1. The International Economy: A Global Road Map
Chapter 11
The International Economy:
A Global Road Map

2. Theories of International Political Economy

3. Economic Nationalism: Economic Statecraft or Mercantilism
Realist approach
IPE as zero-sum game
Emphasis on political goals
Practices
Imperialism/neoimperialism
Economic incentives and disincentives
Protectionism and domestic economic support

4. Economic Internationalism
Capitalism, laissez-faire, liberalism, or free trade

5. Idealist approach
IPE as nonzero-sum game

6. Practices Keynesian economics Two main goals of IGOs:
Separate politics from economics
Adam Smith's exposition of capital theory: The Wealth of Nations (1776)
Keynesian economics
Use IGOs and national governments to regulate international economic interchange
IMF, GATT and other organizations to promote trade
Two main goals of IGOs:
Ensure spread of capitalism and free trade
Ease worst inequities

7. Economic Structuralism: Focus on Economic Structure
Haves (EDCs) exploit have-nots (LDCs)

8. Marxism Economic order determines political and social relationships
Dialectical materialism: history, current situation, and future are determined by economic struggle

9. Dependencia theory (neo-Marxist theory or economic radical theory)
LDCs kept economically and politically dependent on EDCs
Hierarchical structure of international politics
South produces primary products
EDCs produce high-profit manufactured goods
Neocolonialism

10. Two Economic Worlds: North and South

11. Two Economic Worlds: Analyzing the Data
Economic strength of North
Economic weakness of South
Greater focus on agriculture, raw materials

12. Problems with classifications
Not a clear dichotomy
Newly industrializing countries (NICs)
Countries in transition (CITs)
Inaccurate statistics
Questionable relevance of data (GNP), GNP-PPP
Economic vulnerability

13. Common political experiences among LDCs
History of domination

14. Two Economic Worlds: Human Conditions
Disparities
LLDCs
Lower life expectancy
Lower literacy rate
Poor health
Less access to food, water, and sanitation services
Declining conditions in some LLDCs

15. Two Economic Worlds: Approaches to North-South Relations

16. Circumstances Industrialization first in North
Nationalism led to colonialism

17. Economic nationalism: Current rules adequate
National self-interest
Political economy viewed as a zero-sum game
Self-help
Lifeboat analogy

18. Economic internationalism: Prosperity for all through economic exchange
Free trade
Foreign investment
Loans and aid
Global economy viewed as a nonzero-sum game

19. Economic structuralism: Current system must be altered

20. The Growth and Extent of International Political Economy

21. Trade General pattern of expanding trade Merchandise trade
Services trade

22. Trade expansion Productive technology Resource requirements
Materialism
Transportation
Free trade philosophy

23. Uneven patterns of trade: North and South
Dominated by North
LDCs dependent on EDCs for export earnings
LDCs rely on primary products

24. International Investment
Foreign direct investment
Stake in foreign companies or real estate
Foreign portfolio investment
Does not involve control of companies

25. International investment and multinational corporations (MNCs)
Private enterprises
Subsidiaries operating in more than one state
Ownership of plants and/or resource extraction in other countries
Most based in North

26. Monetary Relations Globalization of money
Four main banking centers: Germany, Japan, United Kingdom, United States
Globalization of financial services
North-South patterns of money and banking
Dominated by North
Exchange rates
Balance of payments
Credits
Debits

27. The Impact of Expanded Economic Interchange
Increased economic interdependence
Trade
Foreign direct investment
Foreign portfolio investments
Domestic portfolio investments
Autarky--an unrealistic concept