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POL208Y1 (35)
Chapter 14

Chapter 14 Summary

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University of Toronto St. George
Political Science
John Haines

Chapter 14: International political economy in an age of globalization Theories of IPE: liberal, mercantilist and Marxist. Recently look at rational choice analysis. Impact of globalization on world-economy? Diminishing the states role? What about for different kinds of states? How do international institutions manage these impacts and challenges - What role do we expect them to play in managing globalization? IPE tries to explain what creates and perpetuates institutions (rules, norms, laws, organizations) and what impact they have on the world economy. End of cold war met challenges of integrating the Eastern bloc countries into the world system. Tribal, religious, ethnic conflicts forced analysts to more carefully examine links between poverty, economic stagnation and the debt of countriesinter-state conflict (Rwanda, Indonesia, former Yugoslavia). IMF, WTO, World Bank. Post-war world-economy Bretton Woods 1944; policy makers need to resolve a) no Great Depression of 1930s would follow war stable monetary system and world trading system needed and b) rebuild war-torn economies of Europe IMF 1946 (ensure stable exchange rate and provide emergency assistance to countries balance of payments), International Bank for Reconstruction and Development aka World Bank 46 (facilitate private investment and reconstruction in Europe and developing countries), General Agreement on Trade and Tariffs (GATT) 1947 (became forum for negotiations of trade liberalization). Plans for a world-economy postponed with US policy of containment of Soviet Union (US takes more direct role in reconstruction fearing the rise of communism in Europe): Marshall Plan 1947, gold standard replaced by US-gold backed dollar standard. IMF, WB and GATT by 1950 were western bloc organizations. Less support to Bretton Woods by 1965 when US economy began to change: US involvement in Vietnam, urban redevelopment and public education programs and no raise in taxes = less competition for US goods in world as their prices rose at home. US dollar confidence drops. European economic integration brought new players to the stage: EEC (European Economic Community) meant no longer depend on US policy in NATO, military exercises and support for the gold standard. ELI in Asia (Japan, South Korea, Taiwan NICs) challenge US trade competition. 1971 US decides to change the international monetary systems rules by no longer having a gold- backed dollar; no more Bretton Woods system. High inflation of 1970s and OPEC oil crisis in 1973 brought world into stagflation (high inflation + low economic growth). Industrialized www.notesolution.com
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