Chapter 8 Reading.docx

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Georgia Institute of Technology
International Affairs
INTA 1110
Tarun Chaudhary

Chapter 8 Reading IPE: Contemporary Debates 10/17/2012 2:50:00 PM The Relationship between Politics and Economics: The Debate on US Hegemonic Stability  Hegemonic Stability Theory o Presence of a hegemon allows for liberal rules to be applied in the world market economy. o Hegemons require military power and control over raw materials, capital, markets, and the hegemon’s competitive advantage  Public goods and free riders take advantage of the goods, so the hegemon must deal with free riders by penalizing them  Bretton Woods System made in 1944, US now leads multiple institutions, so US has reason to restore liberal world economy after WWII.  Relationship between politics and economics: o Politics and economics influence each other o The relative decline of the US has not meant a breakdown of the liberal world economy. o Politics of a leading power may be altruistic but also has an element of self interest. Development and underdevelopment in the third world  Economic Liberal Approach o Modernization theory  Third world countries should be expected to follow the same developmental path taken earlier by developed countries o Two sectors of third world countries isolated from each other  Traditional sector  Emerging modern sector o Emphasizes:  Need for open economy, free of political interference  Growing rate of economic investment  Foreign direct investment o W.W. Rostow  Marxist Approach o Dependency Theory of Underdevelopment  Underdevelopment is caused by factors external to the poor countries  Underdeveloped and development are the results of global capitalist development  Underdevelopment is due to external, primarily economic, forces  Overcome underdevelopment b
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