Chapter-1
Chapter 1:
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What is International Political Economy?
- International political economy (IPE) studies how politics shape developments in the global economy and how the global economy shapes politics. IPE studies how the enduring political battle between the winners and losers from global economic exchange shapes the evolution of the global economy.
- IPE = Politics + Economy + International
- How international politics shape domestic economy.
- How international economy shape domestics politics.
- How international politics shape international economy and vice versa.
- The political battle between the winners and the losers of global economic exchange.
- How the political battle between the winners and losers of global economic exchange shapes economics politics the government adopt.
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Why and how is IPE important for IR/IS students?
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four issue areas in IPE
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The international trade system
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WTO-centered trade system and challenges: the WTO play an important role in the economy since they create agreement to benefit each other with equal terms. However, there is still some agreement such as NAFTA that consist a small group of countries who offer each other preferential (优先权) access to their market.
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The international monetary system
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function: exchange rate, converted one country money to another, economy exchange flourishes
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Challenges: If it is not working well, the global economy can slow and even collapse.
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Multinational Corporations or MNCs
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Function: is a firms that controls production facilitates in at least two countries.
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Challenges: there are more than 82,000 MNCs operating in the contemporary global economy. 810,000 production plants and employ about 77 million people across the global. Therefore, the power and politics of MNCs could influence the politics because they extend managerial control across national border.
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Economic development
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Different development strategies adopted by different government
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Different levels of economic between East Asian countries and developing countries in Latin America, Africa
For example: some developing countries they have successfully adopted the strategies that would develop their countries to industrialize such as (Taiwan, South Korea, Singapore and Hong Kong). However, some countries are not.
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How does politics shape society decisions about how to allocate available resources?
The decision making process have two very different consequences
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Welfare consequences: determines the level of social well-being, maximize the social welfare, make the society well-off as possible.
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Distributional consequences: they influence how income is distributional groups within the countries and between nations in international system.
Traditional School are —the mercantilist school, the liberal school, and the Marxist school.
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Mercantilist school say that politics and economy is really related. They are trying to purchase national power and trade means the increase in positive trade would also made the government more power for state as well. Therefore, they need to priority on High technical industrial over the manufacturing and agriculture.
- Role of state: determine the economic act
- Image of the dynamic of IPE means how the mercantilism see the global, the state try to increase the export and limited the import.
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Liberal school argued that the purpose of economic activity was to enrich individuals, not to enhance the state’s power. Second, liberalism argued that countries do not enrich themselves by running trade surpluses. Instead, countries gain from trade regardless of whether the balance of trade is positive or negative. Finally, countries are not necessarily made wealthier by producing manufactured goods rather than primary commodities.
Everyone get better and gain more choice in consumer product. (Positive impact)
- Image of dynamic: no matters the import or exports as long as lead to the better living of people.
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Marxist school say capitalism is characterized by two central conditions: the private ownership of the means of production (or capital) and wage labor. Marx argued that the value of manufactured goods was determined by the amount of labor used to produce them. However, capitalists did not pay labor the full amount of the value they imparted to the goods they produced. Instead, the capitalists who owned the factories paid workers only a subsistence wage and retained the rest as profits with which to finance additional investment. Marx predicted that the dynamics of capitalism would lead eventually to a revolution that would do away with private property and with the capitalist system that private property supported. The bourgeoisies exploitation of the proletariats. They giving the proletariats only 50% of their profit. So, the bourgeoisies keep expand their produce ability. (negative impact)
- Role of state: agents of capitalist (help the capitalist) បរិវារបស់ពួកមូលធន
Interest and Institutions
There are 2 types of interest:
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Material interest: to know our position in any situation.
Example: If we are the farmer and the government have the policy to free trade. However, it would effecting us.
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Ideas: mind set of belief about cause and effect relationship (apply the best theory that could describe the situation) ___ economy theory
Example: the mind set or belief of pol pot is self-reliant which they belief that the only way for development of state is grow rice so they have all doctor and lawyer to doing farms.
There are two types of institution:
- democracy
- Authoritarianism
Key Term
- Comparative advantage: the ability to produce goods with low-cost than others.
- Bourgeoisies: the rich, the capitalist, the owner of company.
- Ideal socialism: the ideas of the equality for everyone.
- Capitalism: the doctor, the lawyer and teacher gain more income than the cleaner because they contribute more to the society. It is not about the time of work.
- Market failures: which are instances in which voluntary market-based transactions between individuals fail to allocate resources to socially desirable activities.
- Explanatory studies: are oriented toward explaining the foreign economic policy choices that government make.
- Evaluation studies: are oriented toward assessing policy outcomes, making judgements, and proposing alternative about negative one.
- Interest: are the goals and policy objectives that individuals, firms, labor unions, and interest group want to achieve.
- Material Interest: give the benefits to one another. In simple term, tell me what you do for work, and I will tell you what your foreign economic policy preference are.
- Ideas: are mental models that provide a coherent set of belief about cause and effect relationship.
- Political institutions: establish the rules governing the political process.