International Political Economy - by yurtgc548


									     International Political
• Two Basic Questions:
• What makes a nation wealthy?
• What is the proper role of
  government in economic activity?
             Three Paradigms
 Right                              Left

liberalism     nationalism         structuralism

                         dependency        Marxism

Right vs. left: amount of government intervention
• Adam Smith (1723-90; Scotland)
Free Trade

intervention in
Tariffs, Quotas
  Competition in a Free Market
The market for chalk in State A

Company A Chalk (State A) $100/box
Company B Chalk (State B) $90/box

What do you buy?
     Government Intervention
Government of State A imposes 20% tariff
on all foreign chalk – aimed at Company B

Company A Chalk (State A) $100/box
Company B Chalk (State B) $108/box

Now what do you buy?
           Two Worlds
Government Intervention   Free market
• Expensive chalk         • Chalk prices go
• Same quality and          down
  choices                 • Quality goes up
                          • Innovation
                            – Colored chalk
                            – Dustless chalk
                            – Sidewalk chalk
          The Invisible Hand
Lamborghini Diablo   Dodge Aires K-Car
The Invisible Hand at Work
The Benefits of Competition
Multinational Corporations
  Premises of Nationalism

• States compete
• Nations with the most
  advanced economies win
  economic competition
      Theorists of Nationalism
Friedrich List, Prussia, Alexander Hamilton,
1789-1846                USA, 1755-1804
“Report on the Subject of Manufactures”

Industrial   =   National = Independence
power            power
Strong Economies       Weak Economies
• Mature Industries   • Infant Industries
• High quality        • Low quality
• Low cost            • High cost

Do you buy this?      Or this?
  Economic Structuralism
• 1. Marxism
• 2. Dependency Theory
 Marxism, Communism
• Karl Marx (1818-1883)
• Fredrick Engels
• The Communist Manifesto 1848
 Communism in Power
Soviet Union 1917
 –20 million deaths in 1950s
   Lenin                Stalin
 Communism in Power
People’s Republic of China 1949
 –Estimates from 50-100 million
 –Mao Zedong
            Dependency and the
             Division of Labor
EDCs                        LDCs
•   North America
•   Western Europe
                            • Africa, Asia, Middle
•   Japan                     east, Latin America
•   Large middle class      • Primary products
•   High Tech               • Commodities
•   Industrial products     • Elites -- impoverished
•   High skills             • Low skills
•   High wages              • Low wages
•   Cars, chemicals,        • Bananas, coffee,
    aerospace, telecomm,      minerals, rubber, timber
    electronics, software
          The Flow of Money

$$$$$$: cars, computers, manufactured goods

       EDCs                               LDCs

$$: bananas,   coffee, timber, minerals

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