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Balaam & Dillman Introduction to International Political Economy book summary will help you prepare for GPE exam.
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Introduction to International Political Economy - Balaam & Dillman ReadingsCh. 1
There are three interrelated global developments that merit discussion at the beginning of this
textbook because they are profoundly shaping the international political economy: the Arab
Spring, the European sovereign debt crisis, and the Occupy Wall Street (OWS) movement.
Taking place on three different continents since 2011, they have shaken political institutions and
spurred waves of political protest in response to a variety of social and economic ills.
→ Each development can either help lead to a more stable, prosperous world in which human
security is better guaranteed or render divisions within and between societies wider than before
so that cooperative relations and a fairer distribution of resources remain ever more elusive
goals
→ What do these three developments have in common? While each has its own causes, the
protestors collectively represent a reaction to corrupt government and growing inequality.
Movements sought protection from financial and cultural globalization that left people feeling at
the mercy of market forces
→ With it came a certain denaturalization of ruling ideologies, such as economic liberalism. A
new emphasis was placed on democratic participation and economic fairness. Despite this new
zeitgeist in the air in three continents, old political and economic institutions were still resilient.
The alternatives to the old did not always promise a better future, either.
What is international political economy?
- IPE includes a political dimension that accounts for the use of power by a variety of
actors, including individuals, domestic groups, states (acting as single units),
international organizations, nongovernmental organizations (NGOs), and transnational
corporations (TNCs)
- IPE involves an economic dimension that deals with how scarce resources are
distributed among individuals, groups, and nation-states
- The works of notables as Charles Lindbloma nd economists Robert Heilbroner and
Lester Thurow help us realize that IPE does not reflect enough the societal dimension of
different international problems → a variety of transnational groups (referred to as global
civil society) have interests that cut across national boundaries
Contrasting perspectives and methodologies
The three dominant perspectives of IPE are economic liberalism, mercantilism, and
structuralism
- Economic liberalism is most closely associated with the study of markets. → Orthodox
economic liberals (OELs) champion free markets and free trade → Heterodox
interventionist liberals (HILs) support more state regulation and trade protection to
sustain markets. Increasingly, HILs have stressed that markets work best when they are
embedded in (connected to) society and when the state intervenes to resolve problems
that markets alone cannot handle. Many HILs acknowledge that markets are the source
of many of these problems → many liberal values and ideas are the ideological
, foundation of the globalization campaign → the laissez-faire principle, that the state
should leave the economy alone, is attributed to Adam Smith → under pure market
conditions (i.e. the absence of state intervention or social influences), people are
assumed to behave “rationally”. That is, they will naturally seek to maximize their gains
and limit their losses when producing and selling things. They have strong desires to
exchange and to generate wealth by competing with others for sales in local and
international markets. According to OELs, people should strongly value economic
efficiency - the ability to use and distribute resources effectively and with little waste;
when an economy is inefficient, scarce resources go unused or could be used in other
ways that would be more beneficial to society. This idea has been applied to the new
global economy and is one of the basic principles behind globalization
- Mercantilism (also called economic nationalism) is most closely associated with the
political philosophy of realism, which focuses on state efforts to accumulate wealth and
power to protect society from physical harm or the influence of other states. Since the
mid-seventeenth century, the state has been the dominant actor in the international
community based on the principle that it has the authority to exercise sovereignty (final
authority) over its own affairs. → States use two types of power to protect themselves:
hard power refers to tangible military and economic assets employed to compel, coerce,
influence, fend off, or defeat enemies and competitors. Soft Power comprises selective
tools that reflect and project a country’s cultural values, beliefs, and ideals. Soft power
can in many ways be more effective than hard power because it rests on persuasion and
mutual exchange.
- Structuralism is rooted in Marxist analysis but not limited to it. It looks at IPE issues
mainly in terms of how different social classes are shaped by the dominant economic
structure. Structuralists emphasize that markets have never existed in a social vacuum.
IPE today represents an effort to return to the kind of analysis done by political theorists and
philosophers before the study of human social behaviour became fragmented into the discrete
fields of social science. → We can say that IPE blends together distinct perspectives to produce
a more holistic explanation
The four levels of analysis
In his book Man, the State, and War, Kenneth Waltz argues that explanations for causes of
international conflict are located in different stages of an analytical scale of increasing
complexity, ranging from individual behaviour and choices (individual level), to factors within
states (the state/societal level), to something stemming from the interconnection of states (the
interstate level). More recently, many have argued that there is also a fourth global level that can
be identified as causing specific problems. The characteristics of the different levels of analysis
are as follows:
- The Global Level: this is the broadest, most comprehensive level of analysis.
Explanations focus on how important global factors like changes in technology,
commodity prices, and climate create constraints on and opportunities for all
governments and societies. For example, as oil prices fluctuate dramatically, they forex
, countries to adapt in ways that can contribute to recession, conflict, and energy-source
innovations
- The Interstate Level: this level emphasizes how the relative balance of political, military,
and economic power between states affects the probability of war, prospects for
cooperation, and rules related to transnational corporations. The relative power of a
state determines the ways in which it will associate with or exercise leverage over its
allies and states with dissimilar interests. For example, as China grows stronger, it is
forcing some of its Asian neighbours like Japan, the Philippines, and Vietnam to forge
closer relations with the United States as a form of insurance against China’s potentially
aggressive behaviour
- The State/Societal level: paradoxically, because the focus narrows to factors within
states, explanations contain more casual factors. At this level, we emphasize how
lobbying by socio-economic groups, electoral pressures, and culture influence the
goreign policies of countries. In addition, we focus on how different types of governments
and decision-making processes within a state shape the way that it interacts with others.
For example, these factors help explain why democracies almost never go to war
against other democracies or why politicians will adopt high tariffs on imports to try to
help a domestic industry
- The individual Level: this is the narrowest level and yet it contains the biggest number
of factors that explain why individuals (usually state leaders) choose certain policies or
behave in particular ways. This level emphasizes the psychology, personality, and beliefs
that shape choices made by specific policy makers. For example, we might speculate
that German chancellor Angela Merkel is reluctant to bail out spendthrifty Greece and
Spain because of her deep-seated belief that countries - just like households - should
live within their means. She is nicknamed the “Swabian housewife” because she
supposedly behaves like a stereotypical wife in southern Germany, who is frugal, not
ostentatious, and keeps a balanced budget. Or, Merkel may not want to expand the euro
money supply to help Greece because of her fears that it could cause the kind of
crippling hyperinflation Germany experiences after WWI.
The four levels of analysis help organize our thoughts about the different causes of,
explanations for, and solutions to a particular problem. Each level pinpoints a distinct but limited
explanation for why something occurred. One of the paradoxes of the level of analysis
problem is that to get a bigger and more complex picture of a problem, one is tempted to look
at all the levels for possible answers. Mixing the levels of analysis usually produces no single
satisfactory answer to a problem. The level of analysis problem teaches us to be very
conscientious about how we frame questions, what data we look at, and what we expect to find.
, Susan Strange’s Four IPE Structures
Susan Strange’s four structures: production and trade; money and finance; security; knowledge
and technology
- The Production and Trade Structure. The issue of who produces what, for whom, and
on what terms lies at the heart of the inter- national political economy. Making things and
then selling them in world markets [a global-level process] earns countries and their
indus- tries huge sums of money, which ultimately can quite easily shift the global
distribution of wealth and power. As we will see in Chapter 6, in recent decades there
have been dramatic changes in international trade rules [an interstate level factor] that
have shifted the manufac- ture of consumer goods such as electronics, household
appliances, and clothing away from the United States and Western Europe. Many cor-
porations that make these items have moved to newly emerging econo- mies such as
South Korea, Mexico, Brazil, China, Turkey, Poland, and Vietnam. Since the 1990s,
governments of these emerging economies have sought to attract foreign investors to
promote the production of a range of goods for export. At the same time, many unions
and manufacturers in Western countries have lobbied their government for protectionist
barriers against cheap imports from China in order to preserve jobs and profits [a
state/societal level factor]. As emerg- ing economies have earned more income but also
had to deal with the effects of the current financial crisis, some have been reluctant to
agree to new free-market trade policies in negotiations among members of the World
Trade Organization (WTO) because of pressure from vested interest groups [a
state/societal level factor].
- The Finance and Monetary Structure. With perhaps the most abstract set of linkages
between nations, this structure determines who has access to money and on what
terms, and thus how certain resources are distributed between nations. In this respect,
money is often viewed as a means, not an end in itself. Money generates an obligation
between people or states. In- ternational money flows [a global level factor] pay for trade
and serve as the means of financial investment in a factory or a farm in another coun-
try. Financial bargains also reflect rules and obligations, as money moves from one
nation to another in the form of loans that must be repaid.
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