What is IPE? IPE= 3 Areas 1. International Monetary System 2. International Trade System 3. International Investment & Finance

About the IMS Currency exchange Int’l Monetary Fund (IMF)IMF Stability GDP  measures of monetary wealth ¤

CountryGDP (IMF 2013) GDP per capita (IMF 2013) United States (1) $16.8 T$53,101 China (2) $9.18 T$9,844 Japan (3) $4.9 T$36,899 Germany (4) $3.64 T$40,007 France (5) $2.74 T$35,784 India (10) $1.87 T$4,077 EU$17.37 T$34,280

China’s Income Distribution

IMS: Interdependent Connected Income from exports Currency value Interest rates Currency exchanges $5.3 T exchanged ~$1.45 T/ per day 60% of global capital through 4 cities ¤

#1 London #2 NYC #4 Paris #3 Tokyo

IMS: GN Domination Colonization Post WWII US Goals Avoid repeating Post WWI errors GN currencies buy more Purchasing Power Parity (PPP) Way to compare cost Same goods in different countries Big Mac index Big Mac (ave. cost) Could BuyAbroad U.S.$4.2012,310 Big Macs 312,916 Big Macs in India India$1.622,372 Big Macs 891 Big Macs in U.S.

About the ITS Exchange of goods & services 2 types of trade 1. Merchandise trade Primary goods Raw foods, fuels, fibers, minerals, water Manufactured goods Processed 2. Service trade ¤

ITS: Interdependent Global trade flows Who relies on what exports Outsourcing 3 rd party Offshoring Abroad Reshoring Returning ¤ Goods & Services $20 Billion = $55,000/ day 2013$18.3 Trillion = $50 B/day

ITS: How States Trade Bilateral China- Japan, Canada- UK, US- EU US- EU trade deal-- How does this deal affect you?trade deal Cheaper shoes Cheaper drugs EU cars cheaper, more available Dairy availability Standardize products Headlights issue Gas exports to EU ¤

ITS: How States Trade What’s up with cheesemakers? Proprietary names When is ‘feta’ really ‘feta’? EU demanding protection 145 food names Often city, region origin How does/ could this proprietary issue affect trade? Could stop trade agreements EU- US TTIP pact Viewed as trade barrier Unless trademarked (ex.: Parmigiano Reggiano) ¤

ITS: How States Trade Multilateral Free trade agreements (FTAs) NAFTA, APEC, proposed TPP Fight protectionism Challenges WTO Dispute mechanism Ruled on almost 450 cases Recent rulings US wrongly imposed tariffs on steel from India, China US wins complaint against Chinese tariffs on US cars ¤ Jeep Billboard in Shanghai

ITS: GN Advantage Colonization GS  Primary goods Cash crops Uneven trade Rising role of EEs Bigger economy = more leverage ¤

About II & IF Int’l Finance Countries’ ‘checking accounts’ Debits Credits

About II & IF Int’l investment Funds invested abroad 2 ways: 1) Foreign Direct Investment (FDI) MNCs Control assets  $$$ 2) Foreign Portfolio Investment (FPI) Stocks, bonds, etc. Earn dividends ¤

II & IF: Interdependent FDI, FPI  WWII U.S.  MNCs invest abroad after war Most FDI  China, US EEs, EU Investment not evenly distributed ¤

II & IF: GN Domination Post-WWII US hegemony Top 500 MNCs  80% GN80% GN Gross Corporate Product (GCP) ¤ RankCountry# of top 500 MNCs 1US132 2China73 3Japan68 4 (tie) France32 4 (tie) Germany32

Rank Company 1Royal Dutch Shell 2Exxon Mobil 3Wal-Mart 4BP 5Sinopec Group 6 China Nat’ l Petroleum 7State Grid 8Chevron 9ConocoPhillips 10Toyota Motor II & IF: GN Domination MNCs’ power Shell GCP of $484.5 B in 2013 = 25 th state GDP

Economic Sanctions What are they? Why are they used? Effectiveness Some examples U.S.  Cuba M23 U.K.  Rwanda for M23 support Global, unilateral  Iran Nuclear weapons program ¤

Iranian Sanctions ‘Iranians Feel Sanctions Bite’ What impact have sanctions had on Iran? Cut business ties High unemployment Fewer w/ steady income Increased prices Shortages Can’t transfer $ Volatile prices Rial value decreased Trade $, buy gold Oil exports affected

Russian Sanctions ‘Iranians Feel Sanctions Bite’ What impact have sanctions had on Iran? Cut business ties High unemployment Fewer w/ steady income Increased prices Shortages Can’t transfer $ Volatile prices Rial value decreased Trade $, buy gold Oil exports affected

# 1 What IPE IS IPE: 3 Sectors 1. International Monetary System Currency exchange 2. International Trade System Exchange of goods & services 2 types of trade 3. International Investment Foreign Direct Investment (FDI) Foreign Portfolio Investment (FPI)