POLI 445 Politics of International Economic Relations

Transcription

1 POLI 445 Politics of International Economic Relations Session 2 KEY THEMES IN POLITICS OF INTERNATIONAL ECONOMIC RELATIONS - POLI 445 Lecturer: Dr. Bossman E. Asare Contact Information: bossasare@gmail.com/beasare@ug.edu.gh College of Education School of Continuing and Distance Education 2014/ /2017

2 Session overview 1. Students will be introduced to some of the key thematic areas of international political economy. 2. There will be discussions on the relevance of the various themes 3. Students will look at the practical aspects of the various themes.

3 Session Outline The key topics to be covered in the session are as follows: Topic one : Themes in International Political Economy 1 Topic two: Themes in International Political Economy 2

4 Reading List Thomas Oatley (2013), International Political Economy (fifth Edition): Interests and Institutions in the Global Economy, Pearson Longman.

5 Topic one Themes in International Political Economy 1

6 Themes in International Political Economy 1. International Trade System The international trade system focuses on the activities, policies and principles of the World Trade Organization (WTO). The WTO has created an international trade system which ensures that each member country in the world has access to the markets of other member countries (Oatley 2008). In theory, all member states have equal access to the markets of other member states. This means that by the WTO international trading system, both Nigeria and Ghana have access to the United States of America market on equal terms. Because of the activities of the WTO a large number of goods and services move across national borders annually. These movements of goods and services, as you can see, have made it possible for countries to consume the goods and services they cannot produce locally. We can say, for instance, that because of the international trade system, Ghanaians in particular and Africans in general are consuming sophisticated technological goods that we are not able to produce. In recent times regional economic agreements have sprung up to challenge the autonomy of the WTO in the promotion of free trade. In unit 2 we shall be looking at the WTO and this will help you appreciate how the organization has been able to promote free trade through a number of principles and policies.

7 2. International Monetary System The international monetary system is the system that facilitates the exchange of currencies in the world. It makes it possible for people living in different parts of the world to engage in economic transactions (Oatley 2008). Because of the international monetary system you do not have to be in the United States of America before you can have access to US dollars. Moreover, this system allows Ghanaians who want to purchase something in the US, Britain, or Japan to do so by means of currency conversion. You can simply convert your Ghana cedis into US dollars and use it to buy goods in the US, or buy something online (Internet), say from or (by using a debit or credit card). Oatley (2008:4) argues that when the international monetary system is able to perform these functions very well, international economic exchange flourishes. The global economy may probably slow down when this system fails to perform these functions well. People will find it difficult, perhaps impossible, to convert their local currencies into the currencies of other countries. It will also undermine international trade, since people will not know the amount of money they will have to convert to be able to buy from other countries. For a functioning global economy, the world needs an effective and efficient international monetary system.

8 3. Multinational Corporations Multinational Corporations (MNCs) are business organizations with their headquarters abroad. They are organizations that operate in at least three countries and they have their headquarters in other countries, usually in the western world, such as the USA and Europe (a number of them are also located in Japan). Payne (2007:12) notes that MNCs are companies that operate in more than one country and depend on interdependence for the operation of their enterprises. And interdependence suggests a situation where countries depend on one another. For instance, Ghana depends on other countries for certain essential goods and services, while other countries also depend on Ghana for some essential goods and services. MNCs occupy an important and often divisive role in the global economy. One reason why MNCs are important is that some of their activities promote human and national development. They are also divisive because they can give legitimacy to an autocratic regime and also abuse human rights. These companies control business activities in several countries. In practice their authority extends beyond national borders. Some of the popular ones are Ford, General Electric, Toyota, and other financial institutions. MNCs make decisions that affect people in their countries and other countries. In Ghana, examples of MNCs are Standard Chartered Bank and Coca Cola. Unit 5 is devoted to MNCs and, as such, we will be able to examine the merits and demerits of their activities

9 Topic Two Themes in International Political Economy 2

10 4. Economic Development The theme of economic development examines the specific development strategies that have been pursued by global south countries. Global south countries are the countries located in the southern hemisphere. They are largely poor, some have democratic political systems, and some are still under dictatorship. Global south countries are also called developing countries (they were known as the third world during the Cold War), and they are mostly located in Africa, Latin America, and Asia. Global south countries are compared to global north countries. Global north countries are in the northern hemisphere, largely democratic and economically rich and industrialized. Some of the economic development strategies are export-led industrialization, import-substitution industrialization, debt cancellation, south-south cooperation, grants, remittances, and so forth. The theme of economic development also investigates which of the development strategies have been more successful and which of them have failed (Oatley 2008). There are also three main theories (dependency, modernization and world systems) that explain economic development in the global south. In Unit 4, which is the global south in the global economy, we shall investigate the differences between the global south and the global north, the theories that explain economic development, and the strategies that have been used by the global south to promote economic development. Do a research on the meanings and explanations of the development strategies and the theories that explain development in the global south.

11 5. International Financial Institutions This theme focuses on the activities of international financial institutions (especially the World Bank, the International Monetary Fund, the European Central Bank, and the United States Federal Reserve ) in relation to monetary policy in the global system. Monetary policy is the management of the supply of money in an economy to avoid problems like inflation, deflation, stagflation and unemployment. In essence these institutions are expected to work to ensure that global economic relations promote prosperity in all parts of the world. The US Federal Reserve is added here because its activities influence the global system in profound ways.

12 Sample questions How do the themes discussed in this session enhance your understanding of the global economy. Examine the extent to which Ghana benefits from the international trade system.

13 Conclusion The session has explained five of the core areas in the study of the Politics of International Economic Relations. It is important to emphasize that these themes shape the global economy in ways that all people around the world can identify with some if not all the themes.

14 Additional Readings Thomas Oatley (2013), International Political Economy (fifth Edition): Interests and Institutions in the Global Economy, Pearson Longman. Bossman E. Asare (2016). International Politics: The Beginner s Guide- Updated and Expanded, Digibooks, Ghana. Charles W. Kegley Jr. and Shannon L. Blanton (2010). World Politics: Trend and Transformation, Wadsworth: Cengage Learning, USA. Robert Gilpin (2000). The Challenge of Global Capitalism: The World Economy in the 21st Century, Princeton Richard Payne (2007). Global Issues: Politics, Economics, and Culture. New York: Pearson Longman. John Ravenhill (Editor) (2005). Global Political Economy. Oxford University Press. Joshua Golstein and Jon Pevehouse (2006). International Relations, Pearson Longman, USA.