Lecture 13.docx

3 Pages

International Affairs
Course Code
INTA 1110
Tarun Chaudhary

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Hegemonic Stability Theory - Hegemonic Stability Theory: a hegemon is necessary for the creation and full development of the liberal world market economy because in the absence of such a power, liberal rules cannot be enforced around the world o The hegemon manipulates the market to create a world of free trade which benefits all participating states and not just the hegemon o The liberal world economy is a public or collective good – characterized by non- excludability  Hegemon’s prevent free-riders from creating problems in the system i.e. instability o In order for the hegemon to remain in power, it must induce or coerce others to participate and support the system  The US does this through trade and military power o Uneven power growth leads to a destabilization of the system  This leads to the hegemon being overthrown and a new hegemon being established o Political power regulates economic activity  creates the basis for and affects  Political Power o Hegemonic responsibility prevents nations from creating a world market based solely on self-interest and protectionism o The United States emerged as the new hegemon after WWII; it has always been in its own best interest to maintain the liberal world economy based on institutions which it could largely control - Hegemon must have control over four sets of world economic resources: (Keohane) o Raw materials o Capital o Markets o Competitive advantage in the production of goods - Loss of American Hegemony o 1950s and 1960s US began to act in a protectionist manner as Japan and Western Europe began to catch up economically o The US became a “predatory hegemon” o 1. Mercantilism a. True: political regulation creates a framework for economic activity b. False: politics is in full control of economics 2. Marxism a. True: Economics affects and influences politics b. False: economics determines politics 3. Liberalism a. True: the market has an economic dynamic of its own b. Fal
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