political econonmy summary

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8 Feb 2011
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International political economy in an age of globalization chapter 14
The International Political Economy (IPE) is the way in which politics and
economics affect each other in world affairs
Due to globalization, analysis of the IPE has become increasingly important
in recent times
International Economic institutions such as the IMF and the World Bank
exist today as a result of the need for economic cooperation following World
War 2
During the beginning of the cold war the operations of these institutions and
policies such as the General Agreement on Trades and Tariffs (GATT)
were put on hold and the U.S began to manage the international monetary
system based on the dollar
The Bretton Woods System, which managed exchange rates and capital
flows was used until 1971 when the U.S decided to stop converting the dollar
to gold, which left the system defunct
In the 1970s many industrialized countries floated their exchange rates and
set up barriers to trade, this lead to a huge lack of economic cooperation
among certain countries
Developing countries took this very badly and fought to reform the IPE
throughout the 1970s
Today we can see a huge shift from the 70s where countries like China and
India play a large part in the IPE
Globalization is a very big deal for states when it comes to exchange and
interest rate policies, they have to make their choices very carefully
Wealthier and more powerful countries have fewer issues when it comes to
globalization. This is because taxation is not the biggest issue when firms are
looking for countries to invest in, workforce and infrastructure to name a few
come into play
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