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IR 3.24.docx

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Political Science
Kelly Greenhill

IR 3.24 Globalization What is international political economy? • Gilpin definition: the reciprocal and dynamic interaction in international relations of the pursuit… • liberalism—economics should determine politics o the purpose of economic activity is to enrich individuals rather than to enhance the power of the state o trade benefits all regardless of the level of imports vs. exports  absolute gains concerns dominate  does not guarantee equal trade—will be losers and winners o all productive activity is valuable; the key is to specialize in activities in which the state (or individuals) possess comparative advantage  the idea being that interdependence allows for greater returns for the same investment; can also have peace inducing effects • Marxism—economics does determine politics o capitalism=private ownership of means of production by capitalists; workers are paid wages by capitalists o value of goods determined by labor used to produce them o wages paid do not compensate workers for the true value of the labor, leading to class conflict, then to revolution and eventually the abolition of capitalism o international system is exploitative as long as dominated by capitalists o system will tend toward imperialism, to benefit the capitalists within states o key relationships between elites in core and periphery (colonies) • mercantilism/realism—politics determine economics o economic strength is a key component of national power o trade is useful in terms of providing markets for exports and building national income, but imports should be discouraged  the idea being that interdependence makes states potentially vulnerable • relative gains concerns therefore dominate o governments should thus play an active role in the economy, encouraging exports and discouraging imports through a variety of means, especially tariffs and subsides th th o dominated great power economic policies from 16 through late 18 centuries Trade • balance of trade is the difference between the monetary value f exports and imports in an economy over a certain period o positive balance of trade=surplus o negative balance of trade=deficit • international trade o basic issue: a tension between desire for material benefits of an open system and pressure to promote/defend state and/or particularist interests o collective action problem(s): how to manage the basic tension and who is going to bear costs of system governance; individually rational behaviors can undermine system stability o liberalism: free trade doctrine holds that national prosperity is advanced by the unfettered exchange of goods and services with other states  achieved by removing restriction on trade  dominant view in post-war period; US served as hegemon o realism: mercantile doctrine holds that national prosperity is advanced by achieving a trade surplus  achieved thru state subsides to exporting industries, and by state restrictions on imports Free Trade • in general, Americans think trade with other countries is good; but when worded differently, opinions will change • economists definitely support free trade • against free trade o tariffs (taxes on imports) and NTBs (non-tariff barriers) o common NTBs: quotas and licenses (set quantitative limits on imports), voluntary export restraints (VERs)(common in 1980s)(exporter agrees to limit shipments), exchange controls (restrict access to foreign money needed to import; keep your exchange rate artificially low), selective treaty adoption, demands for technology or intellectual property rights (IPR), role of non-state actors Arguments for/against Protectionism: #1 Protectionism is necessary for national defense • for: o if something is vital for defense, it should be produced securely within one’s borders  weapons, petroleum o protectionism helps these industries survive • against: o states can obtain critical goods from their allies o state can st
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