Political Economy of Foreign Policy

Study Notes

Political Economy of Foreign Policy

The interaction between politics and economics is a field of study, where it is argued that economic interests influence political behavior and outcomes.
Political decisions often reflect the interests of powerful actors, particularly in the realm of foreign policy.
The decision to build a battleship fleet in the US between 1890 and 1891 is an example of this theory in action.
The USS Indiana, the first modern US battleship, entered service in 1893.
The US aimed to dominate the Western Hemisphere and exclude European powers.
Battleships were seen as the tool to achieve this dominance.
National Prestige: The US sought to promote national unity and solidarity, especially with a growing immigrant population. Battleships served as symbols of power and prestige, used for displays of technological advancements, particularly in countries like Japan.
This resulted in social prestige for US national leaders. Key figures, like Cecil Spring Rice and Henry Cabot Lodge, played roles in promoting these objectives.
Naval Ideology: The influence of Alfred Thayer Mahan, a prominent naval theorist, played a key role in shaping this decision. He argued for the importance of a strong navy, particularly fleets concentrated in one location, for achieving national power and control of the seas.
The British Navy provided an example of the effectiveness of a strong naval presence.
Economic Interests: The battleship fleet served as a means to enforce market access in underdeveloped areas, ensuring that European powers wouldn't colonize South America or the Caribbean.
The building of the fleet drove the manufacturing sector, which benefited from the high tariffs on manufactured goods, as less developed countries primarily exported raw materials.
This policy hurt export agriculturists, particularly in the South, as it negatively impacted their trade with European nations.
The strength of the Political Economy Explanation: This theory provides a more fundamental explanation for the US's decision compared to alternative accounts.
It can explain the origins of navalist ideology by linking it to the economic interests of the navy.
Economic interests have clear implications for policy. Economic actors can easily recognize the impact of policies on their interests.
Economic interests possess political resources that are used to influence government action.
Government action is crucial for facilitating private economic activity.
Market activity necessitates government support, including negotiating international market access and providing the legal framework for economic exchange.