International Political Economy

irrational exuberance

"false hopes", acid inflation caused by low interest rates, so people spent money on stock market instead of saving, so stock market prices sky rocketed, -deals w/1990 internet explosion

protectionism

(we don't want a deficit in trade, we want a surplus) seek to protect national interests + domestic constituencies. Includes: tax laws (tariffs or duties), regulatory laws (public health laws, env.), quota laws (limits on quantities of a certain imported good), antidumping laws (laws prohibiting selling below product cost), subsidies (govt supported monopolies)

Hegemonic state

-A state powerful enough to enforce cooperation through threat of force -Willing to pay the cost of providing a public good

fixed, pegged and floating exchange rates

-the price of currency in units of other currencies, (appreciation and depreciation) Floating: an unmanaged process in which governments neither establish an official rate for their currencies nor intervene to affect the value of their currencies, and instead allow market forces and private investors to influence the relative rate of exchange for currencies between countries (based on the demand for and supply of these currencies) Pegged and fixed: when a government commits itself to keep its currency at or around a specific value in terms of another commodity, such as gold. This resulted from the Bretton Woods system, thus making the US $ the worlds reserve currency. All other countries become begged to the dollar.

competition

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cooperation

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interdependence

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RTA / trade agreement

..., A negotiated agreement among two or more countries to limit or alter their policies with respect to trade., Regional Trade Agreement; trade agreement that removes all barriers to trade among member nations while maintaining barriers with non-members (technically these violate GATT and WTO principle of nondiscrimination yet are still legal entities)

supply chain

..., Global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution and cash.

most-favored nation

..., Status in an international trading arrangement whereby agreements between two nations on tariffs are then extended to other nations. Every nation involved in such an arrangement will have most-favored-nation status. This policy is used, particularly by the United States, to lower tariffs, extend cooperative trading agreements, and protect nations from discriminatory treatment. Most-favored-nation agreements can also be used to apply economic pressure on nations by deliberately excluding them from international trade.

assets

..., The entire property of a person, association, corporation, or estate applicable or subject to the payment of debts.

globalization

..., The process by which regional economies, societies, and cultures have become integrated through a global network of political ideas through communication, transportation, and trade.

conditionality

..., When regional or international lending agencies require that recipient national governments accept certain policy conditions in order to receive a loan or some form of economic assistance. includes structural adjustment procedures

WTO

..., _______________, in effect since 1995. It deals with trade regulations amongst states and seeks ultimately to liberalize international trade. - a rules-based organization; a collective body - the WTO System: an int'l organization with enhanced legal integration - DSU (dispute settlement unit) - Doha Round à stalemate

interdependence

..., a relationship between countries in which they rely on one another for resources, goods, or services

capital

..., assets available for use in the production of further assets, previously manufactured goods used to make other goods and services

Third World debt

..., money owed by developing countries to richer countries, From commercial banks, governments, IGOs (World Bank; IMF).

currency crisis

..., when a speculative attack on the exchange value of a currency results in a sharp depreciation of the currency or forces authorities to expend large volumes of international currency reserves and sharply increase interest rates to defend the prevailing exchange rate

Bretton Woods Agreement

1944, Held in _____________New Hampshire, Allied leaders joined and created the IMF, GATT and World Bank. It made the change that all exchange rates were fixed in terms of the dollar (since the gold standard fell during the war, this replaced/reinstated it); the US stood ready to convert foreign holdings of dollars into gold at a rate of $35/ounce

Cold War

1945-1988 The ideological struggle between communism (Soviet Union) and capitalism (United States) for world influence. The Soviet Union and the United States came to the brink of actual war during the Cuban missile crisis but never attacked one another.

soft / hard currency

1: not widely accepted currency - usually limited to its home country or region. a currency that is not fully convertible. However, even a hard currency can be weak relative to another currency because of the relative exchange rates over time. , fluctuates in value and are not considered stable. They are not easily converted 2: Currencies including USD, JPY, GBP and EUR, that are generally accepted in international trade transactions because the money is issued by large countries with reliable and predictably stable political economies.,

tariff/non-tariff barriers

1: taxes placed on imported goods to raise the price of those goods, making them less attractive to consumers. Used to protect domestic industry from foreign competition 2: all barriers other than protective tariffs that nations erect to impede international trade, including import quotas, licensing requirements, unreasonable product-quality standards, unnecessary bureaucratic detail in customs procedures, and so on (an example of neomercantilism taken in the 1970s post OPEC crisis)

Imperialism

A policy in which a strong nation seeks to dominate other countries politically, socially, and economically.

regional integration

Agreements among countries in a geographic region to reduce, and ultimately remove, tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other

european union

An economic and political union established in 1993 after the ratification of the Maastricht Treaty by members of the European Community and since expanded to include numerous Central and Eastern European nations. The establishment of the European Union expanded the political scope of the European Economic Community, especially in the area of foreign and security policy, and provided for the creation of a central European bank and the adoption of a common currency, the euro.

economic growth

An increase in the total output of an economy. It occurs when a society acquires new resources or when it learns to produce more using existing resources.

APEC/ASEAN

Asia-Pacific Economic Cooperation is a forum for 21 Pacific Rim countries (formally Member Economies) that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region. Established in 1989 in response to the growing interdependence of Asia-Pacific economies and the advent of regional economic blocs (such as the European Union) in other parts of the world, APEC works to raise living standards and education levels through sustainable economic growth and to foster a sense of community and an appreciation of shared interests among Asia-Pacific countries. The Association of Southeast Asian Nations is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967. Its aims include the acceleration of economic growth, social progress, cultural development among its members, the protection of regional peace and stability, and to provide opportunities for member countries to discuss differences peacefully

bailout

Emergency funds given to corporations in order to prevent their collapse. Funds can come from the government or other institutions, can take many forms, and may or may not require reimbursement

Multinational ompanies (MNCs)

Firm that produces, distributes, and markets its goods or services in more than one country. They are able to influence politics, econ developments, and social relations through the goods and services they produce and the wealth at their disposal. Ex: Microsoft/cocacola.

International Monetary Fund (IMF)

Formally charged with providing short-term loans to countries experiencing a current account deficit in their balance of payments (in exchange for the implementation of policies) 1980s worked with World Bank to solve the problem of LDC debt

government spending

Government expenditures, both chosen and required for a variety of programs and entitlements.

capital account

Includes all payments related to the purchase and sale of assets and to borrowing and lending activities. Components include outflow of U.S. capital and inflow of foreign capital (simply put, international investment)

G-8

International organization that promotes economic cooperation: GB, Canada, France, Germany, Italy, Japan, Russia, and the US.

IPE (International Political Economy)

International political economy is the study of the "interplay" of economics and politics in the world arena. i) the study of the political basis of economic actions, the ways in which government policies affect market operations. i.e.) the evolution of European Union; gov't subsidies; Japan and Korean auto transplants in the U.S.... ii) the economic basis of political action, the ways in which economic forces mold government policies. i.e.) imperialism; policy demands for (conflicts about) free trade or protectionism; liberalization; industrial policy... --> two focuses are complementary (politics and markets are in a "constant" state of mutual interaction); * important questions are about effects of various political (and economic) "conditions" that mold preferences, choices of policy coalitions of individuals, groups, firms and even states.

nafta

NAFTA Regional trade agreement b/w US, Canada and Mexico i. Encourages the elimination of trade barriers between these nations MEXICO: i. Mexico's economic crisis in the 1980s leads to deregulation and market opening (Mexico joins GATT in 1985) c. In 1994, NAFTA reduced tariffs over 15 years d. NAFTA has created the world's largest trading bloc e. Unresolved labor issues include immigration and cross-border trucking

State / Nation

Nation, state and nation-state are three different concepts. A nation defines a group of people with a shared sense of cultural identity and territoriality. A state is a legal concept describing a a social group that occupies a territory and is organized under common political institutions and an effective government. A nation-state, synonymous with the term country -- since the 1648 Peace of Westphalia, this has been the major political (sovereign) unit of the international system.

Colonialism

Policy by which a nation administers a foreign territory and develops its resources for the benefit of the colonial power...exploitation

Smoot-Hawley Tariff

Pres. Hoover era, legislation passed in 1930 that established very high tariffs. its objective was to reduce imports and stimulate the domestic economy, but it resulted only in retaliatory tariffs by other nations. Was considered the cause for the great depression.

constructivism

theoretical perspective proposing that learners construct, rather than absorb, knowledge from their experiences

open market operations

Purchases and sales of government and certain other securities in the open market through the Domestic Trading Desk at the Federal Reserve Bank of New York, with the purpose of influencing the volume of money and credit in the economy

foreign assets

Represents the total fixed and current assets outside the home country

neoliberalism

Revival of Adam Smith's classic economic liberalism (primarily thought of in the 1970s), the idea that governments should not regulate private enterprise and that free market forces should rule , deregulation, privatization, open world market(an agenda of economic policies -- compared to liberalism as a perspective)

TRIPs

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement administered by the World Trade Organization (WTO) that sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994.

Adam Smith

Scottish political economist and philosopher. His Wealth of Nations (1776) laid the foundations of classical free-market economic theory, government should not interfere with economics. Advocates Laissez Faire and founder of "invisible hand", Father of economics. Explained how rational self-interest and competition, operating in a social framework which ultimately depends on adherence to moral obligations, can lead to economic well-being and prosperity.

uruguay round (UR)

The Ambitious GATT round of negotiations that took place during 1987-94, which attempted to negotiate trade restrictions that heretofore been ignored, such as those on agricultural trade, clothing trade, services trade, and intellectual property rights.

eurozone

The Eurozone are the collection of countries who all share the Euro as a common currency. However, each member retains their own economic policies, with the exception that they do not have monetary policy powers. Many countries are currently in the process of joining the Eurozone because of the perceived benefits. Greece's entering into the Eurozone directly contributed to the lowering of interest rates in that country, as investors assumed that as a Eurozone member, greece would take fiscal policyt measures to improve the country's finances, and at the very worst, The richer members would bailout Greece. In 2010, the Greek debt crisis threatened the Eurozone, because the potential for default could lead to a chain of increasingly devastating defaults in other member countries that would lead to severe economic depression. Members of the Eurozone include Germany, France, Italy, Greece, Portugal and Spain.

GATT

The General Agreement on Tariffs and Trade - a multilateral agreement that sought to promote free trade among countries; predecessor to the WTO, established in 1947. Promotes the ideas of reciprocity and nondiscrimination (supposedly) MFN status included in this

maastricht treaty

The Maastricht Treaty (formally, the Treaty on European Union, TEU) was signed on February 7, 1992 in Maastricht, the Netherlands after final negotiations on December 9, 1991 between the members of the European Community and entered into force on November 1, 1993 during the Delors Commission. It led to the creation of the European Union and was the result of separate negotiations on monetary union and on political union. The Maastricht Treaty has been amended to a degree by later treaties

World Bank

The World Bank is an international financial institution that provides loans to developing countries for capital programmes. created by the bretton woods agreement (used to be called in the international bank for reconstruction and development -- meant to help European countries redevelop post WWII)

liabilities

US banks borrow from depositors (you) who are paid interest and FDIC insured, Organization's debts and other financial obligations.

Keynesianism

The economic theory is based on the idea that the state will follow economic policies which regulate the economy in an effort to promote economic growth. The key point to include is that the state can use deficit spending to boost the economy in times of economic downturn--in other words, the state can spend more money than it has to keep the circular flow of goods flowing. When the economy is doing well, the state can cut back and reduce its spending. -combine state and market influences in a way that in the spirit of Adam Smith still relies on the invisible hand but supports a larger but still limited sphere of constructive state action. -state intervention -adopted in modern terms with regard to the current economic crisis (We're all Keynesian now)

division of labor

The main focus of Adam Smith's The Wealth of Nations lies in the concept of economic growth. ____________, or specialization is essentially the breaking down of large jobs into many tiny components. Under this regime each worker becomes an expert in one isolated area of production, thus increasing his efficiency. Also also implies assigning each worker to the job that suits him best (different attributes and knowledge)

official reserves

The quantities consisting of foreign currencies that the central banks of nations hold with the IMF, and stocks of gold

Free market

This is the core of Adam Smith's thesis: giving everyone freedom to produce and exchange goods as they pleased (free trade) and opening all markets to competition (international as well as domestic). This became known as the invisible hand

Big 9

This refers to the 9 biggest banks that Henry Paulson sat down with prior to requesting his $700 billion dollar bailout (basically told them that they were going to take the money)

macroeconomic policy

Utilizes government spending and tax policy to influence economic growth. • Government spending is a direct source of demand for specific goods and services. • Increased govt. spending leads to GDP growth. • Decreased govt. spending leads to GDP declines. Tax policy affects how much money people and firms have to spend in the economy. • Tax increases reduce the amount of money available to spend in the economy by citizens.

structural adjustment

World Bank programs which offer financial and management aid to poor countries while demanding privatization, trade liberalization, and governmental fiscal restraint and adopt neo-liberalism

taxation / tax cuts

designed to equitabley distribute wealth, to protect new industries, or to uplift social conditions / may result in too few dollars chasing too few goods and therefore cause inflation

central bank

a government monetary authority that issues currency and regulates the supply of credit and holds the reserves of other banks and sells new issues of securities for the government, A bank whose chief function is the control of the nation's money supply; in the United States, the Federal Reserve System Ex) The main goal of the Federal Reserve is to maintain and control the money supply; they do this through Monetary Policies such as regulating domestic financial institutions and influence domestic and foreign exchange rates

free trade agreement (FTA)

a group of nations that agrees to eliminate tariff barriers for trade among themselves, but that retains the right of individual nations to set their own tariffs for trade with nonmember nations.

Gold Standard

a monetary standard under which the basic unit of currency is defined by a stated quantity of gold (strong until the end of WWI when it died - temporarily resurrected in the early 1930s - IMF, tied DOLLAR to gold in a fixed exchange rate, variation of this - specifically $35 an ounce)

proletariat

a social class comprising those who do manual labor or work for wages

fiscal policy

all economic activity by the government, a government policy for dealing with the budget (especially with taxation and borrowing)

OPEC (Organization of Petroleum Exporting Countries)

an international organization concerned with the crude-oil policies of its member states. This organization was founded in 1960, and has 11 members, including Kuwait, Algeria, Iran, Iraq, Indonesia, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. Due to their control of most of the world's oil supply, they have a strong influence on many industrialized nations. (1973 spike in oil prices)

customs union

an organization of nations whose members have no trade barriers among themselves but impose common trade barriers on nonmembers

european comission

an unelected body created in 1967 whose commissioners are appointed by member states but who are not responsible to them-to implement the treaties agreed to by member states. Commissioners propose new laws and run the day to day operations of Community affairs.

Positive sum game

any interaction between actors that makes all participants simultaneously better off -- this is the liberalist argument of the benefits of a free marker

TARP

bank side response to US economic crisis, initially turned down by congress then rewritten in-acting equity injectors in which the treasury takes preferred stock in banks and uses leverage to buy up bad debts (every dollar in equity offsets 8-10 dollars in bad debts) A Keynesian style of stimulus initiatives.

stag hunt

basically we must decide whether to act in our own interest or cooperate to save the group (referring to giving up sovereignty in exchange for the regulation and benefits of IOs) : Jean Jaques Rousseau's analogy of the five hunters trying to catch a stag (deer) by cooperating with one another. The analogy forces us to consider whether it is rational to cooperate to solve problems with one another, or not to--given that someone else may choose not to cooperate and ruin things for everyone. The analogy is often applied to security situations that require cooperation to move forward on a problem like arms control.

John Maynard Keynes

came at a time of crisis, liberal policy was failing -reacting to wild fluctuations seen in the market -ideally, fluctuations would self-correct -wants to achieve full employment -new policy response to market failure (mixed govt intervention)

opportunity cost

cost of any activity measured in terms of the value of the best alternative that is not chosen (that is foregone). It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices

radicalism

critiques the failures of the state and markets (anti-system), Belief that rapid, dramatic changes need to be made in the existing society, often including the political system. feel that the current system can't be saved, and starting new is the only option.

structuralism

critiques the failures of the state and markets (structure), a sociological theory based on the premise that society comes before individuals - have their roots in Marxist ideas but do not share the commitment to socialism - however they see the current global system as exploitive

balance of payments

registers an accounting of all of the international monetary transactions between the residents of one nation and those of other nations in a given year -- much like a personal check book

foreign debt (govt or private)

debt we owe to other countries; 2/3 of debt comes from other countries, people, companies and the rest comes from government owing itself

monetary policy

deliberate government efforts to increase the supply or velocity of currency

Specialization

essentially the breaking down of large jobs into many tiny components. Under this regime each worker becomes an expert in one isolated area of production, thus increasing his efficiency. This saves time and enhances overall gains from exchange and trade. Ultimately, this resulted from uneven distribution and attributes but led to greater abundance of the necessities and conveniences of life (similar to division of labor)

zero-sum game

gains by one party equal the losses for the others. Plays a major role in the realist-mercantilist perspective (not liberal thought)

exports vs imports

goods sent to other countries to sell vs goods sold in our country from other countries

national interest groups

groups that use various forms of advocacy to influence public opinion and/or policy; they have played and continue to play an important part in the development of political and social systems. Groups vary considerably in size, influence and motive; some have wide ranging long term social purposes, others are focused and are a response to an immediate issue or concern.

inflation

increased prices for goods and services combined with the reduced value of money

hedge fund

investment instrument that attempts to make a profit from the fact that an asset such as a stock or bond might be trading at different prices in different places. a private investment pool, open to wealthy or institutional investors, that is exempt from SEC regulation and can therefore pursue more speculative policies than mutual funds, known for its risky but lucrative returns.

capital flight

investors transfer their bank accounts out of the country to safe harbor nations. In turn, this creates extreme shortage of funds in the debtor nations and then sends interest rates shooting up in economics, occurs when assets and/or money rapidly flow out of a country, due to an economic event that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic strength. This leads to a disappearance of wealth and is usually accompanied by a sharp drop in the exchange rate of the affected country (depreciation in a variable exchange rate regime, or a forced devaluation in a fixed exchange rate regime)., Also: When residents and nonresidents rush to convert their holdings of domestic currency into a foreign currency, usually taking place when domestic currency is depreciating rapidly or a counry is facing dim economic prospects

Liberalism

market oriented economic model (cooperative), an economic theory advocating free competition and a self-regulating market and the gold standard

bonds / securities

notes of debt - also commonly called "paper" - paid out at an established rate of return or interest over a specified period of time (are effectively tradable loans to governments and private firms)

schengen agreement

opened the borders between most of the european countries and defined new forms of police cooperation. 1985. , The 1985 agreement between some- but not all- European Union member countries to reduce border formalities in order to facilitate free movement of citizens between member countries of the new "Schengenland." For example, today there are no border controls between France and Germany or between France and Italy. opened the borders between most of the european countries and defined new forms of police cooperation. 1985.

Mercantilism

state-focused economic model (realist) -- a term generally applied to state intervention in an attempt to manipulate market outcomes, typically out of some realist or national interest

stocks / equities

stocks are ownership shares in companies called equities / equities may be reserved for private ownership (family business) or may be sold to the public and traded

current account

that part of the balance of payments recording a nation's exports and imports of goods and services and transfer payments

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer the producer can do both areas efficiently but specializes anyways b/c not enough resources and can make more money (**Ricardo built this idea off of Smith's idea of absolute advantage) included in this is the idea of an inherent opportunity cost

factor endowments

the amount of land, labor, capital, and entrepreneurship that a country possesses and can exploit for manufacturing -- commonly referenced as part of the Heckscher-Ohlin model

trade

the commercial exchange (buying and selling on domestic or international markets) of goods and services

hegemonic currency

the current most powerful currency --> right now this is the dollar as a result of BWA and the fixed exchange rate at first. many argue different theories on whether or not this will stay this way for long

statistical discrepancies

the idea that in measuring balance of payment, measures are inexact so we must keep track of the margin of ___________________

bourgeoisie

the middle class, including merchants, industrialists, and professional people

interest rates

the percentage of a sum of money charged for its use. Usually lenders will add this onto the amout of money borroted from them. Discount: The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window. SubPrime: characterized by higher interest rates and less favorable terms in order to compensate for higher credit risk. Prime: a term applied in many countries to a reference interest rate used by banks

FDI

the purchase by the investors or corporations of one country of non-financial assets in another country. This involves a flow of capital from one country to another to build a factory, purchase a business or buy real estate."

absolute advantage

this is the idea that ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors, using the same amount of resources (Adam Smith "The tailor does not make his own shoes, but buys them from the shoemaker")

GDP/GNP

total goods/services produced by a country // GDP + net transfers of profits from firms and individuals operating abroad

balanced budgets

when revenues equal expenditure (no deficit or surplus)