1. some think traditional economic policies could have avoided the 2008 crisis

2. many states seek more economic growth and think protectionism can guarantee it

3. alternate models of state capitalism are evoking growing interest

what is the main idea of economic contrstuctivism?

goals and structures of economic policies differ from state-to-state because of cultural, social, and politicla differenceswhat

what is an economic climate?

set of values, norms, and economic liberalism practices that can encourage/discourage investments (favorable EC means lower costs to businesses)

how does economic climate affect investments?

if other states see another states EC negativelt, they are unlikely to invest with them, and vice versa

marshall plan

a way to promote beliefs in free market/free trade fostered in cooperation and mutual acceptance

national purpose

a states major ecnomic goal/visione

economic nationalism

emphasizes mercantilism (domestic markets) but also sees the potential from economic liberalism (free trade)

what is the difference between the top %’s globally vs america?

the top global percents are significantly lower than Americas percents

according to Keynesian principles, what stimulates growth?

spending more money than a states revenue allows

whats the comparative advantage principle?

theory that explains why states should always produce certain goods to be exported and buy/trade for eveyrthing else, says two states would benefit from mutual trade because some things are cheaper to produce in other places than domestically

whats the main idea of economic liberalism?

the benefits of protecting domestic products (protectionism) against foreign competition are insignificant compared to the damage it causes to a domestic economy

what is the main goal of key international economic organizations?

to promote stability, development among member states, and to facilitate trade and investment.

what are the three main arguments of the world trade organization’s critics?

1. free trade mostly benefits rich states whilst leaving poorer ones to produce cheap labor and raw materials

2. small states have less influence in WTO

3. no new solutions have been proposed for the 2008 crisis

what is the main arguments of WTO supporters?

free trade will…

1. reduce poverty

2. create jobs

3. improve standards of living

4. provide new economic opportunities for billions of people

macroeconomics

combo of economic liberalism + mercantilism; study of the structure and performance of the entire economy; says governments should regulate business and finance

keynesian economics

says states can ease a recession’s undesirable effects by spending more than their revenue allows to stimulate production and consumption which leads to lower unemployment + a strong middle class

monetary policy

state and financial tools to stimulate the economy, control inflation, and maintain social stability

fiscal policy

use of government spending or revenue collection to influence the economy or create jobs

inflation

rise in prices

founders of economic liberalism

adam smith f

free trade

intl trade left to its course of nature without tariffs, quotas, or other restrictions

what gradually replaced mercantilism?

economic liberalism gradually replaced mercantilism

friedrich von hayek

criticized the idea of states regulating markets and argued for monetarism

monetarism

state should abandon protectionist policies and ensure that the amount of money in circulation gradually grows

what do economic liberals argue?

the benefits of a protectionist/mercantilist policy are insignificant compared to the damage it does to a domestic economy + economic cooperation reduces the chances of war

bretton woods conference 1944

wwii winners (US, UK, France, China, Soviets) created the International Monetary Fund (IMF) and the International Bank of Reconstruction and Devlopment (IBRD)

what is the intl monetary fund?

wants to

1. maintain stable exchanges between national currencies

2. provide financial help to states in financial crisis

3. achieve macroeconomical stability

4. overcome global poverty

what is the intl bank of reconstruction and development?

makes loans to developing states for long term projects (some say it is only an agent of interest to the wealthy states)

international trade organization (ITO) 1948

failed because US would not sign the charter because we were afraid it would become a global government

World Trade Organization (WTO)

provides outlines for intl trade regualtions and solves trade disputes

what are the WTO trade regulations?

1. states should have equal access to foreign markets

2. imported products should be treated no differently than domestic products

3. no secret deals or domestic regulations to restrict free trade

regional trade agreements

rules and mutual committees based on intl treaties that bind states to pursue common economic and financial policies (usually deals with tariff reduction/elimination)

what is the main idea of economic marxism?

the gap between the few rich states and the many poor states continues to widen

what is the core and the periphery?

core is the wealthy and tech advanced states (global north), periphery are the poor, underdeveloped states (global south)

economic marxism principles

1. the gap between the few rich states and everyone else continues to widen,

2. intl corps and banks hold the true power

3. free trade agreements are designed to enrich the intl ruling class

dependence theory (raul presbisch + hans singer)

said the core recieves more benefits from intl trade than the periphery + periphery can not catch up to the core under the conditions of free trade

what is outsouricng?

when companies move their production to facilities in states with fewer regulations and cheaper labor

what is the asian development model?

1950s japan government + private businesses basically had a collab where the Ministry of Intl trade would find potential market overseas and help private industries with their exports

why cant the US use the ADT?

because it requires close collaboration with the government and private businesses which is fundamentally different from the US free market approach

what are the differences between micro/macro economics?

macro focuses on the entire economic system while micro focuses on the consumers only

microeconomics

considers the behaviors of the consumer, companies, and industries (the decisions of the individual state/business leaders influence economic policies)

keynesian economics

using active government involvement to stimulate the economy by spending more money than necessary to alleviate a recessions unwanted effects

why is it harder for third world/poor states to promote deregulation/free markets?

because setting up those systems takes time and most of those states don’t have that kind of time to experiment or the resources

four asian tigers

singapore, hong kong, taiwan, and south korea are all adjusted to the ADT and get a high growth rate

which economic structures combine to form the ADT?

economic liberalism and mercantilism combo deal

brett and read initiative

the state of china and china controlled operations have their strategy to include a high capacity transport infrastructure linking east asia to europe

what has helped asia’s economic devlopment?

globalization of trade and liberalization of economic rules (india has the worlds 6th largest economy and has surpassed china in growth since 2015 because of these things)

corporate conscience

style of corporate regulation and business model that follows the print of local and intl law, ethical standards, and public opinion

stagflation

late 1970s America, there was high inflation but no growth

washington census 1989

the maximum deregulation of production and finances to jump start stagnant, corrupt, and inefficient finances

critics of the washington census 1989

argue it will unintentionally destroy the middle class, cause instability, jeopardize democracy, and give excessive power to transnational corporations

how and who adopted keynesian principles?

in reaction to the great depression, Truman + Roosevelt + Eisenhower adopted keynesian principles

brain drain/human capital flight

the move out of the most educated and skilled individuals form poor to developed states (occurs in most of the global south)

about how many people live in abject poverty?

about 700 mil