Exam 2 Flashcards
(36 cards)
International political economy
the interplay of economics and politics in world affairs
American impact on IPE
- United States sets the general trend and standards in IPE
- Firms come to the United States to raise funds and invest
- Federal reserve rates closely watched
Global North and south
North: Industrialized, developed countries.
- high living standards generally distributed
- highly technical infrastructure
- complex and productive economy
South. Undeveloped or underdeveloped countries. Holds most of the word’s poor.
Nature of poverty
About 1 billion people living in “abject poverty”. On or less that $1.25 a day.
-Highest per capita in abject poverty in Africa, though largest absolute number are in South Asia
Groups more likely to be in poverty
- Rural inhabitants
- women
- ethnic minorities and refugees
IMF and Development
- Since collapse of Bretton Woods in 1973, IMF’s role has switched to debt relief
- From exchange rate stability among First World to control over Third World development
- IMF prospered by lending funds to overcome 1970’s oil crisis, and degree of conditionality (terms attached to loans) rose greatly
Country to country development aid
-Aid shortfall since 70’s.
For every $1 in aid developing countries receive, they lose $2.
Modernization Theory
- Development synonymous with economic growth
- Movement from Premodern to postmodern
- Economic growth seen as necessary to combat poverty.
Washington Consensus
- Coined in 1989 included ten broad sets of relatively specific policy recommendations:
- Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP;
- Redirection of public spending from subsidies (“especially indiscriminate subsidies”) toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
- Tax reform, broadening the tax base and adopting moderate marginal tax rates;
Silent Spring
The overriding theme of Silent Spring is the powerful—and often negative—effect humans have on the natural world. Carson’s main argument is that pesticides have detrimental effects on the environment; she says these are more properly termed “biocides” because their effects are rarely limited to the target pests. DDT is a prime example, but other synthetic pesticides—many of which are subject to bioaccumulation—are scrutinized. Carson accuses the chemical industry of intentionally spreading disinformation and public officials of accepting industry claims uncritically. Most of the book is devoted to pesticides’ effects on natural ecosystems, but it also details cases of human pesticide poisoning, cancer, and other illnesses attributed to pesticides.
Montreal Protocol on Substances that Deplete the Ozone Layer
- An international treaty designed to protect the ozone layer by phasing out the production of numerous substances that are responsible for ozone depletion. It was agreed on September 16, 1987, and entered into force on January 1, 1989.
- Imposed a global ban on Chlorofluorocarbons (CFCs)
- As a result of the international agreement, the ozone hole in Antarctica is slowly recovering. Climate projections indicate that the ozone layer will return to 1980 levels between 2050 and 2070. Due to its widespread adoption and implementation it has been hailed as an example of exceptional international co-operation
Kyoto Treaty
- Into force in 1997, goal set for 2012
- GHG Emissions Reductions
- 1990 target year
- Industrial Countries = 5% reduction from 1990
- USA did not ratify treaty
- Industrializing Countries = voluntary reductions
•Mixed success. 192 Parties in first round, only 37 in the second
Bretton Woods Debates: 1960s–1980s
- Which model is better for global growth?
- Neoliberal
- Free market
- Minimal state intervention
- Level playing field
- Keynesian economics
- State actively creates opportunities
- “Pump priming”
Bretton Woods Era
- Referred as the “long boom” or “golden age of capitalism” roughly 3 decades of growth from 1945-1973.
- Was underpinned by the postwar compromise. Strong labor unions, welfare states, high taxes, rising wages and productivity
End of the Postwar Consensus
- Wage restraint
- Attack on Organized Labor
- Effort to restore corporate profitability
- Turn towards financialization
- All solutions to the crisis of the 1970s
- Volcker shock of 1979-Sudden sharp rise, record interest rates led to a deep recession
- Shift from Keynesism of the postwar period to neoliberalism
What is neoliberalism?
- Hayek and Friedman key intellectual thinkers
- minimal government interference in the economy
- neoliberals accept that free markets are artificial and therefore would not arise spontaneously, but would have to be enforced, usually through the state and the rule of law.
- markets are self-regulating. regulation unnecessary and disruptive.
- free market would produce the socially optimum equilibrium with regard to production of goods and services
Securitization
- basic logic: transforming illiquid loans in banks’ portfolios into marketable / tradeable / negotiable assets
- expanding the secondary markets for derivatives / creating new derivative markets
- inventing / creating compound (structured) financial derivatives
- inventing / creating off-balance sheet conduits – SIVs (structured investment vehicles) to hold such assets
How did all this happen?
- From 1820 to 1970, every decade U.S. workers experienced a rising level of wages
- In the 1970s this came to an end; real wages stopped rising and they have never resumed since
- U.S. workers became more productive, but got paid the same; wages began to stagnate and decline
- The gap between labor and capital grew bigger
Start of the crisis
- It started in one relatively small segment of the US – real estate and mortgage market (the so called “subprime” segment)
- It ended up as a world financial crisis affecting all international financial markets and all capitalist countries in the world
- The Global Financial Crisis was caused by the failure of the subprime mortgage market, the failure of trillions of dollars’ worth of derivatives, and the deregulation of the financial sector
Defining ‘Region’
•In International Relations, it generally indicates the multilateral groupings of neighboring nations
(eg. Europe, Middle East, East Asia)
•The primary common sense usage connotes physical contiguity and societal homogeneity. Within state actors, contiguity and proximity seems to be an important prerequisite for creating and maintaining a sense of unity.
- Indeed proximity seems to be a necessary, although not sufficient condition for confident stipulation of a region.
- Be aware of some major regional organizations, EU, ASEAN, OAU, etc.
International Law
- A core international institution that states created
- A set of norms, rules, and practices
- Fashioned to achieve international social goals such as peace, order, coexistence, justice, human development
- Has specific historical roots that explain the shape and extent of international law
International Order
and Institutions
War is a crude way for states to ensure their security and interests
•States have worked to build another way to resolve disputes
•Key difference between international institutions and international organizations
•Institutions: norms and principles that influence state expectations
•Organizations: physical creations with staffs, buildings, operating procedures
Criticisms of International Law
Western European idea
•Developed from
•Greek and Roman law
•Christian norms and mores
•Sixteenth- and seventeenth-century European ideas of natural law
•Modern international law contains European concepts of “proper” behavior within and between societies, a standard that non-European societies might not embrace
•UN organs continue European dominance over global system
Anarchy
- Anarchy is the concept that the world system is leaderless: there is no universal sovereign or worldwide government. There is thus no hierarchically superior, coercive power that can resolve disputes, enforce law, or order the system like there is in domestic politics.
- Anarchy not the same as anarchism.
