International Political Economy.docx

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International Affairs
INTA 1110
Tarun Chaudhary

International Political Economy Politics and Wealth 10/9/2012 11:12:00 AM What is politics  The structured interaction of people Why study this?  Products are made through a global supply chain The Global Financial Crisis  Housing bubble Bretton Woods  Developed after WWII o Influence by experience through Great Depression o Int'l Institutions  International Monetary Fund  International Bank for Recovery and Development  World Bank  General Agreements on Tariffs and Trade  WTF IMF  Role o Stabilizes exchange rate  Was linked to the US dollar  US dollar pegged to a fixed price of gold  Provides assistance to countries faced with short term liquidity crises  Traditionally, the head of the IMF is not from US World Bank  Established to help rebuild Europe  Provide development assistance for other economies  Mandate has shifted to center on development  Traditionally helmed by an individual from the US.  US instituted the Marshall plan GATT  Originally, an int'l trade organization o US senate objections blocked any such arrangements  GATT was formed in 1947 o Purpose: lower tariff rates o Multilateral trade deals o Based in Geneva  World Trade Organization 1970s  Increasing protectionism due to shifting American priorities  Stagflation in the US o Wage and price inflation o High unemployment o Decrease for demand of US products  Post WWII US economic dominance undermined  The Nixon Shocks o Got rid of the gold standard o Imposed a 10% tariff on all imports The End of Bretton Woods  US would no longer convert dollars to gold  10% surcharge on imported goods  Effect: decade of protectionist policies among developed countries How do we understand the intersection of the world economy and politics? Theory and Ideology  Mercantilism  Liberalism  Marxism Mercantilism  The economy is another arena of power politics, which it is subordinate to  Benign vs. malevolent  Pursuing a strong economy relative to other=power=security  Economic goal is to enhance your power and wealth  Utilize your domination of other countries to sell your goods. o Translates into security Liberalism  Rational actors maximize utility  Markets will be efficient if left to their own devices  Efficiency begets mutual gains  Laissez-Faire vs. Keynesian  Adam Smith and Ricardo  Comparative advantage leads to specialization Marxism  Critical theory o What is Marx criticizing?  Child labor, exploitation of workers o Marxist view of history  The
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