Unit 1 exam

Economic nationalism

(A people's sense of economic loyalty to their nation-state) became even more entrenched in international relations, which in turn helped generate a second wave of imperialism when Germany, Japan, Italy, and the United States began acquiring their own colonies.

Responsibilization

.29 In other words, the individual lives in service to the economy: "Instead of being secured or protected, the responsibilized citizen tolerates insecurity, deprivation, and extreme exposure to maintain the competitive positioning, growth, or credit rating of the nation as firm."30 Instead of being protected from the depredations of the market through unions or other organizations that engage in collective action, individuals have become isolated units. As "responsibilized" people they have to cultivate their "human capital," compete with others, "self-invest wisely," and become self-reliant.29

Civil Society

A variety of transnational groups have interests that cut across national boundaries. A host of NGOs have attempted to pressure national and international organizations on such issues climate change, refugees, migrant workers, and gender-based exploitation. All of these groups are purveyors of ideas that potentially generate tensions between them and other groups but play a major role in shaping global behavior

Capital (Marx)

Capital, what Marx called the means of production, refers to the privately owned assets used to produce commodities in an economy.

Insourcing

Changes in the global economy have incentivized U.S. companies such as General Electric, Apple, Whirlpool, and Sleek Audio to bring some of their manufacturing capacity back to the United States

Outsourcing

Eventually they started to contract with other companies overseas for goods and services

Foreign Direct Investment

FDI consists mostly of overseas investments by foreign companies in factories, mines, and land. About two-thirds of existing FDI is in developed countries, while one-third is in developing countries. The biggest senders of FDI in the world are corporations in the United States, the United Kingdom, Germany, and Japan.

Foreign exchange rate

Finance, money, and debt are interrelated in a structure that shapes cross-border flows of capital, the relative value of national currencies...Exchange rates are often set by supply and demand in the market. However, a central bank can also intervene in currency markets, sometimes surreptitiously, buying up its country's own currency or selling it in an attempt to alter its exchange value. When the demand for a country's currency declines, a central bank can use its foreign reserves to buy (demand) its own currency, pushing up its value.

Class conflicts

For Marxists, this inevitably leads to the exploitation of workers because of their weak bargaining position. In a capitalist economy, there is always a certain level of unemployment, even when there is sufficient idle machinery that could put everybody to work if put into operation. The presence of unemployed workers functions to keep down the wages of the employed—if one worker does not accept the going rate, then he or she can be easily replaced...Workers technically do have a choice, but the game is structured such that the best choice is still a bad choice for them, yet a good one for the capitalists....philosophy of praxis—that we should demonstrate our beliefs through our actions....According to Gramsci, the dominant class in society maintains its position in two different ways: through coercion and through consent.

The trade structure

International trade agreements and national regulations shape the flows of goods and services across borders

Dependency Theory

It argues that the structure of the global political economy essentially enslaves the less developed countries of the South by making them reliant to the point of being vulnerable to the nations of the capitalist core of the North.... Theotonio Dos Santos sees three eras of dependence in modern history: It argues that the structure of the global political economy essentially enslaves the less developed countries of the South by making them reliant to the point of being vulnerable to the nations of the capitalist core of the North

Laissez faire reforms

Limit government support for banks, infrastructure projects, and social welfare programs; ■ Decrease regulation of the economy; ■ Cut taxes of the wealthy and middle class to stimulate economic growth; and ■ Foster more globalization, which is good for the United States and the world.

The five main elements of capitalism are as a follows

Markets coordinate society's economic activities. ■ Extensive markets exist for the exchange of land, labor, commodities, and money. ■ Consumer self-interests motivate economic activity, while competition regulates economic activity. ■ Individuals have the freedom to start up new business enterprises without state permission. ■ Individuals have the right to private property and are entitled to the income that flows from their property.

Strongman politics

Promote new political, social, and economic issues. 2) offer themselves as symbols of the body politic. 3) plan and startegize with disdain for democratic accountability. 4) nurture a cult of personality.

Heterodox economic liberals proposal

Spend more to grow the economy and create jobs, without worrying too much about inflation; ■ Invest more in renewable energy, infrastructure, education, and health care; ■ Break up big banks and impose tougher regulations on them; and ■ Better manage globalization, but without stopping it.

Transnational corporations TNC

TNCs can reduce exchange rate risks by establishing production facilities in each of their major consumer markets so that costs and revenues largely accrue in the same currency. TNCs also have a strong incentive to invest overseas when their home country's currency is overvalued. leading many to view TNCs as tools of U.S. hegemony during the Cold War era. U.S. foreign policy created opportunities for U.S. firms to expand abroad, and U.S. investments created economic interests favorable to U.S. policies. Business and the flag were mutually supportive. TNCs typically seek favorable tax treatment, state-funded infrastructure, and perhaps even weakened enforcement of some government regulations. A weak state, or one with few productive resources and a weak market system, may be at a fundamental disadvantage in negotiations with TNCs.

Uruguay Round

The Uruguay Round established new rules and principles to limit protectionist measures such as dumping (selling goods at below fair market prices) and the use of state subsidies. It lowered average tariff rates to 3.9 percent on manufactured goods traded between developed countries. Going beyond previous trade rounds, it also addressed a wide range of sensitive issues such as: market access for textiles and agricultural goods; intellectual property rights; restrictions on foreign investments; and trade in services. Uruguay Round negotiators finally reached a consensus on agriculture in November 1993. They agreed that all countries were to reduce their use of agricultural export subsidies and domestic assistance gradually over a period of years. A country can (and often does) apply a lower tariff in practice, but once it offers a bound rate, it cannot go over that binding again. The idea of tariff bindings is to make tariffs more predictable and make it easier for countries to progressively lower tariffs in future negotiations.

The production structure

The issue of who produces what and on what terms lies at the heart of the international political economy.

Two basic principles of the GATT are reciprocity and nondiscrimination.

Trade concessions are reciprocal—that is, all member nations agree to lower their trade barriers together. The loss of protection for domestic industry is offset by greater access to foreign markets. Nondiscrimination has two components: most favored nation (MFN) treatment and national treatment. MFN treatment means not giving preferential treatment to the imports of one country over those of another. National treatment requires that a country treat imported goods the same as equivalent domestically produced goods.

Investor-state dispute settlement (ISDS)

Under ISDS, TNCs can take their disputes directly to independent international arbitration bodies that issue binding rulings that can sometimes compel states to award damages to foreign investors. TNCs generally like ISDS because the arbitration bodies can act quickly and without political bias, ensuring that states abide by standards of treatment outlined in signed agreements. Many states agree to ISDS because it reassures TNCs and may encourage more FDI.

appreciates

When a currency's exchange price rises—that is, when the currency becomes more valuable relative to others

Transfer Pricing

When affiliates of the same TNC trade with each other, the prices they charge often do not reflect the true market value of the goods and services.

The finance and monetary structure

With perhaps the most abstract set of linkages between nations, this structure determines who has access to money and on what terms, and thus how capital is distributed between nations.

International Political Economy

a field of inquiry that focus on actors and issues that are either "international" (between nation-states) or "transnational" (across the national borders of two of more states). Many analysts use the term "global political economy " instead of international political economy to label the study of problems such as climate change, hunger, and illicit markets that have spread over the entire world.

Precariat

a large social class that has insecure work without benefits those with flexible labor contracts, temporary jobs, or part-time jobs who lack an occupational identity. They usually do not receive non-wage benefits such as pensions from their employers, and they might not be eligible for state benefits like unemployment insurance. Standing describes them as "denizens"—inhabitants lacking the full rights of citizens. Despite their insecurity, they tend to reject mainstream politics and labor unions, turning instead to protests and anti-austerity movements. Standing expects this precar-iat to experience an increase in anxiety, anomie, alienation, and anger.

Modern World System (MWS)

a single division of labor whereby nation-states are mutually dependent on economic exchange; the sale of products and goods for the sake of profit; and the division of the world into three functional areas.18

Keynesian compromise

a sort of class compromise whereby owners of capital would share gains from growth and rising productivity with workers in the form of rising wages and benefits, while workers maintained social peace and accepted the legitimacy of the liberal capitalist system... the major Western powers encouraged economic recovery in their post-war economies by employing various mercantilist policies that promoted employment and enhanced the purchasing power of the working class.

Mercantilism

also called economic nationalism) is closely associated with the political philosophy of realism, which focuses on state efforts to accumulate power and wealth to protect society from physical harm or the influence of other states.... which explains the compulsion of nation-states to use power to protect themselves and generate wealth for their citizens. Although neoliberal ideas replaced mercantilist ideas in popularity after the 1970s, mercantilism has made a comeback in recent years.

The Washington Consensus

an understanding that economic liberal reforms promoted growth in developing countries—became the rationale for IMF, World Bank, and WTO policies.

Tax Havens

are countries or jurisdictions where corporate tax rates are low and financial regulations are often relatively lax.

Bourgeoisie

are wealthy elites who own the means of production—or what today are big industries and financial institutions.

Keynes

argued the market does not always translate the rational and selfish behavior of individual actors ( consumers, workers, and firms) into an outcome that is socially optimal... Keynes also made clear that state should use its power to improve the market, but not along the aggressive, nationalistic lines of mercantilism

Transnational capitalist class (TCC)

as one of the most important developments in contemporary capitalism. This class primarily consists of the owners and managers of transnational corporations and financial institutions. They control most global financial assets and most of the stock in TNCs listed on exchanges around the world.

strategic trade policy

became synonymous with efforts by states to stimulate exports and hinder foreign access to domestic markets through non-tariff measures.

tax inversion

by which a large corporation in one country sells itself to (or buys) a smaller corporation in another country and then reincorporates there.

Neomercantilists

challenge the assumption that specialization in comparative advantage unconditionally benefits all of the parties engaged in trade.

Property

clear title to land for example-also encourages the owner to make investments in improving the land and provides the owner the collateral with which to obtain the credit necessary to do so.

corporate social responsibility (CSR)

codes whereby they try to address key social and environmental issues in their business practices.

epistemic communities

defined as "professionals with recognized expertise and competence in a particular domain and an authoritative claim to policy-relevant knowledge within that domain or issue-area."20 These global networks of experts—often scientists—have detailed knowledge about complex issues and share common understandings of the truth about these issues, based on the standards of their profession. Although epistemic communities are not political actors in a formal sense, political elites rely on them for advice and policy options. Thus, these experts can have the ability to "educate" power holders about what problems exist, how important they are, and even what can be done about them.

Law of comparative advantage

demonstrated that free trade increased efficiency and had the potential to make every country better off. It mattered little who produced the goods, where, or under what circumstances, as long as individuals were free to buy and sell them on open international markets. The law of comparative advantage suggests that nations should specialize in and export what they are relatively highly efficient at producing and import what they are relatively least efficient at producing.

the security structure

feeling safe from the treats of other states and non state actors is perhaps one of the most significant concerns of nation- states and the people within them.

Classical mercantilism

focused on state efforts to generate trade surpluses by promoting exports and limiting imports. It was widely believed that trade surpluses strengthen a nation's economy, thereby contributing to its security and protecting certain public and private groups within society...Classical mercantilism focused on threats to a nation's security by foreign armies and how states often resist the influence of foreign firms and international institutions. It also presumed that states would seek to generate trade surpluses as a means of supporting military power. Both mercantilists and their realist cousins assert that states can and should use the economy, either legally or illegally, as a means to generate more wealth and power.

Discourse analysis

helps us understand where important concepts come from and how they shape state policies, sometimes in very undesirable ways.

boomerang pattern

if domestic groups in a country cannot convince their government to accept a norm, they work with international groups in their network to lobby other governments and IOs to put pressure on the reluctant government to bind itself to the norm.

General Agreement on Tariffs and Trade (GATT)

in 1947 to lower trade barriers and promote the West's political objectives during the Cold War. With the creation in 1995 of the World Trade Organization (WTO), which administers the revised GATT and other trade agreements, global trade liberalization accelerated. Yet, since the 2000s new multilateral trade negotiations at the WTO have been virtually deadlocked. Regional trade blocs such as the European Union and the Gulf Cooperation Council have been facing crises. The United States and the United Kingdom are now upsetting some of their long-standing trade relationships.

Cultural sovereignty

in the face of globalization's homogenizing effects is an eminently political goal, vital for nurturing a democratic citizenry that is well informed about its own history and values.

Positive-sum game

in which everyone can potentially get more by making bargains with others as opposed to no trading with them

Zero-sum game

in which gains by one person or group necessarily come at the expense of others... absolute gains by one state were interpreted as absolute losses for other states

Norms

influence the behavior of states and markets...Because norms are shared values, it can be difficult for a state to violate them without threatening its own identity and risking opprobrium from other states.

intermediate goods

inputs, parts, and components used in the production of finished goods.

State

is a legal entity and an autonomous set of instructions that governs a specific geographic territory and people of a nation...sovereignty (final authority) over affairs within its territory... The state is the legal identity of the nation, monopolizing the means of physical force in society and exercising sovereignty within a given territory...A nations is a collection of people who, on the basis of ethnic background, language, and history, define themselves as members of an extended political community

Malevolent mercantilism

is a more hostile version of economic warfare that nations employ to expand their territorial base or political influence at the expense of other nations.

Problematization

is a process by which states and advocacy groups construct a problem that requires some kind of coordinated, international response. Constructivists argue that problems exist because we talk them into existence.

Constructivism

is a relatively new and increasingly influential IPE. It contends that norms, ideas, and discourse play important roles in shaping outcomes in the global political economy. Constructionists widen the study of IPE to include numerous non state actors and cultural values. They are particularly interested in how actors come to acquire their interests and understanding of the world in which they act....Constructivism is a vibrant theory that focuses on the beliefs, ideas, and norms that shape the views of officials, states, and international organizations (IOs) in the global system. It identifies an important role for global civil society in molding the identity and interests of actors that wield enormous economic, military, and political power.... Four basic assumptions of constructivism applied to IPE are as follows: ■ Ideas, norms, and identities of groups and states are socially constructed. ■ Ideas and values are social forces that are as important as military or economic factors. ■ Conflict and cooperation are products of values and beliefs. ■ Some international political changes are driven by changes in the beliefs and identities of actors over time.

Soft power

is comprised of selective tools that reflect and project a country's cultural values, beliefs, and ideals. Through cultural exports, information flows, and diplomacy, a state can convince others that the ideas and values it sponsors are legitimate and should be accepted or tolerated. Soft power can in many ways be more effective that hard power because it rests on persuasion and mutual exchange

Odious debt

is in the making as a result of changes in political values and notions of fairness. As a result, there is a possibility that elimination of debt inherited from corrupt, authoritarian regimes will become more widely accepted.

Benign Mercantilism

is more defensive in nature, as "it attempts to protect the economy against untoward economic and political forces."

Structuralism

is rooted in Marxist analysis but not limited to it. Structuralist ideas continue to be extremely important, even though they are not as politically popular as they were before the end of the Cold War. The structuralist perspective has no single method of analysis or unified set of policy recommendations To prevent capitalism from imploding, Lenin and others argued that imperialism therefore was a necessary outlet for surplus finance. Imperialism allowed rich capitalist nations to sustain their profit rates, while keeping the poorer nations deep in debt and dependent on the rich nations for manufactured goods and financial resources.

Global level

is the broadest, most comprehensive level of analysis. We look at global economic constraints and opportunities resulting from changes in technology, global markets, and the natural environment. Global level factors cannot be traced to the actions of any one state, group of states, individual, or group

Hegemonic stability theory

is the idea that international markets work best when a hegemon (a single dominate state) accepts the costs associated with keeping them ope for the benefits of both itself and its allies bu providing them with certain international public goods at its own expense

Framing

is the process of defining what the essence of a global issue is: what is causing it, who is involved, what its consequences are, and what the best approach to addressing it is...Frames make us see a problem in a certain way as opposed to another, and therefore they greatly influence how we understand how we should behave toward it

Norm cascade

kicks in, whereby previously reluctant states in quick succession formally accept the norm

The knowledge structure

knowledge and technology are sources of wealth and power for those who use them effectively

General Agreement on Trade in Services (GATS)

liberalized trade in banking, insurance, transport, and telecommunications services by applying the principles of national treatment and most favored nation to them.

Neoliberalism

limited state role in the economy. Their increasingly popular ideas lies intellectual groundwork for what became a distinct variation of economic liberalism...describes a newer, subtler version of imperialism that structuralists claim the United States has been practicing since the end of the Vietnam War in 1975. Neoimperialism differs from classic imperialism in that states no longer need to occupy other countries in order to exploit or control them.

food sovereignty

meaning the right to produce food for oneself in the territory where one lives.16

Accumulation by dispossession

mechanism is predatory: it relies on seizure, thievery, and fraud, sometimes accompanied by violence. It takes many different forms, including privatization of state assets, liquidation of workers' pensions, and financial speculation. Individuals are also saddled with debt (like home mortgages), then driven into insolvency and dispossessed of what they own through bankruptcy.

Securitization

occurs when elites, through discourse, construct an issue as a security threat; if the public agrees with the discourse, leaders can undertake exceptional measures against the security problem—such as suspending civil liberties—that the public wouldn't normally sanction...Securitization often causes governments to address an issue with military and law enforcement instruments that may be inappropriate or expensive compared to alternative instrument

Regional trade agreements (RTAs)

often also called free-trade agreements (FTAs), reduce trade barriers between member countries but often do not extend these trade concessions to nonmember nations. RTAs violate the GATT and WTO principle of nondiscrimination, and yet they are legal entities. Article 24 of the GATT and Article 5 of the GATS permit them, as long as they remove tariffs and other barriers on "substantially all the trade" within the bloc. In some cases RTAs have generated more efficient production within the bloc, either while infant industries are maturing or in response to competition from outside industries.

Multinational corporations (MNCs)

operate outside of their main consumer markets in developed countries. new "foreign accountability norm" has emerged that holds MNCS "accountable for socially and/or environmentally harmful practices regarding natural [resource] extraction abroad."31 The norm creates the expectation that companies will exercise due diligence within their supply chains to identify and minimize the risks of contributing to illegal logging, human rights abuses, and armed conflict. The norm holds MNCs accountable for their own conduct and the conduct of their suppliers in foreign countries. It is now less acceptable for a company to be willfully ignorant of where its supplies ultimately come from.

Paradox of thrift

people often predict a very bleak future or at least find it difficult to think rationally about the future

Capital goods

plants, equipment, and tools that workers need

Hard power

refers to tangible military and economic assess employed to compel, coerce, influence, fend off, or defeat enemies and competitors

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

required countries to maintain minimum standards for protection of patents, copyrights, and trademarks—and to effectively enforce those standards (see Chapter 10). Many delegates expected that remaining disputes over agriculture and services would be dealt with more directly in a future round of trade negotiations.

data localization

requirements to force companies to host data on computer servers only in the country where the data comes from. Other restrictions prohibit foreign companies from transferring and storing data overseas where foreign intelligence agencies might have access to it.

Embedded liberalism

strong international markets would be subject to political restraints and regulations that reflected domestic priorities

global value chains (GVCs) (also called "global production networks" (GPNs))

that encompass "the full range of activities that firms and workers perform to bring a product from its conception to end use and beyond.

Capitalism assumes

that price competition also results in the efficient allocation of resources among competing uses.

Globalization

the extension of economic liberal principles the world over—as a process that would boost economic growth and bring democracy to those nations integrated into this capitalist structure. An economic process that reflects dense interconnections based on new technologies and the mobility of capital; ■ The integration of national markets into a single global market; ■ A political process that weakens state authority; ■ A cultural process leading to complex cultural interconnections; and ■ A process that benefits everyone economically and helps spread democracy in the world

Nuclear Taboo

the strongly held norm among the permanent members of the Security Council that first use of nuclear weapons is unthinkable.48

Costs of production

the wages of the workers, the raw materials, and all intermediate goods used in production- and then sell the finished commodities on the market. Whatever is left over, the difference between the revenues and the costs, belong to the capitalist owners. This is a legal right of ownership, refereed to as capitalist property rights... In contrast, the owners of a corporations are those who own its stocks which can be bought and sold on a stock market.

base erosion and profit shifting (BEPS)

their term for the process whereby TNCs artificially shift profits to low-tax locations where they have very little real economic activity.

"special and differential treatment"

they already have in WTO agreements so that they can protect infant industries, maintain high tariffs on agricultural imports, and subsidize local industries. Developed countries are willing to grant these exemptions from general WTO rules to the poorest countries, but not to middle-income developing countries such as China, Brazil, India, and Indonesia.

Procurement policies

to create national champions- big, globally competitive companies like Boeing, Lockheed, Motorola, IBM, and Microsoft- that rely on the government to purchase their products.

Transnational Advocacy networks (TANs)

to describe "those actors working internationally on an issue, who are bound together by shared values, a common discourse, and dense exchanges of information and services."18 TANs act as "norm entrepreneurs," using testimonies, symbolism, and name-and-shame campaigns to create a shared belief among political elites that, for example: ■ Human rights protection is a state obligation. ■ Torture is never acceptable. ■ Debt relief for poor countries is "the right thing." ■ Human trafficking is a new form of slavery.

Neomercantilism

to describe many defensive economic policies that states use to safeguard their societies in an interdependent and intensely competitive international political economy...In the face of the declining utility of military weapons and violent conflict for advancing national economic interests, developed countries increasingly turned to neomercantilist finance, trade, and development policies to defend their economies and enhance the competitiveness of their domestic firms. Neomercantilism included efforts to generate economic growth, control the business cycle, and eliminate unemployment. Many governments increased spending on various social programs, imposed new regulations on industries, introduced some capital controls, and manipulated interest rates. Also, state industrial policies included subsidies for state-owned corporations and funding for research and development in the private sector. Some nations employed export subsidies to lower the price of goods, making them more attractive to importers overseas.

Spiral model

to the study of norms.17 In the area of human rights, they observe that an authoritarian state will often deny that it is violating human rights or claim that the norm of human rights is superseded by some other norm, before eventually making tactical concessions in the face of international pressure. Eventually, the state liberalizes, starts to internalize the norm of human rights protection, and finally adheres to it in practice. The spiral model has been influential because it explains the process by which states are socialized to comply with a variety of international norms, even if those norms initially conflict with the states' material or political interests.

State-societal level

we analyze how bureaucratic decision making and the type of government shape outcomes. We also look at how lobbying, electoral pressures, culture, and a country's class structure determine foreign policy actions

Interstate level

we analyze how the relationships between states affect global outcomes

Individual level

we look at what individual policymakers do to cause or influence events. We try to understand the psychology, goals, and ideology of state leaders. Not all leaders react the same way to the same events and information.

Proletariat

were the exploited workers (including their fam-ilies) in Britain's mills and factories, who received very low wages and sometimes died on the job... Finally, imperialism helped convert the poorer colonial regions into the new "proletariat" of the international capitalist system.

Offshoring

when corporations move their manufacturing or certain business functions overseas.

Dialectical Process

whereby inherently unstable opposing economic forces and counterforces lead to crisis, revolution, and the next stage of history. Over long periods, the forces of production will continually improve because technology is simply an aspect of human knowledge.

sovereign wealth funds (SWFs)

which are quasi-independent bodies that manage pools of capital on behalf of governments, have become important shapers of global production.

new constitutionalism

which entails removing some sensitive economic issues from the realm of politics and placing their governance in the hands of independent bodies and the private sector.

Historical Materialism

which takes as its starting point the notion that the forces of production, defined as the sum total of knowledge and technology contained in society, set the parameters for the whole political-economic system

Orthodox economic liberals

who champion free markets and free trade

Heterodox economic liberals

who support more state regulation and trade protection to sustain markets. Heterodox liberals stress that market work best they are embedded in (connected to) society and when the state intervenes to resolve problems that markets alone cannot handle. In fact, many heterodox scholars acknowledge that markers are the source of many of these problems.

False consciousness

workers may recognize their common interest but be unable to organize due to suppression of unions or the result of collective action problems. In Marxist language, workers are often a class in itself without becoming a class for itself....capitalists and workers is built upon an objective division of the economic output of a society into wages and profits.

The entrenchment of mercantilism in the 1970s and 1980s

■ More use of neomercantilist tools to protect states and international businesses from a variety of economic threats; ■ Increased political saliency of international economic interdependence and dependence on oil and natural resources; ■ Greater importance of international finance and trade agreements, especially to developing nations; and ■ Increased investment in and attention to technological and information innovations.