Transcript International Political Economy in an age of Globalization

International Political Economy
in an age of
Globalization
▶ The Post-War World Economy
▶ Traditional approaches to IPE
▶ New approaches to IPE
137002 Park In Hong
After the WW2,
International conference was held in 1944 in
Bretton Woods
Leaders wanted to build “New Economic System”
Never to repeat “The Great Depression”
For Europe’s Economic Recovery
The way was …
▶ Reducing trade barriers
▶ Establish a stable financial system
◆ The International Monetary Fund(IMF) ◆
IMF was a central institution managing Monetary Order.
▶ Managing stable exchange rates
▶ Function of loan, managing balance of payments
▶ Monitoring international capital flow
◆ The International Monetary Fund(IMF) ◆
But when the function of Loan was applied to
Developing Countries, the Condition was so strict.
The IMF wanted countries used its money to make
a Structural Adjustment.
▶ Currency devaluation
▶ Deregulation of interest rates
and of foreign exchange transactions
▶ Slower expansion of domestic credit creation
▶ Measures to manage and reduce
external indebtedness
◆ The International Monetary Fund(IMF) ◆
… Changes In US Politics to the IMF
▶ In 1971,
No longer convert dollars to gold at ＄ 35 per ounce,
and imposing a 10% surcharge on import duties
▶ In 1979,
the US Federal Reserve raised interest rates.
The rise in interest rates made many of these loans
unrepayable.
◆ The International Monetary Fund(IMF) ◆
Hard to repay until in deadlines
for Developing Countries
it caused Deficit
Deficit caused financial problem of IMF
Critical insists ware come out
from countries which experienced the IMF system
that it benefits to developed countries.
Role and maintaining possibilities of IMF became vague
in nowadays compared to the past.
◆ General Agreement on Tariffs and Trade (GATT) ◆
The necessity of GATT was discussed in Bretton Woods,
Came into Effect in 1948.
it operated until 1994 when it was superseded by the WTO.
The roles and system of GATT inherited to WTO.
On a way of Liberalism, GATT reduced tariffs realistically
through several “Rounds”
▶ Kennedy Round(1964-1967) average percentage of reduction : 35%
▶ Tokyo Round(1973-1979) average percentage of reduction : 33%
▶ Uruguay Round dealing with Service as a objective of trade
fully reached an agreement in 1994 through 7years negotiations
and system of GATT was ended
◆ World Trade Organization(WTO) ◆
▶ As a result of Uruguay Round, WTO was started in 1995.
▶ GATT concentrated on trade of “Goods”
while WTO started to deal with invisible intellectual services.
※ Trade-Related Intellectual Property Rights(TRIPS)
: Property rights of
… ideas, knowledge, technology, music,
movies, Software, pharmaceutics …
◆ World Bank ◆
▶ As One of the UN agency,
established in 1944, started works in 1946
▶ World Bank is also criticized the bank have been
speaking for developed countries.
▶ The policies practiced in 1980s and 1990 to the Africa
caused many disputes. Irrational privatization and
market-forces to Area which has Nothing resulted in
failure.
▶ With the 2007 report,
the bank announced its intention to return to
a focus on agriculture in developing nations,
especially in Africa.
▶ As a role about discussing further flow of international economy,
and giving opportunities to developing countries
by providing economic information or loan service,
The existence of World bank can be considered possitive.
◆ Collaps of Bretton Woods system ◆
▶Absence of Par value in Bretton Woods system.
(In 1971, No longer convert dollars to gold at ＄35 per ounce,
and imposing a 10% surcharge on import duties
This policy disabled dollar system from staying at fixed value.)
▶ Recovery of Western Europe countries.
(Western countries full recovered and didn’t need to
be subordinated in that system.)
▶ Rise of Protectionism
(Policies in protectionism arose even in the developed countries
in the 1970 restricting competitive imports from developing
countries to keep domestic market.)
◆ New actors and “Power Shift” ◆
▶ European allies were benefiting from the growing and
deepening economic integration in Europe
(Case of European Union)
▶ Industrialize countries began to discuss monetary issues
among themselves in groups such as G7.
▶ G20 is consists of US, western countries, and developing countries.
Total Sum of these countries’ GDP reach to 85% of the whole world.
So Politics made in this Group are significant in global world.
China is arising as new influential countries
leading the economic flow as a donor.
▶ In Asia, the phenomenal success of export-led growth
in Japan and in newly industrializing countries
such as South Korea, and Taiwan
created a new challenge to US trade competitiveness, and
new agenda for trade negotiation.
◆ Traditional Approaches to IPE ◆
1. Liberal Tradition
▶ Emphasize the positive effect of Free Market
▶ Economy is facilitated and being developed by free trade.
▶ There are Goods in market which is valuable and worthy
to put investment or to trade.
▶ The role of Government is limited as
allowing or permitting the free market and
not making any restriction to the market or
not intervening to the market
▶ Value or salability of Goods is well estimated
by businessman who is expert in economic flow,
not by politicians.
◆ Traditional Approaches to IPE ◆
2. The mercantilist tradition
▶ The important unit is “STATE”
▶ Leaders of global economy are ‘states’
rather than influential politicians or CEOs
▶ To survive in the global age which is more like “Jungle”,
States want to maximize
its strength, power, wealth, and independence.
▶ Protectionism is easily understandable in this theory .
◆ Traditional Approaches to IPE ◆
3. The Marxian tradition
▶ Class is divided to oppressor or oppressed
whether individuals have means of product or not.
▶ Whether countries have means of product or not,
A lot of Power would be allocated
to The core(Industrialized countries)
and few power for the periphery(Developing countries)
◆ New Approaches to IPE ◆
※ Rational Choice (=neo-utilitarian)
The Choice made by someone, a group, or a state
is not perfect one.
But it is at least optimal choice
in a certain situation or in a certain limitation.
◆ New Approaches to IPE ◆
1. Political Economy
(the application of rational choice to groups within the state)
▶ Interest groups can make a rational choice for their profits.
▶ The policies and preferences of governments
reflect the actions of specific interest groups in the economy
▶ In this theory, Coalitions of groups
which is independent to each other is understandable.
◆ New Approaches to IPE ◆
2. Institutionalism
(the application of rational choice to States)
▶ For states,
to survive in globalization, to adapt to globalization
and to get benefits from globalization
Institution is needed as a conference of countries
as a intervenient of countries.
So states delegate some power to Institution
To deal with their international agendas.
▶ When we see the Global institutions
like IMF, WTO, UN, Group of 77 …
They seem to be experts in analyzing the global flow,
provide some important informations to countries.
▶ Institutionalists say that
If Institutions want to be influential in global stage,
One of the way is
to foster the negotiations or cooperations among the countries.
◆ New Approaches to IPE ◆
3. Social Constructivism
▶ Policies are affected by historical and sociological factors.
That is 0pposite way with “Rational choice”
▶ Belief, roles, traditions, ideologies, and patterns of influence
that shape preferences, behavior and outcomes.
▶ Have to check “Hegemony”
which can influence their insists to others without enforcement.
▶For constructivists,
Interests of States are not defined simply,
Interest is fluid concept which is influenced by “ Identity”
▶ Identity is influenced by a social structure of interactions,
normative ideas, and beliefs in a certain society.
▶ Institution is easy to reflect the powerful states,
but stage of institution is opened, and result can’t be fixed.
So still there’s possibility for other outcomes.
Because ‘Interests’ are products
made by societies, interactions of states, changes of globalization .
◆ New Approaches to IPE ◆
4. Social Constructivism
▶ Policies are affected by historical and sociological factors.
That is 0pposite way with “Rational choice”
▶ Belief, roles, traditions, ideologies, and patterns of influence
that shape preferences, behavior and outcomes.
▶ Have to check “Hegemony”
which can influence their insists to others without enforcement.
▶For constructivists,
Interests of States are not defined simply,
Interest is fluid concept which is influenced by “ Identity”
▶ Identity is influenced by a social structure of interactions,
normative ideas, and beliefs in a certain society.
▶ Institution is easy to reflect the powerful states,
but stage of institution is opened, and result can’t be fixed.
So still there’s possibility for other outcomes.
Because ‘Interests’ are products
made by societies, interactions of states, changes of globalization .
◆ New Approaches to IPE ◆
4. Role of Institution for Realists
▶ Policy of Institution is mainly affected by Powerful States.
▶Even though Institution has been established for neutral benefit,
It is changed to reflect the interests of Powerful States.
▶ Furthermore, If a certain State has enough power
not to be interfered by institutions
How can States feel necessity of Institutions?
States don’t want to be restricted by Institutions
and be easy to neglect the politics of Institution.
▶ So If Institutions want to make their voice in the global world,
They have to reflect the interest of Powerful States in their policy.
▶ Insists, opinions, or policies raised by weak countries
would be accepted and managed
in condition that they don’t infringe the interests of powerful countries
◆ Debates ◆
1. For realists,
Institution is passive organization influenced by Powerful Countries
and have to reflect their benefits.
2. For Constructivist,
Institution is passive. But
Interest, Agendas, are Issues have fluid characters in them,
and they are influenced by various situation.
So result is not fixed.
3. For Institutionalists,
Institutions can operate and aggressively manage the world issues.
They can be neutral organization which can deal with interests of countries
and lead the interests to negotiations.
… So what do you think about “Institutions”?
Institutions are passive or active in global stage.
And how are they operating in nowadays?