Transcript POLS IP BD Economic Issues File

International Politics
International Political Economy
• Questions
– What Is “The Political Economy?”
– How Does Economic Liberalism Differ From Economic
Realism And Economic “Radicalism?”
– How Is Economic Liberalism Different From How
American Politicians And The Media Define Liberalism?
– What Are The Shortcomings Of Each Economic Theory?
– How Does Each Economic Theory View Globalization?
– Which Are The Northern Countries? Which Are The
Southern Countries? What Do The Economic Theories
Say About Why Some Countries Are More Developed?
International Politics
International Political Economy
• Political Economy
http://www.fotosearch.fr/comp/ART/ART314/INF019.jpg
– Intersection Of Politics (States) And Economics
(Markets)
– Three Key Economic Theories
• Economic Liberalism (Capitalism)
• Economic Realism (Nationalism)
• Economic Radicalism (Marxism)
– Which Economic Theory (IV: Type of Economic Theory)
Does The Best Job Of
• Increasing Development? (DV: Level of Development)
• Reducing Conflict? (DV: Level of Conflict)
– Hypotheses: What Is The Relationship Between A
Country’s Level Of Economic Freedom (IV) And
• DV1: Economic Development? DV2: Human Development?
• DV3: Internal Conflict?
DV4: External Conflict?
International Politics
International Political Economy
• Liberal Theory (Capitalism)
– Free Market (Adam Smith) & Development
• Negative Relationship Between Politics &
Economics
– As Politics Has Less Of An Influence, The Economy
Will Grow, Leading To Development
• Supporting Concepts
www.adamka.pl/szkola/adam_smith.html
– Law Of Supply & Demand
» Increase In Demand, Decrease In Supply =
Higher Prices
» Decrease In Demand, Increase In Supply =
Lower Prices
» Prices Set By The Market, Not The State =
Greater Efficiency
– Key Actors: Individuals, Households & Businesses
– Limited Role For Government
» Keep Hands Off Economics
» Provide Collective Goods Too Inefficient For
The Market To Provide (Military, Infrastructure,
Lighthouses)
International Politics
International Political Economy
• More Liberal Theory (Capitalism)
– Free Trade (David Ricardo) & Development
• Law Of Comparative Advantage
– Export What You Produce Efficiently +
– Import What You Produce Inefficiently =
– Greater Levels Of Development
econc10.bu.edu/.../
david_ricardo.htm
– Other Elements To Liberalism & Free Markets
• Trade With Whoever Gives You The Best Price (Friend
Or Foe)
• Hire Whoever Will Work For The Best Wages
(Domestic Or Foreign Employer)
• Reduce Government Regulation On
– Environment
– Social Conservative Issues: Religion Is People’s
Responsibility, Not The Government’s
– Liberalism’s Role In Conflict Reduction
• Markets & Trade = Efficient, Conflict = Inefficient
International Politics
International Political Economy
• Realist Theory (Economic Nationalism)
– Economic Realism = Political Realism
– A Positive Relationship Exists Between Politics &
Economics (As Political Control Over The Economy
Increases, Development Increases)
Pat Buchanan attacks
globalism as a conspiracy
of "elites" callously
indifferent to the wages
and living standards of
working families
• Politics Determines What Is In The “National Interest”
– Self-Sufficiency: No Need To Rely Upon
» Foreign Markets
» Foreign Workers
» Foreign Resources
» Foreign Technology
– Government Uses The Economy To Gain Power (Military
Spending)
• Economics = Zero-Sum Game
– One Country’s Gain = Another’s Country’s Loss
– Trade = Zero-Sum (Winners & Losers)
http://www.theatlantic.com/issues/98jul/buchanan.htm
International Politics
International Political Economy
• More Realist Theory (Economic Nationalism)
– Government Should Determine
• Who You Trade With (Don’t Want To Trade With Current Enemy…Or
Future Enemy!)
• Who You Hire (Don’t Give A Country’s Jobs Away By Hiring
Immigrants
• Economic Behavior (Preserve Resources, Environment) & Social
Behavior (When Goods Are Bought & Sold)
– Why Economic Nationalism Generates Better Development
• Policies Are Designed “In The National Interest” To Make Country’s
Economy & Citizens Stronger, With Better Government Management
– Why Economic Nationalism Generates Less Conflict
• Governments Provide More Control & Stability Over Situations
(Domestic And Foreign)
International Politics
International Political Economy
• “Radical” Theory
http://www.eviltwincomics.com/action/store.html
Communism
– Dialectic History (Marx)
• History = Series Of Economic Stages
• Society Progresses When Contradictions Of
Current Economic System Are Resolved
– Feudalism
» Order Replaces Chaos Of Dark Ages
» Few Incentives For Peasants
– Capitalism
» Incentives For Hard Work & Innovation
» Overproduction & No “Safety Net”
– Socialism
» Government Meets Basic Needs Of People
» Government Inefficiency Emerges
– Communism
» State “Withers Away”
» “Each Gives According To Ability, Takes
According To Need”
Socialism
Capitalism
Feudalism
Now You
See Why
Nazis (National
Socialists) and
Communists
Fought!
International Politics
International Political Economy
• More “Radical” Theory
– Wait A Minute…Doesn’t Communism Involve The Government
Controlling Everything?
• Pure Communism: No Government (Too Inefficient)
• We’ve Never Seen Pure Communism (Governments Claiming To Be
Communist Were Actually Socialist, But Claimed It Was Just A
Transition Phase)
• We’ve Also Never Seen “Pure Democracy” Or “Pure Capitalism” Either
– Radical Theory Is Better For Development (Marx)
• Capitalism = Overproduction, No Safety Net
• Socialism = Government Inefficiencies
• Communism = No Special Economic Class (All Equal)
– Radical Theory Is Better For Conflict Reduction (Lenin)
USSR =
Union Of
Soviet
SOCIALIST
Republics
• Capitalism = Cutthroat Competition Among Firms
• Socialism = States War Over Economic Resources
• Communism = No Need To Fight If Each Shares Resources
http://www.clipartlab.com/free_samples.php
International Politics
International Political Economy
• Liberalism
• Realism
• Radicalism
Economic
Relations
– Harmony
– Conflict
– Conflict
Actors
– Households &
Firms
– Maximize
Global $
– States
– Maximize
Country $
– Economic
Classes
– Maximize
Class $
Political &
Economic
Relationship
– Economics >
Politics
– Politics >
Economics
– Economics >
Politics
Support For
NAFTA &
The WTO?
– Yes
– No
– No
Economic
Goals
http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm
International Politics
International Political Economy
• Testing The Economic
Theories: Extra-Credit
Assignment
– Open The SPSS File
(POLS IP Political
Economy Theory Test)
• Locations: Library, Smith
Hall, CAB 2 Computer Lab
–
–
–
–
Go To “Analyze”
Go To “Descriptive Statistics”
Go To “Crosstabs”
Put Economic Freedom
(EconFree) In The Row
Category
International Politics
International Political Economy
• Testing The Economic
Theories: Extra-Credit
Assignment (Part 2)
– Go To “Statistics” And Check
“Chi-Square”
– Go To “Cells” And Check
“Observed” And “Expected”
– Put A Dependent Variable In
The Column Section
– Dependent Variables =
» EconDevelop (GDP
Score)
» HumanDevelop (HDI
Score)
» Internal War (Yes or No)
» External War (Yes or No)
You Will The Model Each Time,
Checking To See The Relationship
Between Economic Freedom And
Each Dependent Variable Related To
Development And Conflict
International Politics
International Political Economy
• Results
Economic Fre edom (EFW Score 7-10 = Fre e, 5-6.999 = Pa rtly Fre e, 0-4.999 = Not Fre e) * Political Freedom
(Freedom House Scores: 2 = Fre e, 1 = Partly Free, 0 = Not Fre e) Crosstabula tion
– Examine The
Graph
– Which Cells
Have The Most
Cases?
– Which Cases
Have More
Than Expected
Or Less Than
Expected
Categories?
– Is The
Relationship
Significant
(Asymp, Sig. 2sided for
Pearson ChiSquare Is .05 Or
Less)
Ec onomic Freedom (EFW Not Free
Count
Sc ore 7-10 = Free, 5-6.
Ex pec ted
999 = Part ly Free, 0-4. 999 Partly Free Count
= Not Free)
Ex pec ted
Free
Count
Ex pec ted
Total
Count
Ex pec ted
Politic al Freedom (Freedom House
Sc ores : 2 = Free, 1 = Part ly Free, 0 =
Not Free)
Not Free Partly Free
Free
110
116
54
Count
49.4
94.0
136.6
90
258
299
Count
114.1
217.2
315.7
19
43
253
Count
55.5
105.8
153.7
219
417
606
Count
219.0
417.0
606.0
Total
280
280.0
647
647.0
315
315.0
1242
1242.0
Chi-Square Tests
Example: There
Asymp. Sig.
Is A Positive
Value
df
(2-s ided)
Relationship Between Pears on Chi-Square 268.623 a
4
.000
Likelihood Ratio
272.393
4
.000
Countries That Are
Linear-by-Linear
231.020
1
.000
Economically Free
Ass ociation
And Politically Free. N of Valid Cas es
1242
a. 0 cells (.0%) have expected count less than 5. The
The Relationship Is
minimum expected count is 49.37.
Statistically
There Are 100 More Cases Of Economically Free
Significant.
Countries With Political Freedom Than Expected.
International Politics
International Political Economy
• Political Economy Theory Test
– If There Is Support For Liberalism
• There Should Be More Countries With Economic Freedom And Higher
Levels Of Development Than Expected.
• There Should Be Less Countries With Economic Freedom And War Than
Expected.
– If There Is Support For Economic Nationalism Or Economic
Radicalism
• There Should Be Less Countries With Economic Freedom And Higher
Levels Of Development Than Expected.
• There Should Be More Countries With Economic Freedom And War Than
Expected.
– Do We Find Any Support For Any Of The Hypotheses Derived
From The Theories? If So, Which Ones? Are They Statistically
Significant?
International Politics
International Political Economy
• Three Worlds Of Politics
– First World (“North,”
“West”)
• Free Market Liberal
Countries
• Europe, North America,
Japan, Australia, New
Zealand
– Second World (“East”)
• Former Socialist Countries
• USSR/Russia, China, East
Europe, East Asia
• Some Become First World;
Others Become Third World
http://www.bendib.com/thirdworld/
– Third World (“South”)
• “Everybody Else”
• Broad Range Of Economy
(Neocolonial, Capitalist,
Socialist, Feudal)
• Asia, Americas, Africa
International Politics
International Political Economy
• Northern Countries
Wealth
• Southern Countries
Population
Population &
Wealth
Nature Of
Products
Produced
– Manufactured Products
– Cash Crops &
Resources
Commodity
Concentration
– Variety Of Goods
– Little Diversity
Trade Partner
Concentration
– Variety Of Partners
– Little Diversity
Economic
Goals &
Institutions
– Preserve Status Quo
– Liberalism (LIEO)
– Change Status Quo
– Radicalism (NIEO)
North
South
North
South
International Politics
International Political Economy
• Competing Theories Of Southern Development
– Liberals: Modernization Theory
• Economic Success = Become Involved In World
Economy (Open To Trade & Investment)
• Take Advantage Of Assets (Resources & Cheap Labor)
• Obstacles To Success = Internal Problems (War,
Corruption, Inefficiency)
– Radicals: Dependency Theory
• Structure Of World Economy Keeps South Underdeveloped
• Asymmetry: South Dependent Upon North
• Problems = External
– Unfair Terms Of Trade
• Solution: Import Substitution Industrialization (ISI)
– Produce Everything At Home; Block Globalization
International Politics
International Political Economy
• New International
Economic Order (NIEO)
– Opposes Liberalism
(LIEO)
– Third World (Southern)
Plan
• Financial Aid From North
http://www.bendib.com/thirdworld/
To South
– Third World Strategy For
• Transfer Of Technology
Implementing NIEO
From North To South
• Pressure Group In United
• More Influence In Economic
Nations (Group Of 77
Institutions
{Now 132})
• Preferential Access To
• Cartelization: Withhold
Northern Markets (Make Up
Resources Or Charge
For Prior Discrimination)
Higher Prices (OPEC)