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49 Cards in this Set

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  • Back
Most important actors in IPE
THA STATE
LIBERALISM

What is a shared assumption?

How do they feel about international orgs?

How do they differ from realists? What do they base off of? An example?

Are they based on relative or absolute gain?

Relative or absolute advantage?

How many countries rely on this system overall?

What kind of economy is it based on?
Shares assumption of world anarchy. There is no government above the state. This does not necessarily mean that states have the same goals.

In favor of creating international organizations and norms to make anarchy less severe.

Based on reciprocity. (EX: States create trade agreements and follow them because it's beneficial. It IS possible)

Based on absolute gain , if the state's economic gain is going up

Absolute advantage

Most countries rely on liberalism

Based on market economy
Bargaining Space
The difference between the lowest price a seller will accept and the highest price a buyer will pay. The difference in price.
Market Price
The equilibrium price set by the competition between multiple sellers of a good or service, where the supply and demand curve intersect
Demand Curve
When prices rise, there are less buyers
Supply Curve
The higher the price, the more is supplied
MERCANTILISM

1. Who should economies serve?
2. Purpose of economic development?
3. Shares which realist/liberal belief?
4. Is the emphasis on absolute or relative? (in both power and advantage)
5. How do they support domestically produced products?
6. Emphasis on?
1. Politics
2. To fund military and thus make you less threatened by other states, as well as opening up new economies. Money = POWER.
3. That states are rational actors looking out for own interests
4. Relative. Position to rival states
5.By imposing high tariffs on imports (except from colonies)
6. Export more than import
Absolute Advantage

Example?
When a state can produce a good at a lower cost than any other good. Not in comparison to others, just to yourself.

EX: US can produce corn cheaper than any other good we can produce, but there's no real profit in corn so who cares?
Comparative Advantage
Produce a certain good cheaper than any other state. Relative to other states.
Monopoly: problems
Inefficient, inferior product and higher prices, political interference, anti-trust regulation
Oligopoly

EX?
Small number of producers controlling a good. Dominate a market, trade block, market imperfection

EX: : OPEC (Oil Producing and Exporting Countries) - trade bloc
Autarky
Self reliance, avoid trading. Try to produce everything domestically. Permanently trying to be independent.
Various ways to discourage imports:
1. Tariffs
2. Non- Tariff barriers to trade: Quotas and Regulations
3. Subsidies to domestic industries (tax breaks)
Example of a regional free trade agreement
NAFTA, duh.
Most favored nation concept [MFN]
Whatever you do with your fav trading partner should be applied to all your trading partners. So if you engage in trade with one state and have some sort of state restriction, that should apply equally to all member states.
What type of exchange rate was Bretton Woods?
Fixed exchange rate

Side note: Set a regime of stable monetary exchange, based on the U.S. dollar backed by gold that lasted from 1944 to 1971.
Currency
o Medium of exchange;
o Equivalent to what we call money;
o Nearly every state prints its own currency, therefore it is a hallmark of state sovereignty
Inflation
A unit of currency has less purchasing power. There is too much currency in the market, so it buys less. Also, an imbalance of supply and demand- too much supply, not enough demand.
Hyperinflation

EX?
Extreme form of inflation of more than 50% a month for more than 2 months in a row. Occurs most often in developing countries- specifically developing countries that have borrowed money from foreign countries and the world bank.

EX: Latin America borrowing far too much money; have lots of loans and they can’t pay the interest rate and they print more money and the value goes down; people realize the value appears to be going down quickly, people spend it all.
Monetary Policy
Economic Policy relating to the money supply and interest rates. Through the use of the Central Bank, it can Increase or decrease the money supply or the interest rate to influence the economy.
Expansionary Monetary Policy
In a recession, lower interest rates and increase money supply to stimulate the economy.
Contractionary Monetary Policy
During inflation, the government increases interest rates and decreases the money supply
Fiscal Policy
Government taxing and spending in order to influence the economy
Expansionary Fiscal Policy
Occurs during an economic recession. Increased spending and reducing taxes.
Contractionary Fiscal Policy
Occurs when government has a high deficit. Decreases spending and increases taxes
Deflation
When the value of a currency is increasing; increasing its purchasing power however results in rise of prices, unemployment and low economic growth
Law of Supply and Demand
The popularity of goods, their demands, and how the amount of production influences their prices. For example, if there a high demand of a certain product, producers would produce more of that product. If there is too many produce in the market, the demand slows down, the product price lessons, and producers stop making such product.
Scarcity
Notion that goods get values in part because their supply is limited. Extreme competition for extreme scarce goods due to limited supply/not enough resources to feed the demand.
Bargaining Space
Terms of exchange are determined by the price at which goods are traded. The lowest price a seller would accept, and the highest price a buyer would pay
Equilibrium
The point of which demand of a good equals the supply of the good. The prices of a good are not too expensive or too cheap, supply is not increased nor decreased.
Fixed exchange rate
The official rates of exchange for currencies set by governments; no longer a dominant mechanism in the international monetary system.`
Floating exchange rate
Rates are determined by global currency markets, in which private investors and governments alike buy and sell currencies. Value of each currency fluctuates depending on supply and demand for each state’s currency, with prices constantly adjusting in response to market conditions. (ex: Just as investors might buy shares of Apple or Wal-Mart stock if they expect its value to rise, so too would they buy a pile of Japanese yen if they expected that currency’s value to rise in the future).
Hard currency
Form of convertible currency that can be converted to leading world currency. Specifically refers to the world’s strongest currencies with low inflationary rates (Euro, Yen, Pound, U.S dollar).
Special Drawing Rights (SDR)
A world currency created by the IMF to replace gold as the world standard. Cannot buy goods, only currencies.
Discount Rate
Interest rate the government charges when it loans money to private banks. Set by countries’ central banks.
Foreign Direct Investment (FDI)
The acquisition by residents of one country over a new or existing business in another country. Involves tangible goods such as factories and office buildings. Long-term investment.
Devaluation
To decrease the value of currency. Undervalue. This keeps exports cheap and more competitive
Why would a country choose to devaluate its currency?
o A country is able to keep exports cheap
o Makes them very competitive within the trade market
o Increases employment within that country to meet the high demands of exports.
Function of the Central Bank
o Holds reserves of currency for a state and prints money.
o Utilized because it is more trustworthy than politicians.
o Sets the discount rate: the interest rate the government charges when it loans money to private banks.
o Controls sizable reserves of currency, which are constrained because private banks and citizens control most wealth.
Capital Flows
o Foreign investment a state makes in another country compared to foreign investments made by citizens of a country
o Total investment in loans foreigners make in a country minus total investments and loans citizens make outside the country

Can be direct (like owning a factory) or indirect/portfolio (like owning stock)
Currency Accounts
o Maintained by the IMF (International Monetary Fund)
o Keeps track of the current account (balance of trade) of exports and imports of a state
International Integration
o The integration, coming together or economic and political systems
• Ex: The European Union
o Integration Theory: refers to a process by which supra-national institutions replace national ones
• Unification of a number of states for political, economic, and security functions
• A gradual shifting upward of sovereignty from the state level to the regional/international level
o The ultimate expression of integration theory:
• The merger of several states into one state
• HAS NOT YET OCCURRED
o Reasons international integration has not yet occurred:
• Due to the issue of state sovereignty
• No state wants to give up their state sovereignty
Functionalism
o A variant of integration theory
o Emphasizes closer economic ties
o Integration will occur economically but NOT politically
o Supra-national institutions will be created in response to national needs
• Ex: trade regulation, pollution
o Specific functions to deal with specific trans-boundary economic problems
Neo-functionalism
o Another variant of integration theory
o Argues that economic integration generates and leads to political integration
Colonialism
Formal political control by an imperial power over another territory. Political, economic and social control.

Always implies exploitation
Positives of Colonialism
1. Fostered economic accumulation in the colonies, improved their economies of the colonies
2. Led to the establishment of infrastructure in the colonies
3. Established a more cohesive political unit - established a model of government for the colonies
Neo-Colonialism
The continuation of colonial exploitation without formal political control, informal type of control -- using economic power to exploit another state, multi-national companies
Dependency Theory
Explains the north-south gap (or economic gap): close economic and political ties to the first world (aka north/western industrialized nations) are detrimental for development for the third world (the south). These ties are the reason for the lack of economic development. Close ties to the first world were based on an economic system based on exploitation; raw materials were extracted and brought to first world to be manufactured and turned into finished products, which were then sold back to the third world at extremely high prices
World Systems Theory
Marxist in orientation, explains the gap between north and south in terms of class division and class struggle

o Divided into 3 separate regions:
• 1. Core - developed world,
Ex: USA
• 2. Periphery - most of the third world
• 3. Semi-Periphery - between the core and periphery, a middle ground that gains certain benefits from its relationship with the core. Has trade and economic benefits. Acts as a buffer zone to prevent the global south from rebelling, preventing global revolution. Ex: Mexico