Role Of Mncs In The International Political Economy

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Multinational corporations and other institutions play an important role in the international political economy. Multinational corporations are a forefront of the concept of liberal economics. Economic liberals suggest that MNCs are engines of economic growth in the international system. MNCs also are a liberal ideal of an interdependent world economy. MNCs have a positive impact on the international political system for many reasons. One reason is because they take the integration of national economies beyond trade and money to the internationalization of production. Other reasons include: they invest in capital stock, move money to the most efficient markets, and they finance projects that industrialize and improve agricultural output. MNCs …show more content…
The IMG was first only assisting states by providing short-term loans for member states confronted by financial hardship. They then increased their assistance by providing policy advice on macroeconomic issues and economic restructuring. The IMG plays decent role in the political economic system. The third institute is the General Agreements on Tariffs and Trade. GATT was created to highlight important liberal values like the support of trade liberation, nondiscrimination in trade, focus on economic development in the South, and the support for “national treatment” of foreign enterprises. The GATT not only established these principles/values but they also created procedures on how to achieve these principles. These institutions have had a great impact on economic growth. The approach to economic growth has become known as the Washington Consensus. The Washington Consensus is defined as “the liberal belief that only through specific liberal economic policies, especially privation, can develop result.” In recent years the role of the Washington Consensus has been changing due to crises in the international political economy. Fukuyama and Birdsall believe that the views of Washington-based institutions might change now that American capitalism is no longer on a pedestal. Capitalism and the liberal idea of economics has …show more content…
Realism can be seen in the international political economy through mercantilism, also known as economic realism. The goal of mercantilism was to build economic wealth as an instrument of state power. Throughout history mercantilist policies have included high tariffs and discouraged foreign investment in the name of achieving national self-sufficiency. Radicalism/Marxism think that capitalism is what cause negative occurrences in international politics. They believe that the constant expansion of capitalism leads to tragic consequences. They also believe that society is conflictual and that this conflict arises from tension between the owners of wealth and the workers for scarce resources. Liberalism can be seen in the international political economy through economic liberalism. This type of political economy understands that states differ in their supply and lack of a certain resource—land, labor and capital. Liberals believe that because states differ in the resources they have international trade would maximize worldwide wealth and be in the best interest of all the states. The resource that they are abundant in or can produce most efficiently is called a state’s “comparative advantage.” Economic liberalism also suggest that states should act rationally because when individuals act rationally, markets are created to

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