Part III - Final IAF Relations

4 Issues Areas of IPE

1. International Trade System

2. International Monetary System

3. Multinational Corporations (MNCs)

4. Economic Development

3 Institutions Bretton Woods System - 1

International Monetary Fund (IMF)

3 Institutions Bretton Woods System - 2

International Bank for Reconstruction and Development (World Bank)

3 Institutions Bretton Woods System - 3

General Agreement on Tariffs and Trade (GATT)

TARRIFFS

Taxes that governments impose on imported foreign goods

HEGEMONIC STABILITY THEORY (HST)

Argues that the global economy will be open and stable when a hegemon exists to lead it.

A hegemon:

• Lowers free riding

• Provides public goods

• Funds economic institutions

FIXED EXCHANGE RATE

When a government fixes the value of its currency to an external standard, such as a precious metal or another country’s currency.

FLOATING EXCHANGE RATE

When governments do not maintain a set value for their currency in relation to a precious metal or another state’s currency.

• The “strong” or “weak” value of a currency relates to market-driven supply and demand.

First Inhibitor to monetary cooperation

Complexity

Complexity

Different financial priorities and the difficulties of monitoring compliance

Second Inhibitor to monetary cooperation

Adjustment

Adjustment

Determining an exchange rate is tedious and multi-layered.

Third Inhibitor to monetary cooperation

Ambiguity

Ambiguity

Does a hegemon need to exist to ensure cooperation?

How do Keohane and Nye (2000) define Globalization?

An increase in “globalism”

COMMODITIES

Tangible goods that can be bought & sold.

State Illicit Globalization include:

Illicit Trade, Finance & Transfer