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Chapter 9

Chapter 9. International Political Economy (IPE). International Political Economy (IPE). Interrelationship between politics and economics, between states and markets Increasingly important (facilitated by new technologies) Growing transactions in trade, investment, lending

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Chapter 9

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  1. Chapter 9 International Political Economy (IPE)

  2. International Political Economy (IPE) • Interrelationship between politics and economics, between states and markets • Increasingly important (facilitated by new technologies) • Growing transactions in trade, investment, lending • Expectation governments responsible for economic policies • Outcomes increasingly transparent; more controversial, politicized

  3. Economic Liberalism • Dominant paradigm post-WWII (aka, Neoliberalism, Washington Consensus) • Individual level • rational, maximize self-interest • State level • Markets develop to produce, distribute, consume goods; efficiency  improved welfare • State provides basic order; free market = free of government interference • International level • Free flow of commerce, absence of state intervention  efficient allocation of resources by market • interdependence  economic development on comparative advantage; international wealth maximized

  4. International Institutions: WB • Bretton Woods institutions (1944); IGOs set up at end of WWII • World Bank (WB), International Monetary Fund (IMF), General Agreement on Tariffs and Trade (GATT)  World Trade Organization (WTO) • World Bank • Reconstruction of Europe following WWII; 1950s development • Loans money to states for economic development projects • Economic liberalism, structural adjustment policies (SAPs)

  5. IMF, GATT WTO • International Monetary Fund (IMF) • Stabilizing exchange rates; short-term and long term lender • Key issues = debt, transition • Advocate of SAPs (see figure 9.2) • General Agreement on Tariffs and Trade (GATT) • Trade liberalization • Non discrimination • Preferential access in developed markets for South • “national treatment” of MNCs • World Trade Organization (WTO) • Trade negotiations, review, dispute settlement, and enforcement • Aligned with North; degrading human welfare, environmental and labor standards

  6. Mercantilism/Statism • Mercantilism • (15th-18th century) European states encouraged exports over imports, industrialization over agriculture • protected domestic production (protectionism); intervened in trade • Surplus balance of payments to protect national interest • Statism • Modern mercantilism • Emphasizes state, subordination of economic activities to state building, increasing state power • Examples = Japan, Singapore, South Korea, Taiwan, Thailand

  7. Radicalisms • Radicalism/Marxist/Dependency/World System • Planned domestic economies, rapid industrialization (USSR) • Post-WWII, import substitution industrialization (ISI) and statist development • Restructuring of IPE • LDCs in permanent dependency • MNCs exploit working class, developing countries; co-opt decision-makers • Inequalities within and between states • WB, IMF, WTO perpetuate dominance of North and global inequality • International and economic power must be altered

  8. Global Inequalities • Major differences between North and South (see Table 9.1, 266) • New International Economic Order (NIEO) (1974) • Global economic change • Minor gains • North refused to negotiate on major issues • Millennium Development Goals (MDGs) • UN’s goals on poverty reduction, better education, improved health, environmental sustainability, and global partnerships • Asia and Pacific on track; Sub-Saharan Africa not

  9. Human Development Index, 2002

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