1. International political economy in an age of globalization
Choi moon joung(IR)
Oct

2. Introduction
The post-war world-economy
The rise of IPE in the study of international relations
Traditional approaches to IPE
New approaches to IPE
The globalization debate in IPE
International institutions in the globalizing world-economy
Conclusion

3. Introduction International political economy(IPE)
Interplay of economics and politics in world affairs
Core questions: what drives and explains events in the world-economy?
World markets and countries, local firms, and multinational corporations which trade and invest within them are all shaped by layers of rules, norms, laws, organizations and even habits.
Political scientists call it ‘institutions’
IPE explains what creates and perpetuates institutions and what impact institutions have on the world economy

4. The post-war world-economy
Bretton Woods system in 1944
Two aims
no more Great Depression of the 1930s
reconstruction of the war-torn economies of Europe
Three institutions planned
International Monetary Fund(IMF)
International Bank for Reconstruction and Development(IBRD later called the World Bank)
General Agreement on Tariffs and Trad(GATT) - trade liberalization

5. 1947 US announced Marshall Plan
gold standard was replaced by the dollar standard
IMF, World Bank and GATT began to function in the 1950s: Western-bloc organization which heavily depend on the US

6. Weakness in the US economy
US support change for the Bretton Woods system
why?
Weakness in the US economy
costly military involvement in Vietnam
more money on public education and urban redevelopment programmes without raising taxes
prices rose-> competitiveness dropped-> confidence in the US dollar plummeted
European allies benefited from economic integration
Asia: success of export-led growth in Japan and in newly industrializing economies such as South Korea and Taiwan

7. in 1971
US changed the rules of the international monetary system
no longer convert dollars to gold at $35 per ounce
impose a 10 per cent surcharge on import duties
the Breakdown of Bretton Woods system
In 1773
the end of high growth and the first oil crisis -> stagflation(low growth and high inflation)
IMF role collapsed -> Group of Seven(US, UK, Japan, Germany, France, Italy and Canada) in 1975

8. The post-war Trading system
cooperation had steadily grown under GATT
In 1970s,however, marked by lack of international economic cooperation among the industrialized countries with new protectionism
new protectionism fuelled the anger of developing countries
launched a campaign in the UN General Assembly for New International Economic Order(NIEO)

9. The 1980s a shift in US economic policy
in 1979 US Federal Reserve raised interest rates to stem inflation
Both borrowers and creditors realized that many of the loans could not be repaid
Debt crisis
IMF’s role in the world-economy became ensuring that indebted countries undertook structural adjustment in their economies

10. By the end of the cold war, the three institutions still existed but with different roles
World Bank-development agency making loans to developing countries
GATT- failed to stem new protectionism and to meet aspirations of developing countries, but created a new World Trade Organization(WTO)
IMF- lost its original role after breakdown of Bretton Woods system but gained a new role with the debt crisis of the 1980s: offering financial and technical assistance to developing and transition economies

11. The rise of IPE in the study of international relations
Until the 1970s, IPE was a neglected subject
By the early 1970s, IR began to change: pay more attention to economic affairs
why?
decline in US economic preponderance
challenge to traditional notions of power and security posed by the US failure in Vietnam
economic challenges in the 1970s
the OPEC oil price rise
developing countries push for a NIEO
the end of cold war and globalization

12. Traditional approaches to IPE
The Liberal Tradition
The world-economy has the potential to be a seamless global market place in which free trade and the free movement of capital shape the policies of governments and economic actors.
Order would be achieved by the ‘invisible hands’ of competition in the global market place

13. The Mercantilist tradition
The world-economy is an arena of competition among states seeking to maximize their wealth and independence
Most powerful states define the rules and limits of the system
Order is achieved only where there is a balance of power or hegemony

14. The Marxist tradition
The world-economy is an arena of capitalist competition, not among states but a class struggle between the ‘oppressor and the oppressed’(capitalists and workers)
Capitalism is the driving force in the world-economy
Order is achieved only where they succeed in exacting the submission of all others
The three traditional perspectives usefully highlight different actors, different processes, and different levels of analysis in the study of IPE

15. New approaches to IPE What is ‘rational choice’ or neo-utilitarianism?
focus on the incentive structure faced by those making decision
assumption-actors’ interests and preferences are known or fixed and actors can make strategic choices as to how best to promote their interests
means that for the actor or group concerned, this was the optimal choice given the specific incentives and institutional constraints and opportunities that existed at the time
Two different applications of rational choice: political economy and institutionalism

16. Political economy: the application of rational choice to groups within the state
world-economy- characterized by competition among vested interests within different kinds of states
core actors- interest groups formed within the domestic economies of the states
key driving force- rational choice at the level of groups within the domestic economy responding to changes in the international economy
order- not concerned with theorizing about the conditions necessary for international order

17. Institutionalism: the application of rational choice to states
world-economy- see an arena of inter-state cooperation
core actor-governments and the institutions to which they delegate power
key driving forces- rational choice at the level of the state motivated by the potential gains from cooperation
order- existence of international institutions which permit cooperation to continue

18. Social Constructivism
assumption- policies within the world-economy are affected by historical and sociological factors
The neo-Gramscian approach: a radical variant
World-economy- overarching structure of knowledge, ideas, and institutions which reflects the interests of dominant actors and within which competition takes place
Key driving force- capitalist competition which is constrained by the need of the powerful to gain the consent of the less powerful.
Order- dominance by one state is insufficient condition. Hegemony requires control over the structures of knowledge and ideas as well

19. The globalization debate in IPE
Four aspects of Globalization
Internationalization
increase in economic transactions across borders
The technological revolution
effect of new electronic communication permits firms and other actors to operate globally with much less regard for location, distance, and borders
Deterritorialization
diminution of influence of territorial places, distances and boundaries over the way people collectively identify themselves or seek political recognition
not only expansion of global civil society but also terrorist networks
Liberalization
government policies reduce the role of the state in the economy

20. Is globalization diminishing the role of the sate in the world economy?
The globalists
governments and states are losing their capacity to control economic interactions
why? quantity and rapidity of flows make it more difficult for governments to regulate trade, investment or capital
The sceptics
the role of states is not eroding; still have a very important and substantial
why? in the new knowledge-intensive economy, factors such as market proximity, good infrastructure and availability of skilled labour are crucial

21. The impact of globalization on different kinds of states
The Asian financial crisis in 1997 highlights that states have different capacities to respond to globalization
strong states
shape the rules and institutions which have made a global economy possible- ruler makers
control the nature and speed of their integration into the world-economy
weak states
little or no influence in the creation and enforcement of rules in the system- ruler takers
exercised little control over their own integration into the world-economy
common to all states
search for greater stability and predictablilty

22. International institutions in the globalizing world-economy
Institutionalist or neo-liberal institutionalist
conditions
for mutual gains
impact of institutions on IR
expand the possible gains to be made from cooperation
implications for globalization
institutions can manage globalization to ensure a transition to a more ‘liberal’ economy
institutionalists argue that international institutions will play an important and positive role in ensuring that globalization results in widely spread benefits in the world-economy

23. Realist(or ‘neo-realist’)
conditions
only where relative position vis-a-vis other states is not adversely affected
impact on IR
facilitate the coordination of policies and actions but only in so far as this does not alter the balance of power among states
implications for globalizaiton
institutions will ‘manage’ globalization in the interests of dominant and powerful states
Realists reject the institutionalist argument on the grounds that it does not account for the unwillingness of states ever to sacrifice power relative to other states

24. Constructivist conditions impact on IR implications for globalization
institutions arise as a reflection of the identities and interests of states and groups which are themselves forged through interaction
impact on IR
reinforce particular patterns of interaction, and reflect new ones
implications for globalization
changing pattern of interaction and discourse will be reflected in institutional responses to globalization
Constructivists pay more attention to how governments, states and other actors construct their preferences, highlighting the role that state identities, dominant beliefs and ongoing debates and contestation play in this process

25. Conclusion
Globalization increases the challenges faced by all actors in the world-economy; increase global interdependence, interconnectedness and capacity of some states to influence others.
Thus it requires more concerted global response with international institutions playing more vital role in IR
Given the Asian financial crisis, it is true that more effective and strong international institutions are needed.
However, the crisis also revealed the problems and flaws of existing international institutions and the bias of interests which they reflect.
Therefore, we also need an effort to strike an balance of voice between strong states and weak states in the world-economy policy choice

26. Thank you
Choi Moon Joung(IR)