International Collaboration and IPE

Explaining Cooperation:

  • IR Theories and Cooperation:

    • Realism: Highlights difficulties in achieving international cooperation

    • Neoliberals/Modern Liberalism: Explains how states overcome these difficulties to cooperate

    • Constructivism: Agnostic on cooperation, focuses on conditions that influence outcomes

  • Neoliberal Instituionalism

    • Realism predicts too little cooperation

    • Cooperation is possible because of continuous interactions

    • Self-interest can lead states to cooperate through international organizations ( IOs):

      1. Longer shadow of future

        • Institutions create repeated interactions between states

        • Cooperation becomes more attractive because the long-term benefits outweigh the short-term incentives to defeat

        • Example: Trade agreements incentivize sustained collaboration by promising long-term economic gains

      2. Clear expectations

        • Institutions establish norms, rules, and procedures that clarify what is expected from states

        • Clear expectations reduce misunderstandings and prevent conflict

        • States are less likely to interpret as hostile when behavior follows agreed-upon rules

        • Example: The World Trade Organization ( (WTO) sets rules for trade, ensuring transparency and predictability

      3. Reduced transaction costs

        • Transaction Costs: Material costs for reaching an agreement states need to reach agreements

        • Institutions provide a framework for negotiation, reducing the time and resources

        • Streamline interactions and make cooperation more efficient

        • Example: The United Nations provides a centralized forum for diplomacy

      4. Monitoring

        • Institutions help monitor compliance with agreements, reducing uncertainty about whether states are adhering to commitments

        • Monitoring builds trust by ensuring that cheating is detected

        • Example: The International Atomic Energy Agency ( IAEA) monitors nuclear programs to ensure states comply

    • Modern Liberal Theory

      • Ideas, interests, and political institutions within states will influence attitudes toward cooperation

        • Democratic political institutions promote cooperation

        • Economic interdependence promotes cooperation

        • Cross-border networks of govt. bureaucrats can promote cooperation

      • Relationship between neoliberal constitutionalism and modern liberal theory

    • Social Constructivism

      • Cooperation may be easy or difficult, depending on states’ identities, the nature of shared understandings, and norms

        • Shared identities often mean shared expectations of cooperation

        • Shared norms can facilitate cooperation through amicable interactions

        • Example: NATO cooperation and socialization of new members

International Trade:

  • Mercantilism ( 15-18th Century)

    • Zero-sum approach to trade

      • each dollar gained by one party in a transaction must be lost by the other, hence yielding a net transfer of wealth of zero.

    • Economic wealth —> state power

    • Methods:

      • Increased exports

      • Accumulation of precious metals

    • Proectisionsim:

      • Tariffs: Taxes on imports

  • Problems with Mercantilism:

    • Depended on colonialism

    • Relied on the gold standard and mercenaries

    • Fueled link between trade and war

  • Retaliatory Tariffs

  • Free Trade: The Logic of Comparative Advantage

    • Factor endowments: land, labor, capital

    • Heckscher-Onlin (H-O) Theory:

      • Countries export goods relying on abundant factors

      • Countries import goods relying on scarce factors

      Comparative ( not absolute) advantage matters!

  • Comparative Advantge lowers prices

  • Absoulte vs. comparative advantage

    • Absolute Advantage: The ability of an actor to produce more of a good or service than a competitor.

    • Comparative Advantage: The ability of an actor to produce a good or service for a lower opportunity cost than a competitor.

    • US produces crud eoil but so does Canada

    • Better for US to import some crude oil-why?

  • Political Challenge of Free Trade

    • Dilemma: How to invest in new technologies?

      • Option 1

        • Rely most on US workers/industry

        • Downside: Coslty

      • Option 2

        • Rely most on foreign- produced technology

        • Downside: Fewer US jobs

  • GATTO AND WTO

    • GATT General Agreement on Tarrifs and Trade( 1947-1995)

      • Provisional agreements ( not permanent)

      • Focus: trade in goods

      • No monitoring mechanism

      • No formalized dispute settlement

    • WTO World Trade Organization ( 1995- Present)

      • Permanent agreement

      • Focus: trade in hoods, services, and intellectual property

      • Periodic review of member states

      • Formalizaed dispute settlement with power to sanction violators

MONETARY POLICY

  • What is Monetary Policy?

    • Monetary Policy: Controls the supply of money in an economy

    • Tools of monetary policy:

      • Interest rate adjustments

      • Changes in money supply

    • Goals: Infleucne inflation, unemployment, and economic stability

  • Exchange Rates: Definition and Types

    • Exchange Rate: The price of one currency in relation to another

    • Types of exchange rates

      • Floating: market determines the value of a currency

      • Fixed: Government sets the currency value relative to gold to another currency ( e.g. the US dollar)

    • Effects on trade:

      • Weak currency —> more exports

      • Strong currency —> more imports

  • Balance of Payments

    1. Current Account

      • Trade balance ( exports minus imports of goods and services)

      • Net income from abroad from earnings, dividnes, etc.

      • Net current transfers, including foreign airs ( typically recurring)

    2. Capital Account

      • Capital transfers, including foreign-direct investment ( typically one-time)

      • Acqusitiion/disposal of Non- Finanical assets, including natural resources

Developement

  • Statisitcs on Global Poverty

    • 10% of the population lives on less than $2/day
      • 22,000 children die from poverty every day
      • 63 million children do not attend school
      • 805 million people lack sufficient food
      • Preventable diseases kill 2 million people per year
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  • The World Bank

    • Loans for middle-income counties

    • Interest-free loans to poor countries

    • Funds projects aimed at reducing poverty and fostering development

    • Types of projects include infrastructure, education, and healthcare

  • The IMF

    • Addresses balance of payment deficits:

      • Occurs when a country imports more goods, services, and
        capital than it exports

        • Short-term: Fuels economic growth.

        • Long-term: Leads to debt.

      • Advocates austerity measures:

        • Spending cuts and tax increases to reduce government debt.

        • Policies often politically unpopular.
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  • State-Led Development

    • States prioritize development for economic and political reasons

    • Examples of unilateral efforts from USAID and other agencies