Chapter 8: International Political economy

The evolution of the international economy

How the globalized economy works today

Economic challenges in the 21st century

definitions or video notes

video notes

defintinos

Economic institutions

Ideas and institutions

The role of multinaitona corporations

The role of economic institutions BRETTON WOODS INSITUTIONS

The so-called Bretton Woods institutions—the World Bank, the International Monetary Fund (IMF), and, to a lesser extent, the General Agreement on Tariffs and Trade (GATT), now the World Trade Organization (WTO)—have all played, and continue to play, key roles in the expansion of economic liberalism

Economics Liberalism: the ideas base don Adam Smith that when individuals puree their own self-interest, efficency for everyone is achived;markets function best when goverments interfere the least.

Mercantilism: economic theory that international commerce should increase ta states wealth, especially gold;stat epower is enhanced by a favorable balance of trade.

The goal of this goverment was to buiild economic weath as a instrument of state power.

Protectionism: state policies imposing barriers to restrict imports from a variety of state.

economic nationalism: reflects a modern version of these care mercantilist ideas. they view the IR sysytem as a cometion of power between states. States should rely on interventtionlism rather they relying on the market mechanism in order to strengthen economy.

Views of human nature: individual act in rationa ways to max self interest

Relationship among indidicuals society and state market : When individuals act rationally, markets are created to produce, distribute, and consume goods; markets function best when free of government interference

Relationship between domestic and international society : International wealth is maximized with free exchange of goods and services; on the basis of comparative advantage, international economy gains

Economic radicalism:beliefs drawn from Marxist and neo-Marxist writing that poor labor conditions, colonial expansion, and divisions between the rich and poor are blamed on international capitalism

Human nature: humans are aggressive conflictual tendencies

relationship among individuals society and states: Goal is to increase state power, achieve by regulating economic life; economics is subordinate to state interest

Relationship between domestic and interntaionl scoiety: Internatinal economy is conflictural; insecurity of anarchy breeds competition; state defends itself.

Views of human nature: naturally cooperative as individuals conflictual in groups

Relationships among individual society and state market: competition occurs among groups, particularly between owners of wealth and laborer's; group relations re conflictual and exploitative.

Relationship between domerstic and international society: conflictual realtionshps because of inherent expansion of capitalism; seeks radical change in international economic system

The role of the state:

macroeconomic polocies: gov. polocies designed to address macroeconomic condictions inclusing fiscal and monetary

fiscal policies: polocies affecting a goverment budgett, manely level of gov. spending and taxt rate

Ststaes exercise key roles in influencing domestic and itnernatinal economic polity and they have two major macroeconomic polocies: fiscal and monetary policies.

Monetary policies: polocies affectting natioanal interest rates or exchange rates designed to affect employement and inflation rates

Microeconomic poliocies: gov. polocies adopted to affect regulations subsides competitiveness and antitrust actyions

That rate facilitates the exchange of goods and services and has an immediate impact on the price of a country’s goods and assets. Under floating exchange rates, the market—individuals and governments buying and selling currencies

tariffs—the taxes on goods and services crossing borders. nontariff barriers—the restrictions on international trade designed to protect health, safety, or national security.

Current accounts: measure the net border flow between countried of goods sercvices and goverment transfers and income on capital investments.

Capital account: measures the flows of capital between couunntries including foreign direct investments and portfiolio investment sin and out

Current and capiutal are two measures that compose of balance of payments- a countries current and capiutal accout balance

Just 10% of MNC generate 80% of all global profits

MNCs take many different forms and engage in many different activities, such as investing in foreign countries, importing and exporting goods and services, negotiating licenses in foreign markets, and opening facilities abroad.

Multinational corporations play a key role as engines of economic growth, providing international finance and items to trade.

libs: good it helps economic growth real: state instruments whos pwoer needs to be harnessed into natironal interest: radicals: MNC controlled by dominant state and their interest.

The world bank IMF and GATT sysytem led to postwar recover and economic prosperity.

Poverty rates fell dramatically and trade volume increased

the WORLD BANK was intitially designed to faciliate reconstruction in post world war 2.. during the 50s they shifted emphasis from development and now generate capital funds from member state contributions and derom bnorring in itnernational finaincial markets.

ITs purpose is to loan these funds with interest for economic develiopment projects. By jumpstating development its lending its designed to not to replace private capital but to stimulatre additional investments by private capital.

IMF orgininal p8urpose was top guarantee exchange rates stability todays it purpose is to act as a lender or last report to keep debtor countries from collapising.

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internatioanl trade organization

World trade organiziton: replace GATT as a forum for negotiating new trade agreements includes stronger dispute settlement procedures.

Genereal agreement of tariffs and trade 9 GATTT) : series of multilateral trade negotioations designed to stimulatree trafe by lowering trade barriers.

Internatioanl finaince coporations: provides loans to promotie growth in developing countries

international development association( ida) provides interest free loans to the poorest countries

Multilateral investment gguarentee agency: ecourages the flow ofprivate equity capital to developing countrie

BRIC: informal group of emerginv economic powers including brazil, russia, india, china and south africa

Group of 7: group of traditional economic powers: Us great brittin france japan ggermany italy and canada who meet annually to address economic problems

World trade organiziton: WTO intergovernmental organization designed to support the principles of liberal free trade; includes enforcement measures and dispute settlement mechanisms; established in 1995 to replace the General Agreement on Tariffs and Trade
Endnotes

Most favored MFN princibles: principle in international trade agreements when one state promises to give another state the same treatment in trade as the first state gives to its most-favored trading partner

Internatioanl finances

Internatianol Monetary policy

international trade

internatinal ttrade negotiations

The regionalizations of trade and beyond

Economic intergration in the Eu

North american trade agreements: cnanada the US and mexico

Mercosur and the pacific alliance

Transregional economic arrangment s

The debate over bilateral regional and transregional trade agreeemnts

Internatioanl development

Strategies to achieve economic development

Is development being achived?

Foreign direct investments( fdi)= construction of factories and investment sin the facilities for extraction of naturla resources.

Portfolio investment investments in another country stocks or boinds either short or long term wihtout taking direct control of those investments.

Soverign wealth funds: state controlled investments companies that manage large foreign exchange reserves in capital surplus countries like china or in petroleum exporting contries like the gult states saudi

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