Examiners commentaries 2014

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1 Examiners commentaries 2014 IR3026 International political economy Important note This commentary reflects the examination and assessment arrangements for this course in the academic year The format and structure of the examination may change in future years, and any such changes will be publicised on the virtual learning environment (VLE). Information about the subject guide Unless otherwise stated, all cross-references will be to the latest version of the subject guide (2011). You should always attempt to use the most recent edition of any Essential reading textbook, even if the commentary and/or online reading list and/or subject guide refers to an earlier edition. If different editions of Essential reading are listed, please check the VLE for reading supplements if none are available, please use the contents list and index of the new edition to find the relevant section. General remarks Learning outcomes At the end of this course, and having completed the Essential reading and activities, you should be able to: demonstrate an understanding of the processes of global integration and fragmentation in international politics and economics show what the sources are of continuity and change in international political economy demonstrate an appreciation of the history of thought in international political economy distinguish between, and critically evaluate, different theoretical approaches to international political economy explain the different roles of states, international organisations and non-state actors in the politics of international economic relations show an understanding of the economic challenges facing states in their foreign policy. Planning your time in the examination It is important that you plan your time carefully in the examination. You should take care to produce the required number of answers; in this case, four out of 12. Good marks in three or fewer answers cannot make up for missing marks, and this is likely to lead to a fail. You will have your own preferences for planning each of the four answers. It is generally advisable to take a few minutes at the beginning to set out the basic structure of the answer. It need not be overly detailed but should contain the main points and subheadings of an answer. 1

2 IR3026 International political economy What are the Examiners looking for? The Examiners are looking for your ability to understand the question as it appears in the examination paper. This means not merely understanding the material to which it refers, but also the suggestions as to how to use that material, so that the answer precisely responds to the question as set. You should critically reflect on the core theories and concepts that make up the discipline, and especially those that are referred to in the questions. Since time in the examination is limited, you should be careful to be relevant and resist going off on irrelevant digressions. This requires being disciplined in the use of illustrative material; which may be necessary but should not be over extended. Linguistic skills are also necessary; a feel for the meaning and subtleties of words, as well as the identification of possible ambiguities in the wording. Good answers can use such ambiguity to identify more than one way of answering the question. Doing this attracts good marks. The best-prepared candidates will always be able to respond to the subtleties of a question in the examination hall and will therefore not rely on model answers. This capacity depends on knowing the material and, of course, having good linguistic and literary skills. The Examiners also look for a familiarity with the relevant literature. This may be acquired through wide reading, but can be approached by remembering the people to whom ideas are attributed in the subject guide or in general texts such as: Economides, S. and P. Wilson The economic factor in international relations: a brief introduction. (London: I.B. Tauris, 2001) [ISBN ]. Gilpin, R. Global political economy: understanding the international economic order. (Princeton: Princeton University Press, 2001) [ISBN ]. You should always try to read as widely as possible. Key steps to improvement There is no simple way to improve. Immersing yourself in the literature is a good first step. When reading new articles or books, ask yourself questions and select those chapters that are most relevant. It is always a good idea to keep past examination questions in mind when selecting and studying new reading material. Beyond that is the need to debate and discuss the subject with others including with fellow candidates. Good candidates are avid readers of newspapers and journals, and are familiar with ways of accessing these, if necessary, online. This is not always possible but should be attempted. The internet is one of the most important resources now available to the student of international political economy. But beware, the internet also provides access to materials that are not of proper academic standard. It is always preferable to work with texts published in widely respected journals and book series. A note on the Examiners commentaries The Comments on specific questions which accompany these General remarks are not intended as indications of model answers but as suggestions as to how a good answer might be produced. There could be other ways to achieve this, and you are encouraged to come up with your own answers. Remember, the Examiners are interested not so much 2

3 in your personal opinions but in properly developed and substantiated arguments that relate to the relevant literature and show an awareness of both the theoretical and empirical dimensions of the subject. Most importantly, answer the question and do not simply rely on a rehearsal of bits of knowledge from the subject guide that may, or may not, be relevant to the question. Question spotting Many candidates are disappointed to find that their examination performance is poorer than they expected. This can be due to a number of different reasons and the Examiners commentaries suggest ways of addressing common problems and improving your performance. We want to draw your attention to one particular failing question spotting, that is, confining your examination preparation to a few question topics which have come up in past papers for the course. This can have very serious consequences. We recognise that candidates may not cover all topics in the syllabus in the same depth, but you need to be aware that Examiners are free to set questions on any aspect of the syllabus. This means that you need to study enough of the syllabus to enable you to answer the required number of examination questions. The syllabus can be found in the Course information sheet in the section of the VLE dedicated to this course. You should read the syllabus very carefully and ensure that you cover sufficient material in preparation for the examination. Examiners will vary the topics and questions from year to year and may well set questions that have not appeared in past papers every topic on the syllabus is a legitimate examination target. So although past papers can be helpful in revision, you cannot assume that topics or specific questions that have come up in past examinations will occur again. If you rely on a question spotting strategy, it is likely you will find yourself in difficulties when you sit the examination paper. We strongly advise you not to adopt this strategy. 3

4 IR3026 International political economy Examiners commentaries 2014 IR3026 International political economy Zone A Important note This commentary reflects the examination and assessment arrangements for this course in the academic year The format and structure of the examination may change in future years, and any such changes will be publicised on the virtual learning environment (VLE). Information about the subject guide Unless otherwise stated, all cross-references will be to the latest version of the subject guide (2011). Comments on specific questions 4 Candidates should answer FOUR of the following TWELVE questions. All questions carry equal marks. Question 1 Which is the more potent driver of economic globalisation: technological innovation or hegemonic power? Chapter 1 of the subject guide provides an introduction to globalisation as a concept and in historical perspective. Other useful discussions of globalisation can be found in: Gilpin, R. Global political economy: understanding the international economic order. (Princeton: Princeton University Press, 2001) [ISBN ] Chapters 1 and 2. Gilpin, R. The challenge of global capitalism: the world economy in the 21st century. (Princeton: Princeton University Press, 2000) [ISBN ], Chapter 10. Hirst, P. and G. Thompson The Future of Globalization, Cooperation and Conflict 37(3) 2002, pp Scholte, J.A. Globalization: a critical introduction. (Basingstoke: Macmillan, 2000) second edition [ISBN ]. This question requires a consideration of the underlying drivers of globalisation. Two of them technological innovation and hegemonic power need to be at the centre of the discussion; although you may want to refer to others as well. A good way to start the answer would be to define the concept of globalisation. In doing so, you should remember that there are different dimensions of globalisation, and that not all authors agree on how to define the concept. The point of this is not to enter into a lengthy discussion of different definitions but to give a sense of what globalisation is about and how the main interpretations of this phenomenon differ. The main focus of the answer should be on the question of how technology and hegemonic power are driving the process of global economic integration, and which of these two factors is the more potent driver. In a first step, you need to discuss how

5 technological innovation (for example, invention of steamships, telegraph, information and communication technologies) and hegemonic power (for example, Britain in the 19th century, the USA in the 20th century) are promoting the globalisation trend. The next step, then, is to compare both these factors and establish which one is a more powerful force behind globalisation. There is no agreement on this question in the literature, so you may come up with different answers. A strong answer would also go into some detail explaining why it is either technology or hegemony that is the most potent driver. Question 2 If wealth is one of the ends of mercantilist economic policy, why is mercantilism generally held to be inhibiting global wealth creation? Chapter 2 of the subject guide offers an introduction to the mercantilist tradition. Economides, S. and P. Wilson The economic factor in international relations: a brief introduction. (London: I.B. Tauris, 2001) [ISBN ]. introduces the main tenets of mercantilism, as does: Gilpin, R. The political economy of international relations. (Princeton: Princeton University Press, 1987) [ISBN ]. Further useful texts on this topic are Ravenhill, J. (ed.) Global political economy. (Oxford: Oxford University Press, 2010) third edition [ISBN ] Chapter 2. Irwin, D.A. Against the tide: an intellectual history of free trade. (Princeton: Princeton University Press, 1996) [ISBN ] Chapters 2 and 8. To answer this question, you need to explain both the essence of the mercantilist doctrine and discuss why it prioritises national over global wealth creation. A good way to start would be to introduce the key tenets of mercantilism. A brief review of what makes mercantilism a distinctive tradition of international political economy would suffice. This is not the place to go into much detail about how mercantilism changed over time; instead, you should focus on the core insights of mercantilism that define this intellectual tradition of international political economy. Thus, you should introduce the mercantilist understanding of power and wealth, with reference to the idea of global wealth as a fixed sum and global economic competition as a zero sum game; the need for states to intervene in economic affairs to maximise their national economic gain, even if this reduces overall global economic welfare; and the importance of power for the acquisition of national wealth. Based on this, you should then be able to identify the main reasons why it is generally held that mercantilism as a doctrine of economic policy is bad for global wealth maximisation. This goes to the heart of the critique of mercantilism by liberal political economists, such as Adam Smith and others, who argue that protectionism, state interference in trade, colonialism and military expansion reduce the opportunities for the full development of nations productive powers and limit the possibility of growing a global market and global division of labour. A strong answer would go one step further and examine the validity of this liberal critique of mercantilism. 5

6 IR3026 International political economy 6 Question 3 Why do liberals believe that the preoccupation of nation-states with relative gains need not hold back the promotion of free trade? Chapter 3 of the subject guide provides background on the liberal tradition. Chapter 2 of Ravenhill (2010) puts liberalism in the context of IPE theory more generally, while Wyatt-Walter, A. Adam Smith and the Liberal Tradition in International Relations, Review of International Studies 22(1) 1996, pp.5 28 considers Adam Smith s important role in formulating core liberal beliefs about the global economy and the benefits of free trade. Other relevant texts on the liberal tradition and liberal trade theory include: Economides, S. (2001), Chapter 2. Richardson, N.R. International Trade as a Force for Peace in Charles W. Kegley Jr. (ed.) Controversies in international relations theory: realism and the neoliberal challenge. (New York: St. Martin s Press, 1995) [ISBN ], pp Sally, R. Classical liberalism and international economic order: studies in theory and intellectual history. (London: Routledge, 1998) [ISBN ] and Irwin (1996). This question concerns a core tenet of the liberal tradition in international political economy; namely, the idea that it is in the interest of all states to promote global free trade even though they may be more concerned with promoting the national interests and maintaining a favourable balance of power. A good way to start would be to outline the main tenets of the liberal tradition and contrast this with the mercantilist view, which claims that a concern for relative gains makes states pursue protectionist rather than free trade policies. On the basis of this, you would then need to discuss in more detail why it is that liberals believe in the general applicability of the free trade doctrine; and why the concern for national power and relative gains does not stand in the way of a general trend towards the liberalisation of international trade. This discussion thus revolves around the liberal-mercantilist debate and the question of whether economic growth and prosperity is a zero-sum or positive-sum game, and it would need to show in detail what reasons liberals give for their claim that states can overcome their usual preoccupation with relative gains to promote absolute gains; namely, the growth of the global economy that (potentially) benefits all nations and not just their own. A strong answer would also refer to the historical evolution of the international economy and illustrate the liberal argument with reference to cases where states created a free trade order (for example, the General Agreement on Tariffs and Trade and the World Trade Organization system) despite the persistence of relative gains as a driving force in international relations. Question 4 Does the failure to create a New International Economic Order suggest that developed economies have maintained their dominance in international political economy? Chapters 4 and 7 of the subject guide provide the main foundation for this answer. The New International Economic Order (NIEO) and North-South relations are mentioned in Chapter 4 in the context of dependency theory,

7 and Chapter 7 discusses developmental strategies in the global economy. Other useful texts on this question include: Ravenhill, J. (2010), Chapter 13. Chang, H. Kicking away the ladder: economic development in historical perspective. (London: Anthem Press, 2002) [ISBN ]. Krasner, S.D. Structural conflict: the Third World against global liberalism. (Berkeley: University of California Press, 1985) [ISBN ]. This question requires that you relate the failure of the project to create a New International Economic Order in the 1970s and 1980s to the overall question of North-South relations and the dominance of the developed economies. The theoretical background to this question is dependency theory (covered in Chapter 4 of the subject guide), which informed the New International Economic Order project; and also other IPE theories (such as mercantilism) that focus on patterns of power and dominance in the international order. But the question is not primarily about explaining and discussing the theoretical perspectives as such; it is much more about applying their insights to the question of whether the industrialised economies have retained their dominant position in the global economy and what the failure of the NIEO can tell us about this. You should therefore discuss the historical record of the global struggle to reform the international economic order in the 1970s and 1980s, explain why the NIEO failed, and consider what this tells us about the relative power of Northern and Southern economies. A good answer would make use of the underlying theoretical perspectives, mostly dependency theory and mercantilism, to shed light on the enduring power inequality between North and South. An excellent answer would extend this discussion and consider whether the more recent success of the emerging economies (for example, China) has reduced the dominance of the industrialised countries in the international economy. Question 5 What factors explain the successful creation of a legally binding trade dispute settlement mechanism under the World Trade Organization (WTO)? Chapter 5 of the subject guide provides background to the international trading order of the GATT and WTO. Useful texts that focus more specifically on the Uruguay Round and the creation of the WTO (including the legally binding dispute settlement mechanism of the WTO) include: Ravenhill, J. (2010), Chapter 5. Gilpin, R. (2001), Chapter 8. Hoekman, B.M. and M.M. Kostecki The political economy of the world trading system: the WTO and beyond. (Oxford: Oxford University Press, 2009) third edition [ISBN ]. This question has a more historical focus and requires a good understanding of the evolution of the international trade system, particularly the circumstances surrounding the GATT Uruguay Round and the creation of the WTO. To begin with, you should briefly sketch the key events that led to the Uruguay Round and its main outcomes. You would then need to discuss in more detail the creation of the legally binding dispute settlement mechanism (DSM) under the WTO and outline its key elements. The point of this is not to discuss how the DSM works and 7

8 IR3026 International political economy how effective it has been, but to explain what made its creation possible. The answer thus needs to go into some detail on the drivers behind the successful completion of the Uruguay Round, the role that key powers played (for example, USA, European countries), and the different interests they pursued and how a stronger DSM was agreed as part of a broader package deal. A strong answer would make use of IPE theory to explain the success of the Uruguay Round negotiations, particularly with regard to the role that hegemonic power played, and also the role of interest group lobbying in shaping the trade preferences of the main powers. Question 6 Do financial crises reveal the central role that powerful states play in maintaining international financial stability? Chapter 6 of the subject guide provides an overview of the international financial system and discusses the nature of financial crises and how they have been managed. The best overview of financial crises in general can be found in: Eichengreen, B.J. Financial crises: and what to do about them. (Oxford: Oxford University Press, 2002) [ISBN ]. Eichengreen, B.J. Globalizing capital: a history of the international monetary system. (Princeton: Princeton University Press, 1996) [ISBN ] Gilpin, R. (2000), Chapters 4 and 5 provides a general history of international efforts to create a stable international financial system. Other useful discussions of financial crises can be found in: Gilpin, R. (2001), Chapter 9. Stiglitz, J.E. Globalization and its discontents. (London: Allen Lane, 2002) [ISBN ]. Woods, N. Understanding Pathways Through Financial Crises and the Impact of the IMF: an Introduction, Global Governance 12(4) 2006, pp You need to demonstrate a decent knowledge of the international financial order and international financial crises (for example, Asian crisis of 1997, global financial crisis of 2008). You need to be able to discuss international policy responses to financial crises, with a particular focus on the role that the most powerful states play in dealing with such crises. To illustrate your answer, you are free to draw on experience with any particular financial crisis or several crises. The main focus of the answer should be on how leading states, through international financial institutions such as the IMF, have responded to financial crises; and what the crisis management can tell us about the role that the great powers play. The answer will need to demonstrate some knowledge about what the underlying dilemmas are that the international community faces in financial crises; what kind of interventions are needed to stabilise the international financial system; and how such interventions (for example, by the IMF) are dependent on the support of the most powerful states, particularly the United States. A strong answer would also discuss the limitations of such interventions by powerful states and how their ability to maintain international financial stability is constrained. 8

9 Question 7 Can the creation of domestic industries through infant industry protection ever promote national economic development? Chapter 7 of the subject guide gives an overview of economic development related topics. Infant industry protection is introduced in Chapter 2 in the context of the mercantilist tradition, and is also discussed briefly in the context of the debate on free trade versus protectionism in Chapter 5. Further useful reading on this question can be found in: Chang, H. Kicking away the ladder: economic development in historical perspective. (London: Anthem Press, 2002) [ISBN ]. Wade, R.H. Governing the market: economic theory and the role of government in East Asian industrialization. (Princeton: Princeton University Press, 1990) [ISBN ]. Mayall, J. Nationalism and international society. (Cambridge: Cambridge University Press, 1990) [ISBN ]. Irwin, D.A. (1996). Helleiner, E. Economic Nationalism as a Challenge to Neoliberalism? Lessons from the 19th Century, International Studies Quarterly 46(3) 2002, pp This question requires that you apply your knowledge of infant industry protection, which is a mercantilist instrument of national economic policy, to the discussion of economic development, with the latter concerning both developed and developing countries. A good way to start would be to introduce the concept of infant industry protection and place it in the context of mercantilist thinking. It is not necessary to rehearse the evolution of mercantilist thinking, but you may wish to discuss why mercantilists have favoured this particular instrument of economic policy throughout history. The next step involves a discussion of the usefulness of infant industry protection as a tool of national economic development. You should consider both sides of the argument; that is, why infant industries in late developing economies need initial protection before they can expose themselves to global market competition, and also why such protectionist policies can fail to develop national industries and make them more dependent on the protection of the state. In assessing these competing claims, you should draw on empirical examples from the history of economic policies in late developing economies. A strong answer would try to identify the specific historical conditions in which infant industry protection can be an effective tool of national economic policy. Question 8 Should developing countries welcome, or fear, the economic size and power of multinational corporations? Multinational corporations (MNCs) and their relationship with host governments, including developing countries, are covered in Chapter 8 of the subject guide. Ravenhill (2010), Chapter 11, Gilpin (2001), Chapter 11 provide general background to this topic, as does: Hirst, P. and G. Thompson Globalization in question: the international economy and the possibilities of governance. (Cambridge: Polity, 2009) third edition [ISBN ], Chapter 3. 9

10 IR3026 International political economy 10 Texts that address the question of corporate power and relations with governments include (among others): Graham, E.M. Fighting the wrong enemy: antiglobal activists and multinational enterprises. (Washington: Institute for International Economics, 2000) [ISBN ]. Hertz, N. The silent takeover: global capitalism and the death of democracy. (London: Heinemann, 2001) [ISBN ]. Hughes, O.E. and D. O Neill Business, government and globalization. (Basingstoke: Palgrave Macmillan, 2008) [ISBN ]. May, C. (ed.) Global corporate power. (Boulder: Lynne Rienner, 2006) [ISBN ]. Stopford, J., S. Strange and J.S. Henley Rival states, rival firms: competition for world market shares. (Cambridge: Cambridge University Press, 1991) [ISBN ]. The question relates to the general perception that global firms have become more powerful in the international political economy and that a power shift from states to global firms has occurred, but is focused more narrowly on the power relationship between developing countries and MNCs. You should therefore avoid simply rehearsing the debate about the rise of MNCs and their power and focus your answer specifically on the context of MNC investments in the developing world. To answer the question, you should first describe the growth of multinational corporations, define what they are and give a sense of their size and economic clout. Following this, you would need to consider the specific effects that MNCs and their investments have on developing countries. It is important to consider both benefits and costs that developing countries derive from engaging with MNCs. This includes the benefits relating to economic growth, employment and technology transfer that multinationals bring; as well as the dangers relating to economic dependence, regulatory race to the bottom, and exposure to external economic fluctuations that may leave developing countries unable to control their own economic fortune. A strong answer would distinguish between different types of developing countries and different types of firm-state bargaining situations, which may produce different results in terms of the benefits that host countries may receive. Thus, China is in a much stronger position vis-à-vis MNCs than developing countries in sub-saharan Africa. Question 9 To what extent does the concept of sustainable development challenge the liberal principles embodied by the World Trade Organization (WTO) trading system? Chapter 9 of the subject guide introduces global environmental politics, as does Chapter 14 of Ravenhill (2010), while Chapter 5 of the subject guide covers the creation and nature of the World Trade Organization (WTO). A useful discussion of the concept of sustainable development can be found in: Clapp, J. and P. Dauvergne Paths to a green world: the political economy of the global environment. (Cambridge, MA: MIT Press, 2005) [ISBN ], Chapter 3. Other relevant texts on this topic include: Elliott, L. The global politics of the environment. (London: Macmillan, 2004) second edition [ISBN ].

11 World Commission on Environment and Development Our common future. (Oxford: Oxford University Press, 1987) [ISBN ]. To answer this question, you need to have a general understanding of both global environmental politics and the international trade order. A good starting point would be to introduce the concept of sustainable development, which rose to prominence in the 1980s and became a focal point of the 1992 UN Conference on Sustainable Development (UNCED). You should define its meaning and how it has been given expression in international environmental politics; for example, in the form of international environmental aid to developing countries. This should then lead to a discussion of whether, and to what extent, this concept challenges the liberal principles embodied by the WTO. Such a comparison requires you briefly to describe the WTO s liberal principles, particularly with regard to promoting free trade and reducing the interference in trade by the state or international organisations. On the basis of this, you would need to establish the extent to which policies to promote sustainable development clash with free trade principles. For example, the discussion could focus on how environmental policies target polluting behaviour in the international economy, by regulating or outlawing such behaviour, which can end up interfering with or restricting trade. Ideally, you should refer to specific examples of whether, and how, the sustainable development agenda creates challenges to liberal principles in the trade system. An outstanding answer would note the ambiguities in the concept of sustainable development and demonstrate how it can lead to different forms of global environmental policy, some of which may be compatible with the liberal principles of the WTO. Question 10 Is the regional level a more promising focus for economic integration today than the global level? Chapter 10 of the subject guide deals with regionalism. Ravenhill, J. (2010). Best, E. and T. Christiansen Regionalism in International Affairs in J. Baylis, S. Smith and P. Owens (eds) The globalization of world politics: an introduction to international relations. (Oxford: Oxford University Press, 2011) [ISBN ] offer good background information on regionalism. Chapters 7 and 9 of Gilpin (2000) discusses European and Asian regionalism, while Chapter 13 of Gilpin (2001). Hurrell, A.J. Explaining the Resurgence of Regionalism in World Politics, Review of International Studies 21(4) 1995, pp gives an overview of different theoretical explanations of regionalism. The following offer useful background on different regional integration projects: Breslin, S., C.W. Hughes, N. Phillips and B. Rosamond (eds) New regionalism in the global political economy. (London: Routledge, 2002) [ISBN ]. Phillips, N. The southern cone model: the political economy of regional capitalist development in Latin America. (London: Routledge, 2004) [ISBN ]. Fawcett, L. and A.J. Hurrell Regionalism in world politics: regional organization and international order. (New York: Oxford University Press, 1995) [ISBN ]. 11

12 IR3026 International political economy You would also find it useful to draw on material from Chapter 5 of the subject guide, which deals with international trade, and particularly the sections that discuss the contemporary crisis in multilateral trade policy and the rise of regional trade agreements. Useful texts in this regard are: Bhagwati, J. Termites in the trading system: how preferential agreements undermine free trade. (Oxford, Oxford University Press, 2008) [ISBN ]. Jones, K.A. The Doha blues: institutional crisis and reform in the WTO. (New York: Oxford University Press, 2010) [ISBN ]. To answer this question, you need to have an understanding of the forces driving both regional integration and global integration. You are required to compare and contrast both forms of integration and discuss whether there has been a shift in recent years away from global (multilateral) integration towards regional forms of integration. One way to start the answer would be first to introduce the concepts of regional and global integration and then describe recent shifts towards regional integration. The focus in this answer should be not on explaining regionalism and regional integration as such but on a discussion of contemporary trends away from global (multilateral) towards regional integration. The answer could then focus on specific examples that illustrate recent shifts in regional/global integration. A useful area to focus on is international trade, where the multilateral negotiations on trade liberalisation (Doha Development Round) have yielded little progress since their launch in 2001, while lots of regional trade agreements have been negotiated during the same period. You can use this example to illustrate their answer and explain some of the underlying reasons for the shift away from multilateral economic integration. A strong answer would go one step further and distinguish between different regional contexts and different levels of regional integration, noting that not all regional integration efforts have been successful. Question 11 Does the economic success of emerging economies contradict long-standing claims that global market integration offers no hope of sustained economic development? Chapter 7 of the subject guide deals with the general topic of economic development. Other relevant texts for this question include: Chang, H. (2002). Rapley, J. Understanding development: theory and practice in the Third World. (Boulder: Lynne Rienner, 2007) third edition [ISBN ]. Rodrik, D. The new global economy and developing countries: making openness work. (Washington, DC: Overseas Development Council, 1999) [ISBN ]. You would also benefit from the discussion of theories of international political economy and how they relate to questions of economic development in Chapters 3 and 4 of the subject guide, particularly with regard to liberal arguments for, and dependency theory s arguments against, global market integration. This question requires that you assess the developmental success of emerging economies and relate this to the long-standing debate in international political economy about whether global market integration is the best strategy for economic development. A good way to start the 12

13 answer would be to describe the recent economic success of emerging economies, such as China, India and Brazil, and discuss the role that global market integration has played in promoting their economic development; for example, through export-oriented growth strategies and/or encouragement of foreign direct investment. The next step would need to relate this discussion to the broader question of what lessons developing countries can learn from the experience of emerging economies. This should not be a general discussion of developmental strategies as such but a focused discussion of whether their experience contradicts arguments against global market integration. You should consider arguments on both sides of this debate, even if the success of emerging economies is generally held to support global market integration strategies. A strong answer would link this discussion to the underlying theoretical debate in IPE between those theories that emphasise the benefits of open economies (e.g. liberalism) and those that are critical of engagement with global capitalism (e.g. dependency theory). Question 12 Why has the international finacial crisis of 2008 not brought economic gloabalisation to a halt? There is no specific chapter in the subject guide that deals with this topic, but you can draw on the discussion in Chapter 1 on globalisation and Chapter 6 on international finance as background reading. Other literature on globalisation and financial crises that will be useful includes: Scholte, J.A. Globalization: a critical introduction. (Basingstoke: Macmillan, 2005) second edition [ISBN ]. Eichengreen, B.J. (2002). Gamble, A. The spectre at the feast: capitalist crisis and the politics of recession. (Basingstoke: Palgrave, 2009) [ISBN ]. Reinhart, C.M and K.S. Rogoff This time is different: a panoramic view of eight centuries of financial crisis, NBER Working Paper (2008). For events relating to the global financial crisis of 2008 and subsequent developments, you need to follow news coverage in publications such as The Economist and The Financial Times. You will need to show a general understanding of globalisation and its underlying drivers as well as more specific knowledge about the recent global financial crisis and how it has impacted on the global economy and globalisation. A good way to start the answer would be to introduce the 2008 financial crisis and describe how it has brought about the world s most severe economic downturn since the Great Depression of the 1930s. In describing the impact of the financial crisis, you should focus on how it has led to a temporary decline in global economic activity, including international trade and financial flows, but how this temporary effect has failed to bring economic globalisation to a halt. Based on this initial discussion of the empirical situation, you will then need to consider why economic globalisation has survived the financial crisis, and how the international political economy has weathered this unprecedented economic crisis. In doing so, you may wish to consider the role that international institutions have played in dealing with the aftermath of the crisis, and how major economic powers have cooperated to deal with the economic shocks caused by the financial crash. A strong answer would link this discussion to more theoretical arguments about what drives economic globalisation. 13

14 IR3026 International political economy Examiners commentaries 2014 IR3026 International political economy Zone B Important note This commentary reflects the examination and assessment arrangements for this course in the academic year The format and structure of the examination may change in future years, and any such changes will be publicised on the virtual learning environment (VLE). Information about the subject guide Unless otherwise stated, all cross-references will be to the latest version of the subject guide (2011). You should always attempt to use the most recent edition of any Essential reading textbook, even if the commentary and/or online reading list and/or subject guide refers to an earlier edition. If different editions of Essential reading are listed, please check the VLE for reading supplements if none are available, please use the contents list and index of the new edition to find the relevant section. Comments on specific questions 14 Candidates should answer FOUR of the following TWELVE questions. All questions carry equal marks. Question 1 Which is a more potent driver of economic globalisation: technological innovation or hegemonic power? Chapter 1 of the subject guide provides an introduction to globalisation as a concept and in historical perspective. Other useful discussions of globalisation can be found in Gilpin, R. Global political economy: understanding the international economic order. (Princeton: Princeton University Press, 2001) [ISBN ] Chapters 1 and 2. Gilpin, R. The challenge of global capitalism: the world economy in the 21st century. (Princeton: Princeton University Press, 2000) [ISBN ], Chapter 10. Hirst, P. and G. Thompson The Future of Globalization, Cooperation and Conflict 37(3) 2002, pp Scholte, J.A. Globalization: a critical introduction. (Basingstoke: Macmillan, 2000) second edition [ISBN ]. This question requires a consideration of the underlying drivers of globalisation. Two of them technological innovation and hegemonic power need to be at the centre of the discussion; although you may want to refer to others as well. A good way to start the answer would be to define the concept of globalisation. In doing so, you should remember that there are different dimensions of globalisation, and that not all authors agree on how to define the concept. The point of this is not to enter into a lengthy discussion of different definitions but to give a

15 sense of what globalisation is about and how the main interpretations of this phenomenon differ. The main focus of the answer should be on the question of how technology and hegemonic power are driving the process of global economic integration, and which of these two factors is the more potent driver. In a first step, you need to discuss how technological innovation (for example, invention of steamships, telegraph, information and communication technologies) and hegemonic power (for example, Britain in the 19th century, the USA in the 20th century) are promoting the globalisation trend. The next step, then, is to compare both these factors and establish which one is a more powerful force behind globalisation. There is no agreement on this question in the literature, so you may come up with different answers. A strong answer would also go into some detail explaining why it is either technology or hegemony that is the most potent driver. Question 2 Does mercantilism still hold lessons for trade policy today? Chapter 2 of the subject guide offers an introduction to the mercantilist tradition. The following introduces the main tenets of mercantilism: Economides, S.and P. Wilson The economic factor in international relations: a brief introduction. (London: I.B. Tauris, 2001) [ISBN ]. As does: Gilpin, R. The political economy of international relations. (Princeton: Princeton University Press, 1987) [ISBN ]. Further useful texts on this topic are: Ravenhill, J. (ed.) Global political economy. (Oxford: Oxford University Press, 2010) third edition [ISBN ], Chapter 2. Irwin, D.A. Against the tide: an intellectual history of free trade. (Princeton: Princeton University Press, 1996) [ISBN ], Chapters 2 and 8. To answer this question, you need to explain both the essence of the mercantilist tradition and the continued relevance and appeal of mercantilist ideas in contemporary trade policy. A good way to start would be to introduce the key tenets of mercantilism. A brief review of what makes mercantilism a distinctive tradition of international political economy would suffice. This is not the place to go into much detail about how mercantilism changed over time; instead, you should focus on some core insights of mercantilism that have stayed constant over centuries. Thus, you should introduce the mercantilist understanding of power and wealth, with reference to the idea of global wealth as a fixed sum and global economic competition as a zero sum game; the need for states to intervene in international trade to maximise their economic gain; and the importance of power for the expansion of exports and accumulation of wealth. On the basis of this, you should then discuss whether mercantilism holds any lessons for contemporary trade policy. This could involve a discussion of the use of trade protectionism as part of developmental strategies, the role that infant industry protection plays even today, and the continued use of protectionism even by the most advanced and liberal economies. However, you would also need to discuss the gradual decline of mercantilist thinking in trade policy over time, despite the fact that certain elements of trade protectionism survive today. 15

16 IR3026 International political economy 16 Question 3 Why do liberals believe that the preoccupation of nation-states with relative gains need not hold back the promotion of free trade? Chapter 3 of the subject guide provides background on the liberal tradition. Chapter 2 of Ravenhill (2010) puts liberalism in the context of IPE theory more generally, while Wyatt-Walter, A. Adam Smith and the Liberal Tradition in International Relations, Review of International Studies 22(1) 1996, pp.5 28 considers Adam Smith s important role in formulating core liberal beliefs about the global economy and the benefits of free trade. Other relevant texts on the liberal tradition and liberal trade theory include: Economides, S. (2001), Chapter 2. Richardson, N.R. International Trade as a Force for Peace in Charles W. Kegley Jr. (ed.) Controversies in international relations theory: realism and the neoliberal challenge. (New York: St. Martin s Press, 1995) [ISBN ], pp Sally, R. Classical liberalism and international economic order: studies in theory and intellectual history. (London: Routledge, 1998) [ISBN ] and Irwin (1996). This question concerns a core tenet of the liberal tradition in international political economy; namely, the idea that it is in the interest of all states to promote global free trade even though they may be more concerned with promoting the national interests and maintaining a favourable balance of power. A good way to start would be to outline the main tenets of the liberal tradition and contrast this with the mercantilist view, which claims that a concern for relative gains makes states pursue protectionist rather than free trade policies. On the basis of this, you would then need to discuss in more detail why it is that liberals believe in the general applicability of the free trade doctrine; and why the concern for national power and relative gains does not stand in the way of a general trend towards the liberalisation of international trade. This discussion thus revolves around the liberalmercantilist debate and the question of whether economic growth and prosperity is a zero-sum or positive-sum game, and it would need to show in detail what reasons liberals give for their claim that states can overcome their usual preoccupation with relative gains to promote absolute gains; namely, the growth of the global economy that (potentially) benefits all nations and not just their own. A strong answer would also refer to the historical evolution of the international economy and illustrate the liberal argument with reference to cases where states created a free trade order (for example, the General Agreement on Tariffs and Trade and the World Trade Organization system) despite the persistence of relative gains as a driving force in international relations. Question 4 Does the failure of the New International Economic Order invalidate, or confirm, the dependency theory of economic development? Chapters 4 and 7 of the subject guide provide the main foundation for this answer. Dependency theory and the New International Economic Order (NIEO) are covered in Chapter 4, and Chapter 7 discusses developmental strategies in the global economy more generally. Other useful texts on this question include:

17 Ravenhill, J. (2010), Chapter 13. Seers, D. (ed.) Dependency theory: a critical reassessment. (London: Pinter, 1981) [ISBN ]. Chang, H. Kicking away the ladder: economic development in historical perspective. (London: Anthem Press, 2002) [ISBN ]. Krasner, S.D. Structural conflict: the Third World against global liberalism. (Berkeley: University of California Press, 1985) [ISBN ]. This question requires that you relate the failure of the project to create a New International Economic Order in the 1970s and 1980s to dependency theory and its account of economic development. To begin with, you may choose to introduce dependency theory first before discussing the failure of the New International Economic Order, or the other way round. Either way, you need to consider the specific historical context in which both the NIEO and dependency theory arose, and you need to explain why it is generally assumed that the NIEO s decline brought with it a decline in the credibility of dependency theory. On the basis of this, you should then consider whether dependency theory is indeed invalidated by the decline of the NIEO agenda, as can be seen from the shift in many developing countries towards more export-oriented growth strategies and their embrace of the Washington Consensus from the 1980s onwards; or whether dependency theory s insights into the structural inequalities of the global capitalist system are in fact confirmed by the decline of the NIEO, given its reformist agenda and failure to overcome the structural dominance of the rich industrialised countries. It is perfectly possible to find arguments in favour of both propositions, and a strong answer would seek to offer a nuanced assessment that draws out both strengths and weaknesses in dependency theory s account of economic development. Question 5 What factors explain the successful creation of a legally binding trade dispute settlement mechanism under the World Trade Organization (WTO)? Chapter 5 of the subject guide provides background to the international trading order of the GATT and WTO. Useful texts that focus more specifically on the Uruguay Round and the creation of the WTO (including the legally binding dispute settlement mechanism of the WTO) include: Ravenhill, J. (2010), Chapter 5. Gilpin, R. (2001), Chapter 8. Hoekman, B.M. and M.M. Kostecki The political economy of the world trading system: the WTO and beyond. (Oxford: Oxford University Press, 2009) third edition [ISBN ]. This question has a more historical focus and requires a good understanding of the evolution of the international trade system, particularly the circumstances surrounding the GATT Uruguay Round and the creation of the WTO. To begin with, you should briefly sketch the key events that led to the Uruguay Round and its main outcomes. You would then need to discuss in more detail the creation of the legally binding dispute settlement mechanism (DSM) under the WTO and outline its key elements. The point of this is not to discuss how the DSM works and how effective it has been, but to explain what made its creation possible. The answer thus needs to go into some detail on the drivers behind the successful completion of the Uruguay Round, the role that key powers 17