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IR Notes Lecture 15

IR Notes Lecture 15 - IR Notes Lecture The International...

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IR Notes Lecture 15—March 13, 2007 The International Economic System I. What is International Political Economy (IPE) a) It’s about the interplay of politics and economics in international affairs b) The core question is the relationship between government and the international economy, and more specifically the relationship b/w states and markets i) This relationship often in tension: state governments want to maintain national sovereignty (1) Market is about economic pursuit of wealth which depends on economic openness, challenging state sovereignty by knocking down state barriers ii) Also sometimes symbiotic: state create rules that allow economies to function efficiently (1) Also join international organization to promote openness c) This is not just about state and markets though, it’s also about interation b/w i) interaction b/w states and multinational corporations ii) Investment in the global economy iii) All of which are shaped by rules, laws, norm that are shaped by different actors d) Broken up into 2 categories usually: International Trade and International Finance II. International Trade a) Trade: movement of good and service b/w countries b) Alternative Theoretical Approaches to understanding trade i) Liberalism (1) A free market approach in which voluntary market exchange is seen as efficient and morally desirable (2) Free trade and movement of capital ensures that money flows to where it’s most profitable to invest (3) Protectionist policies are anathema to this approach (4) There are shared interests among states in int’l relations (5) technological progress expands the pie out there (6) long term growth concerns overcome short term concerns about trying to take advantage about another country (7) countries that don’t pursue good economic policies do so because decision makers are either corrupt or ignorant of advantages (8) this approach is based on fundamental liberal concepts in study of econ (a) Invisible hand: individual pursuit of self-interest leads to greater wealth (i) Supply and demand lead to efficient outcome through pricing (ii) Works best with minimal intervention by government except for creating vital infrastructure for the economy (b) Comparative advantage: free trade allows counties to benefit from CA (i) Some states more efficient at producing some things (ii) If every county specialized and then traded, leads to efficient global economy where everyone benefits
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(9) Criticism: However, not all states benefit from CA and not all comparative advantages are very lucrative (a)
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IR Notes Lecture 15 - IR Notes Lecture The International...

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