introduction to IPE Prof. Thomas Oatley's book (3 traditional…
introduction to IPE
Prof. Thomas Oatley's book
career opportunities have changed
more jobs available in high technology sectors and service
medical care, computer design, biotechnology, high-technology manufacturing
the consumers in us better off by reducing the prices of the goods and services we buy
plenty of choices
expanding the range of choices we have
4 divisions/ areas of IPE
international trade system
intl. monetary system
notes: these divisions are well connected
what is IPE?
winners and losses
studies how the enduring political battle between the winners and losers from global economic exchange shapes the evolution of the global economy
The winners seek deeper links with the global economy in order to extend and consolidate their gains, whereas the losers try to erect barriers between the global and national economies in order to minimize or even reverse their losses
case study: the political battle
the decision by the Trump administration to raise tariffs on softwood lumber imported from Canada in April 2017. The decision to raise tariffs was prompted by lobbying by American lumber mills and timberland owners. The U.S. Lumber Coalition pressed for higher tariffs on Canadian lumber because they were losing trade.Higher tariffs would protect American lumber from competition, thereby reducing the number of American mills in distress.
The tariff hurt Canadian lumber producers, who could sell less lumber in their largest market. Groups that suffered from the lumber tariff turned to the political system to try to reverse the decision.
The higher tariff on Canadian lumber had negative consequences for other groups in society, however. The tariff hurt American industries that use lumber to produce goods, such as home builders, because these firms had to pay more for wood
In the United States, The National Association of Home Builders pressured the Trump administration and Congress to reduce and even remove the tariff.
The Canadian government responded to pressure from its producers by imposing a tariff on American gypsum (drywall) exported into Canada
Imported Canadian lumber was capturing a large share of the American market, resulting in mill closings and layoffs,
politics and global economy
IPE studies how politics shape developments in the global economy and how the global economy shapes politics
3 traditional schools of political economy
classical mercantilist: 3 key propositions
national power and wealth
First, the classical mercantilists argued that national power and wealth are tightly connected. National power in the international state system is derived in large part from wealth. Wealth, in turn, is required to accumulate power.
Second, the classical mercantilists argued that trade provided one way for countries to acquire wealth from abroad. Wealth could be acquired through trade, however, only if the country ran a positive balance of trade, that is, if the country sold more goods to foreigners than it purchased from foreigners.
Third, the classical mercantilists argued that some types of economic activity are more valuable than others. In particular, mercantilists argued that manufacturing activities should be promoted, whereas agriculture and other nonmanufacturing activities should be discouraged.
Mercantilism is rooted in seventeenth- and eighteenth-century theories about the relationship between economic activity and state power.
'modern' mercantilism: 3 propositions
Economic strength is a critical component of national power.
Trade is to be valued for exports, but governments should discourage imports whenever possible.
Some forms of economic activity are more valuable than others.
18th century, Britain
adam smith, david ricardo
argued the propositions/ hypothesis of mercantilism
countries gain from trade, not trade surplus or regardless positive or negative of balance of trade
producing manufactured goods does not necessarily make the countries rich. countries should produce the products that they can produce at relatively low cost.
some other liberal's hypothesis
based on Karl Marx's work that criticize capitalism
karl marx's view on capitalism
private ownership of capital (means of production)
TWO questions shape IPE scholarship
how does politics shape the decision that societies make about how to use the resources?
foreign economic policies of the government (trade policies, exchange rate policies) affect the society's decision to use its resources
what are the consequences of the above decision?
Is society better-off? does it maximize society's social welfare?
income distribution among the groups in the society and nations in the international system
research tradition with IPE
answer the question 'why'
explain the policy choices
evaluate the policy outcome
make a judgement about the policy impact; positive or negative
if the policy impact is negative, the researcher may offer alternative to the existing policy