POSC 1000 Introduction to Politics

POSC 1000 Introduction to Politics Russell Alan Williams

Unit Ten: Globalization and Political Economy and Conclusion (April 1 and 3) • Required Reading:MacLean and Wood, Chapters 13 and 14. • Outline: • Introduction - IPE • The Trade Regime • The Financial Regime • Conclusion – Essays and Final Exam

1) Introduction: “International PoliticsEconomy”: Subfield of “International Politics”. • Studies the interaction between economics and politics. • Assumes a close link between international and domestic politics • Theories and debate focuses on implications of economic interdependence • E.g. “Globalization”: Intensification of economic, political, social, and cultural relations across borders.

“Globalization” highlights the transition from nationally organized economies to an era of liberalization and economic cooperation • “Trade Protection/Protectionism”: Tendency of countries to safeguard their own economic interests by using tariffs, quotas or other forms of trade and investment legislation. • Many international institutions now exist to promote “liberalization” • E.g. The WTO, IMF, WB, EU, NAFTA – involve rules about what states are allowed to “do”. • Development of a global market and society runs counter to nationally based political systems.

2)The Trade Regime: International Political Economy analyzes the content and implications of the “trade regime” . . . • The General Agreement on Tariffs and Trade (GATT) – An international treaty that limits states’ rights to engage in “trade protection” 1945 -> Present • Promotes: • “Non-Discrimination” : Principle that no member of an organization should be excluded from the benefits that one member state extends to another. • “Reciprocity”: Complementary or mutual behavior between two or more actors; view that mutual liberalization of trade barriers would be beneficial to all parties • GATT liberalization was very successful

2)The Trade Regime:

2)The Trade Regime: International Political Economy analyzes the content and implications of the “trade regime” . . . • The General Agreement on Tariffs and Trade (GATT) – An international treaty that limits states’ rights to engage in “trade protection” 1945 -> Present • Promotes: • “Non-Discrimination” : Principle that no member of an organization should be excluded from the benefits that one member state extends to another. • “Reciprocity”: Complementary or mutual behavior between two or more actors; view that mutual liberalization of trade barriers would be beneficial to all parties • GATT liberalization was very successful • However, there were considerable problems with cheating and enforcement

GATT “Uruguay Round” of trade negotiations led to the creation of the World Trade Organization (WTO) in 1994 • Included a new binding system of “Dispute Resolution”: Process by which trade disagreements between states can be resolved by an impartial tribunal • System requires that states change offending policies • Included many new requirements for state behavior • MNC intellectual property rights • MNC investment protection • “Single Undertaking” – acts like a constitution WTO is very controversial: promotes liberalization but reduces “sovereignty”

3)The Financial Regime: International Political Economy analyzes the content and implications of the “financial regime” . . . • “International Financial and Monetary System”: Set of rules, institutions, and agreements governing the flow of money in the international system; the relative value of currencies and the settling of accounts. • Necessary to all international trade, travel and commerce • System is governed by World Bank, IMF and leading states . . . • Goals: • Stability • “Liquidity”: Rate at which assets can be converted to cash • Development – many states are “capital poor”

Economic development requires capital transfers to poor societies . . . . • World Bank and IMF are designed to provide loans to governments facing economic problems • “Bilateral Aid”: Military or financial development assistance given by one state to another. • The “Marshall Plan”: US bilateral Aid to European states after World War II to finance reconstruction • Development assistance has never matched the needs of many poor countries

Economic development requires capital transfers to poor societies . . . . • World Bank and IMF are designed to provide loans to governments facing economic problems • “Bilateral Aid”: Military or financial development assistance given by one state to another. • The “Marshall Plan”: US bilateral Aid to European states after World War II to finance reconstruction • Development assistance has never matched the needs of many poor countries • E.g. “Debt Crisis”: Situation in which a country cannot meet its international debt payments. Sometimes used to refer the LDC debt crisis in particular (1982-????)

4)Conclusions The study of international political economy highlights some basic problems with the modern study of politics . . . . • Focus tends to be on governments, elections and political parties, but in the era of “globalization” more and more of the decisions that impact peoples’ lives are made outside of those national political processes. • Raises questions about “sovereignty” and democratic accountability

5) Final Exam: Final Exam has three components covering the course as a whole – Multiple Choice, Short answer definition questions and long answer essay questions - See Handout

6) Essays:

POSC 1000 Introduction to Politics