POL208Y1 Study Guide - International Political Economy

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7 Apr 2011
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POL208 MIDTERM 2: REVIEW
Introduction to International Political Economy
TERMS
Political Economy
- Interaction economics and politics; combination of the two fields
Opportunity Cost
War Economy
- Times of war, economics plays an important role; market needs to adjust
- Restructuring of the economy
Economic Warfare
- Use of economic instruments as a part of war
- Ex. oil embargo imposed by US and other countries on Japan before they entered WWII;
eventually, they attacked Pearl Harbor
Total War
Economic Sanctions
Opportunity Costs
- When you choose an option, you give up the opportunity of another opportunity that could
have made a lot of money
Peace Dividend
- Economic gain from a reduction in spending on defense
Economic Liberalism
- Increased efficiency will lead to growth, and growth will maximize welfare
- Free markets and limited government intervention
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Economic Nationalism
- Economics are important for national interest and security
Marxism
LECTURE
- Sudan๎€ civil war; Southern Sudan having referendum; mostly Christian; more oil in
Southern part
- Professor Rajan๎€ in an integrated economy, what is good for the individual isnโ€™t
necessarily good for the system๎€ fault lines in global economy because of politics
- Economics in the past was understood as โ€˜political economyโ€™; need to study politics as well
to really understand economics
- Market can be seen as a means of gaining power๎€ market is the butter and security as
the guns; without butter, you canโ€™t get any guns
- Source of power๎€ we need butter to buy guns, so we should invest in the market and
invest in international security
- Source of welfare๎€ we like butter
- We need guns for protection, and butter for welfare
- More money in guns or butter?
- War economy๎€ see trade-offs between guns and butter
- Total war๎€ everything towards production of guns, and not butter
- Lots of shortages and thus rationing
- But most wars are followed by an economic boom as long as they didnโ€™t face too much
infrastructural damage ex. US and Canada after WWIIโ€ฆalthough many European
countries didnโ€™t
- Economic warfare๎€ coercive disturbance of the opponentโ€™s economy to diminish their
power and they will not be able to buy a lot of arms
- Economic sanctions๎€ putting sanctions on another country to make them change their
policies
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- Economic warfare can be waged separately from military warfare, or even in conjunction
- International law tries to separate goods that are part of a war from civilian goods
- Recently, economic sanctions have been used more instead of war๎€ but they often donโ€™t
work, and harm civilians as well
- Smart sanctions can target civilians or military capabilities
- Calculating the cost of war
- Direct costs: tanks, planes, personnel, damaged infrastructure, etc.
- Indirect costs: higher oil prices, borrowing money, healthcare for veterans, etc.
- Opportunity costs are indirect๎€ example: sitting in class instead of going to work
- Peace dividend๎€ peace should lower demand for guns and generate more butter
- What is the role of the economy in international relations? ๎€ liberalism, economic
nationalism, and Marxism
- Economic liberalism๎€ trade will lead to efficiency as well as peace and prosperity
- Absolute gains
- Mercantilism๎€ emphasize military sectors; wealth is a source of power; zero-sum
approach; industrialization therefore government intervention and ownership are necessary
- Guns vs. butter for economic liberals, but guns and butter for a mercantilist
- Marxism๎€ world economy is dominated by capitalists who seek to maximize profit, which
leads to overproduction
- Rich get richer, poor get poorer
- Marxists believe guns serve the needs of butter
๎€‚Gilpin โ€œThe Political Economy of International Relationsโ€
- Three ideologies of political economy: liberalism, nationalism, and Marxism
- Liberalism๎€ politics and economics exist separately
- Marxism๎€ economy drives politics
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Document Summary

Pol208 m i d ter m 2: rev iew. I n t roduct ion to i n ternat iona l pol i t ical economy. Interaction economics and politics; combination of the two fields. Times of war, economics plays an important role; market needs to adjust. Use of economic instruments as a part of war. Ex. oil embargo imposed by us and other countries on japan before they entered wwii; eventually, they attacked pearl harbor. When you choose an option, you give up the opportunity of another opportunity that could have made a lot of money. Economic gain from a reduction in spending on defense. Increased efficiency will lead to growth, and growth will maximize welfare. Free markets and limited government intervention www. notesolution. com. Economics are important for national interest and security. Sudan civil war; southern sudan having referendum; mostly christian; more oil in.

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