International Relations & Politics - Economics Study Guide PDF

International Organizations, Law, and Human Rights International Governmental Organizations (IGOs) -- organizations whose membership consists of 3 or more nation states. transnational corporations (TNCs) -- corporations with operations in more than one country: also called multinational corporat...

International Organizations, Law, and Human Rights International Governmental Organizations (IGOs) -- organizations whose membership consists of 3 or more nation states. transnational corporations (TNCs) -- corporations with operations in more than one country: also called multinational corporations. nongovernmental organizations (NGOs) -- a broad category of diverse organizations, including groups similar to domestic issue groups but with transnational concerns and organizational structure, and groups that focus not on influencing governments but on conducting activities in different countries. International Regimes - a collection of norms that have been institutionalized through organizations and international law Emerges from consistent cooperation Sources of International Law -- often collides with state sovereignty and is often broken Realism → IL not important, only individual interest Liberalism → IL creates incentives and punishments Treaties and customs are most important sources of law. Other sources include: international treaties, customs, recognized principles of law, previous judicial citizens, and writings of respected law scholars. United Nations -- the most prominent IGO: goal is to promote peace through collective action with peacekeeping, state-building, and humanitarian work Great Powers -- China, France, Russia, U.S., U.K. General Assembly-- where decisions occur Security Council -- the Big 5 -- China, Russia, France, UK, US Secretariat -- departments of UN: sets agenda, executive arm World Health Organization -- international public health Economic and Social Council (ECOSOC) -- agree on global norms, help development. International Court of Justice -- settles legal disputes between member states and gives advice to rest of UN European Union -- Political and economic union between 28 European countries Universal Declaration of Human Rights -- contains all backgrounds to set law for human rights violations by UN. Amnesty International - NGO focused on human rights centered in London o war crimes -- violates accepted rules of war. International Political Economy (Developed) International Political Economy (IPE) -- The two way relationship between international politics and international economics Economic events → political consequences and visa versa IPE questions movement of goods, money, people, and ideas across borders. Trade-incentive for cooperation Less state control Globalization -- a process in which international trade increases relative domestic trade; in the time it takes for goods, info, and money to flow across borders and the cost of moving them is decreasing; and in which the world is increasingly defined by single markets rather than by separate ones. Amount of cross-border movement continues to rapidly increase.  Economic theories -- explanations that focus on the type and intensity of interest of actors Economic determinism-- economic forces determine, shape, and define all political, social, and cultural aspects of civilization Political theories -- explanations that focus on the strategic and institutional environment in which interests are translated into policy Distributional outcomes -- Economic Market - composed of producers and consumers of goods and services Market based on supply and quantity demanded Without restrictions, market prices would be solely determined by supply and demand Myth of 'Free Market' -- economics and politics are deeply intertwined and cannot be separated Laissez Faire economics -- 19th century Britain; let go of economy and have little government interference. Economic Liberalism - primarily concerned only on economics and the relationships among individuals, firms, markets, and governments in the economic sphere. Individual interests will differ greatly from the state; represents constraints on state behavior. Economics Ist -- politics serves economic interest. Adam Smith -- Wealth of Nations Complex divisions of labor → wealth for all Free markets = more efficient and higher quality Invisible hand effect David Ricardo -- applied Smith's insights to international economy. Comparative advantage → specialization and absolute advantage. Invisible hand effect -- unobservable market force that helps the demand and supply of goods in a free market reach equilibrium. Free trade -- international trade left to its natural course without tariffs, quotas, or other restrictions. Comparative Advantage - ability of individual or group to carry out an economic activity Specialization -- the process of concentrating and becoming adept at a certain skill Absolute advantage -- the ability of one group to carry out a particular activity more than another. Collective Goods -- services and products that are indivisible. All members benefit and nobody can be excluded. State should only provide what market can't Edu, infrastructure, security, law Most firms don't because it is not in self interest. Funded by taxes and use of government to coordinate. Free Rider Problem - people take advantage of using a common good without paying for it. Mercantilism -- the philosophy that economics and politics are related -- politics comes Ist and economic activity serves the interest of the state. Wealth is a tool to power. Relative gains -- actions of state in respect to power balances. Mercantilism wants to increase relative gains by increasing cost of imports. Protectionism -- impose tariffs on imports, and grant subsidies to own firms. Tariffs, Non-tariff barriers: Import quotas, subsidies, regulations, dumping  Fiscal Policies - refers to government budgets and if they're in a surplus or deficit Monetary Policies - refers to government to influence the economy by controlling interest rates. Zero-sum game - Neither win or lose: equal to others Trans Pacific Partnership -- trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and U.S. Balance of Trade-- exports - imports = net amount of goods and services Trade deficit -- negative balance (imports more than exports) imply job shift abroad Trade Surplus -- positive balance (exports more than imports) imply increased domestic employment Fair trade - advocates retaliation against states that are perceived as cheating on free trade by using barriers to stimulate their economies Embedded liberalism -- the Global economic system from the end of WWII to the 1970s Bretton Woods System - free trade economic regime headed by U.S. following the WWll in order to avoid another great depression IMF - international monetary fund, which coordinates and copes with monetary management problems. Exchange Rates -- price of one currency in terms of another Fixed exchange rate -- tieing currency to another country's currency or gold floating exchange rate - currency price is set by supply and demand Gold standard -- value of currency defined in terms of gold. Conditionality programs - aid can be used Dollar overhang -- the amount which U.S. dollars outside the U.S. exceed the gold standard. GATT/WTO -- General agreement on tariffs and trade and the world trade organization Most-favored nation principle -- cannot discriminate against trading partners. Dispute settlement mechanism -- WTO works to settle conflict World Bank -- created to reconstruct Europe and Japan after WWII and aid developing countries U.S. as hegemon -- largely responsible for enforcement. World Bank group is privately funded. Reciprocity, nondiscrimination Lender of last resort - institution offering loans to banks or other institutions that are nearing collapse. Portfolio investment-- a group of assets including transactions Global Capital Mobility -- ability of private funds to move across national boundaries in search of higher returns. Monetary Trilemma -- free capital movement, independent monetary policy, a fixed foreign exchange rate. Costs of adjustment -- costs to change level of production debt crisis -- massive public debt relative to tax revenues7monetary crisis -- the value of a country's currency falls sharply due to political concerns. International Political Economy (Developing) North/South Gap -- a sharp divide between the wealth countries in the 'North' and the lesser developed countries in the 'south'  LDCs-- lesser developed country Global poverty - wealth has grown significantly but so has inequality GDP -- gross domestic product GDP per capita - country's total income divided by total population Gap between GDPS of wealthy and poor countries is 35 times higher now than in 1960. PPP -- Purchasing power Parity, or the average income adjusted for cost of living. Gini Coefficient - degree or variation of inequality. Quality-of-Life indicators - life expectancy improved but 17% of population in developing world suffer from malnourishment HDI-- measures GDP per capita, life expectancy, and literacy Gender Development Index-- measure global equality International Debt Problem - LDCs face huge relative debt loads and that shifts critical resources that could be used for development to stay afloat: leads to debt traps. OPEC -- in 1970s, the price of oil quadrupled and produced billions in profit for northern banks. LDCs had to pay higher energy costs. In 1979, the oil shock created world wide recession. Debt trap -- debt is difficult or impossible to pay due to high interest rates. Modernization Theory-- South is at an earlier state of development than the north so they must follow the north's pathway. Urbanization is critical. Historical roots of inequality - Europe developed political systems that encouraged innovation and investment. Colonialism was critical to this development and impoverishment of rest of the world. Agenda-setting power or first mover advantages - advantage gained by first mover: Europe and colonization. Economies of scale-- a proportionate savings in costs gained by an increased level of production network effects-- product or service gains value when more people use it investment funds-- supply of capital belonging to numerous investors. Problem of late development - South cannot follow north's path Dependency Theory - The growing gap is caused by the exploitative post-colonial structure imposed by earlier imperialism. After independence, around the 1960s, LDCs were forced to compete in a system in which they were far behind. LDCs cant set terms of trade Import substitution-- replacing foreign imports with domestic production State socialism-- state has control over industries and services Economic Liberalism-- The counterargument to dependency theory. If all countries embrace an international economic structure based on free trade, all countries will benefit. Trade system based on comparative advantage and interdependence South fails to embrace this. Structural Adjustment Plan (IMF) -- loans from IMF to help developing world. Newly industrializing countries -- describes a country whose economic development is in between developing and Ist world Asian Tigers (four countries)-- Hong Kong, Singapore, South Korea, Taiwan  Export-led growth-- economic policy to speed up industrialization by exporting goods UN Millennium Development Goals -- eradicate extreme poverty and hunger, achieve universal primary education, and develop global partnership Washington consensus-- 10 economic policy prescriptions for developing countries developmental state-- state-led macroeconomic planning in Asia multiplier effect-- change in input causes bigger change in output tied aid -- foreign aid in country Declining terms of trade Environment Environmental degradation -- a set of interrelated problems that continue to worsen. These problems feed off of one another to lead to a total environmental crisis. Air pollution, deforestation, global warming, greenhouse gases, climate change, resource shortage, population growth, ozone deterioration, decreased biodiversity Borders have no relevance Collective Action Problem -- a situation where a group of actors has a common interest but cannot collaborate to achieve it Tragedy of the Commons -- when land in community is available to all, each will act selfishly. Develop own environment. Stockholm Conference-- Ist international environmental conference Natural resource depletion -- energy and fresh water are two most important resources Master Resource-- energy;all other extraction depends on its availability nonrenewable resources, renewable resources Barriers to cooperation: countries recognize long term effects but their desire for economic growth wins. Equity -- perception of unequal burdens-- poor countries want to develop and rich countries want to be richer Conflict with free trade agreement Complexity Scientific uncertainty Domestic politics Population Momentum-- growth of a population if reproduction were immediately reduced to replacement-level fertility. demographic transition-- transition from high birth rate and death rates to lower birth rates and death rates as a country replacement rate-- those that die = those being born Kyoto Protocol-- 1997, a treaty to limit emission of greenhouse gases Annex I countries-- 39 annex I countries to reduce output by 5.2% and non annex I countries could increase. All Annex 1 countries besides US ratified it Had provisions for emissions trading as it was unbalanced, had economic competition, defection, and domestic politics Montreal Protocol-- 1987, Ist major global treaty with 180 countries Limited number of actors, clear time horizons, strong leadership, scientific consensus, technology ozone layer, biodiversity  Copenhagen summit-- recognition of climate change and what should be done.. Was not passed Paris Agreement-- 2015, reduce greenhouse gas emissions starting in 2020. Nationally determined contributions. Signed by 177 countries, not U.S. Implementation assessed every 5 years bottom-up structure Sustainable Development -- meeting needs of present generation without hurting future generation Solutions: sustainable development, economic incentives, green sells, environmentally friendly taxes maximum sustainable yield-- maximum level which a resource can be extracted without long term depletion Intergovernmental Panel on Climate Change (IPCC)-- monitor countries Possible Essays -- 1. Describe the evolution of the current free trade regime that dominates the current international economy. What is the economic philosophy guiding this system? What were the major institutions on which that system is based, and what functions did they serve? In what ways did the institutions change over time? Finally, describe some of the problems associated with the free trade regime. After WWII, the U.S. stepped up as the hegemon to change the international economy and ensure that a great depression would not occur again. Their efforts are shown in the Bretton Woods Conference, where they headed the free trade regime. The IMF was set up in order to cope with money management issues. Exchange rates were set to allow for easy international trade. The fixed exchange rate with the Gold standard was set for the U.S. currency. However, the dollar overhang got too high and Nixon put U.S. on a floating exchange rate instead. The WTO was created in order to create agreements on tariffs and other regulations. The world bank was made to help rebuild Europe and Japan. This privately funded bank would help countries in crisis. Also after WWII, the UN was created in order to replace the League of Nations and prevent any future wars. Problems -- still had 2008 recession... free trade leads to environmental problems. Who is in charge? 2. Compare and contrast mercantilism and economic liberalism. What are the assumptions of each regarding the economy and politics? What are the weaknesses of each? Which general theories of international relations do mercantilism and economic liberalism best correspond with and why? Mercantilism is the philosophy that politics and economics are deeply intertwined but politics comes first and economic activity serves the interest of the state. Wealth is a tool for power. Focus on the relative gains, which are the actions of a state with regard to power balances. Wants to increase relative gains by increasing the costs of imports. Focus on protectionism through the use of tariffs and subsidies. Economic liberalism is primarily concerned with economics and relationships among individuals, firms, markets, and governments. Economics first and politics serves economic interests. Believed in by Adam Smith (Wealth of Nations). He called for complex divisions of labor, free markets, and the invisible hand effect. David Ricardo then put this into effect in the international economy with focuses on comparative advantage and absolute advantage. The weakness is that each forgets the importance of the other side. Economic liberalism = liberalism.. focus on wealth and benefits of international relations. Mercantilism = realism.. Focus on power and isolationism. 3. Describe the North-South Gap. What are historical explanations of the plight of the global South? Is it true that the roots of the North-South Gap lie in the historical patterns colonialism and imperialism? What, if anything, should lesser-developed countries be doing to improve their economic status? The North-South gap is a sharp divide between the wealthy countries of the North and the lesser developed countries of the South. Wealth has grown but so has global inequality. Modernization theory states that the south is at an earlier stage of development than the North. To achieve wealth, they must follow the North's pathway -- which includes urbanization. This is refuted by first mover advantage. In agreement with first mover advantage is the dependency theory, which states that the growing gap is caused by the exploitative post-colonial structure imposed by earlier imperialism. After gaining independence in the 1960s, LDCs were forced to compete in a free trade system in which they were far behind and could not set the terms. Lastly, economic liberalism disagrees with dependency theory. It states that if all countries embrace free trade, all countries will benefit. The "South" refuses to do this, explaining why they're impoverished. Solutions include help from IMF, export-led growth, help from the U.N., and participation in free trade. 4. Briefly describe the legacy of colonialism as it relates to the global economy. How did colonialism affect the economic development of both advanced countries and LDCs? Why has colonialism continued to impact international relations today? There are historical roots of inequality that exist in the global economy. Europe was able to develop a political system that led to colonialism, developing European economies even further while putting their colonies to a disadvantage and impoverishing them. Colonialism gave advanced countries that were behind imperialism more resources and more control. Their wealth grew as they exploited their colonies in the 1960s when many countries gained independence, LDCs were left without a structure and were forced to compete in a system of free trade where they had no say in the terms. There are two theories as to how colonialism continues to impact IR today. 1st, the dependency theory states that the growing inequality gap is caused by the exploitative post-colonial structure imposed by earlier imperialism. Trade - they were behind and lacked structure. The 2nd is the first mover advantage which states that advantage is gained by the states that act first. Since Europe colonized first, the developing world is unable to follow their path to a better economy as modernization theory suggests it does. 5. What is the "tragedy of the commons"? How did it apply to global environmental protection? Describe two environmental problems facing the global community that best fit with the 'tragedy of the commons' metaphor. Explain your reasoning. Tragedy of the commons describes that when land is available to all, each will act selfishly, ultimately hurting the environment. It is a metaphor from the 19th century  When extended to the global community, the same logic still applies; development over environment. Actors will be selfish for economic gain. Major roadblock to cooperation and why little progress has been made. One example is air pollution, which occurs due to our reliance on fossil fuel emissions, drastically increasing the levels of CO,. Industrial development is a major contributor to not only states economies, but air pollution. They don't want to stop their successful economies so air pollution continues. It was one of the first problems to be addressed at the Stockholm conference in 1972. Another example is natural resource depletion. Our 2 most important resources are energy and fresh water-- which are shrinking as demand increases. Energy, like fossil fuels, are shrinking in supply but as economies grow so does the demand for it. People have not slowed extraction even though it is necessary. 6. What are the major environmental issues facing the international system? How are these problems interrelated? How can states and the international community address these environmental problems? What are the barriers to international environmental cooperation? Issues include: air pollution, deforestation, global warming, greenhouse gases, climate change, resource shortage, population growth, ozone deterioration, and decreased These problems are all interrelated, leading to environmental degradation. The problems feed off one another to lead to a total environmental crisis. These issues are a collective actions problem, or a situation where a group of actors has a common interest but cannot collaborate to achieve it. States have trouble achieving this goal of a healthier environment because of the tragedy of the commons -- which is when "land" in the community is available to all, each actor will act selfishly rather than preserve the environment. States have tried to address these environmental problems in the Stockholm conference, Montreal protocol, Kyoto protocol, Copenhagen Summit, Paris agreement, and many other international conferences and treaties to attempt to limit human impacted environmental degradation. States unfortunately still act selfishly and put economic interest above environmental necessity. The U.S. is very selfish. In order to actually make change, there can be sustainable development, economic incentives, "green sells", and environmentally friendly taxes. Barriers to cooperation include desire for economic growth, equity, conflict with free trade, complexity, scientific uncertainty, and domestic politics.