PED_IR_Chapter One.pdf

An-Najah National University Faculty of Law and Political Science Department of Public Law Course name and number Political Economy and Development (11102513) Program Major: Law, Minor: International Relations...

An-Najah National University Faculty of Law and Political Science Department of Public Law Course name and number Political Economy and Development (11102513) Program Major: Law, Minor: International Relations Instructor Jawad N. Salman Teaching Professor of Law Course Overview: 3 Credits Course. Type: Sub-specialty Requirements. Textbook(s): - Main: 1. Gilpin, R., & Gilpin, J. M. (1987). The Political Economy of International Relations. [EN] 2. Gilpin, R., & Gilpin, J. M. (1987). The Political Economy of International Relations. [AR] - Others: 1. Mill, J. S. (1885). Principles of political economy. 2. Gilpin, R., & Gilpin, J. M. (2001). Global Political Economy: Understanding the International Economic Order. [EN] Course Contents Introduction: the nature of political economy. Political economy ideologies. Dynamics of international political economy. International money matters. The politics of international trade. Multinational corporations and international production. The issue of dependency and economic development. The political economy of international finance. The transformation of the global political economy. The emergent international economic order.  Chapter One: The Nature of Political Economy Chapter One: the nature of political economy Political economy, What? Why? How? Economy + State Political economy deals with trade or business and their relationship with the law and governments. International political economy: the relationship between economy changes and political changes. (how do political factors affect the nature and consequences of structural changes in economic affairs?) Topics governed by political economy: - Market, production and other economic related topics and their relationship to the state’s politics and policies. Int’l political economy concerns What will be the new basis of economic order and political leadership? Can or will adjustment to the changed economic realities, for example, new trading and monetary relations, take place? How will the inevitable clash between the desire of states for domestic autonomy and the need for international rules to govern change be reconciled? The importance of the market Int'l political economy focuses on the market and its relationship to the state because the world market economy is critical to international relations in the modern era; even in socialist societies the key issue in economic debates is the appropriate role for internal and external market forces. Relationships to law Gold standard was a US federal law. Separation of powers. Checks and balances. Capitalism and Socialism How to consider a state is capitalism or socialism? - based on its political system. - based on its economic system. - based on historical basis. Is France truly capitalist, with 90 percent of its financial sector and much of its heavy industry nationalized and in state hands? The economic consequences of a market A market economy can be defined as one in which goods and services are exchanged on the basis of relative prices; it is where transactions are negotiated and prices are determined. A market can also be defined as the whole of any region in which buyers and sellers are in such free intercourse with one another that the prices of the same goods tend to equality easily and quickly The economic consequences of a market Markets differ with respect to the freedom of participants to enter the market and also the extent to which individual buyers or sellers can influence the terms of the exchange. Thus, a perfect or self-regulating market is one that is open to all potential buyers or sellers and one in which no buyer or seller can determine the terms of the exchange. Although such a perfect market has never existed, it is the model of the world implicit in the development of economic theory. The economic consequences of a market Three characteristics of a market economy are responsible for its dynamic nature: (1) the critical role of relative prices in the exchange of goods and services, (2) the centrality of competition as a determinant of individual and institutional behavior, and (3) the importance of efficiency in determining the survivability of economic actors. From these flow the profound consequences of a market for economic, social, and political life. Market effects and political responses Economic activities affect the political, social, and economic well- being of various groups and states differentially. The real world is a universe of exclusive and frequently conflicting loyalties and political boundaries in which the division of labor and the distribution of its benefits are determined as much by power and good fortune as they are by the laws of the market and the operation of the price mechanism. The assumption of a fundamental harmony of interest is most frequently invalid, and the growth and expansion of markets in a socially and politically fragmented globe have profound consequences for the nature and functioning of international politics. Market effects and political responses Another consequence of a market economy is that it significantly affects the distribution of wealth and power within and among societies. In theory, all can take advantage of market opportunities to better themselves. In practice, however, individuals, groups, or states are differently endowed and situated to take advantage of these opportunities and therefore the growth of wealth and the spread of economic activities in a market system tends to be uneven, favoring one state or another. Thus, states attempt to guide market forces to benefit their own citizens, resulting, at least in the short run, in the unequal distribution of wealth and power among the participants in the market and the stratification of societies in the international political economy Conclusion Int’l political economy deals with the impact of the world market economy on the relations of states and the ways in which states seek to influence market forces for their own advantage. The first is the way in which market interdependence affects and is affected by international politics and in particular by the presence or absence of political leadership. The second is the interaction of economic and political change that gives rise to an intense competition among states over the global location of economic activities, especially the so-called commanding heights of modern industry. The third is the effect of the world market on economic development and the consequent effort of states to control or at least to be in a position to influence the rules or regimes governing trade, foreign investment, and the international monetary system as well as other aspects of the international political economy. Conclusion although trade may well be of mutual benefit, every state wants its own gains to be disproportionately to its advantage; it wants to move up the technological ladder to reap the highest value-added return from its own contribution to the international division of labor. Similarly, every state wants to have its say in decision making about the rules of the international monetary system. In every area of international economic affairs, economic and political issues are deeply entwined.