Global Political Economy

(IRL 3209)
Lecture 2
Definition and Framework
(01/23/2023)
IRL 3209: Lecture 2-Focus of IPE
The political and economic interests are two sides of the same coin. 
They both look at the same issues.  However, economics looks at
income and wealth. 

We are concerned about trade and finding ways to facilitate trade

among countries.  Countries that trade use different currencies.  So, we
become concerned about the exchange rate. 

We become concerned about having enough liquidity in the

international system to pay for the goods and services that we buy
from each other. 
IRL 3209: Lecture 2-Focus of IPE
We become concerned about the tax structure of a country.  One
component of the tax structure that is of interest here is the customs
duty on imports. 

Countries that want to sell to Guyana are concerned about the level of
our import duties.  And Guyana becomes concerned about it when it
wants to sell to other countries.
IRL 3209: Lecture 2-Focus of IPE
As you could see, International Political Economy studies problems
associated with policies linked to the range of political, economic and
social issues that occur within countries and across countries. 
In some cases, it is easy to see the link and in others we are left
wondering how someone else’s business becomes ours.  For example, it
is easy to see how issues of trade, finance, foreign investment,
environment, globalization and hegemony could bring countries into
contact with each other. 
For example, where trade is concerned, we exchange goods so as to
expand the range of goods available for consumption.
IRL 3209: Lecture 2-Focus of IPE
Equally, we could wonder how a dispute between tribes in a country is
our business.  At some point in time, internal conflicts arouse the
conscience of people. 
For example, in April 1994, an internal conflict started in Rwanda.  That
conflict involved mass murders of the people of the Tutsi tribe by the
majority Hutu tribe.  By the time it was over, close to 1 million
Rwandans were dead. 
That event stirred the conscience of the world.  Today, we could add
the promotion of democracy, the promotion of human rights and the
problem of global warming as issues which impact people across the
globe.  
IRL 3209: Lecture 2-Focus of IPE
There has always been the perennial question of whether trade follows
the flag or vice versa.  That debate which has gone on since time
immemorial has been rendered mute with the continuous breakdown
of the wall between politics and economics.

The foregoing viewpoint takes us in the direction of recognizing that

the relations between countries are very complex and cannot easily be
studied using a single discipline.  
IRL 3209: Lecture 2-Focus of IPE
Why are we studying IPE?
•Interdependence
Consequently, one of the things that make the study of IPE necessary is
our interdependence in the world.
For example, we can look at our relationship with China.  Currently,
there is an economic relationship between Guyana and China involving
the acquisition of construction services and access to loans from China. 
IRL 3209: Lecture 2-Focus of IPE
One could also look at the trading relationship between Guyana and
the rest of the world.  There are many goods that Guyana needs for use
in its agricultural and mining industries.  We need tractors and
combines in agricultural production. 

We need excavators for use in the mining industry.  We do not produce

those goods.  In exchange, Guyana tries to sell the goods it produces to
the countries from which it gets the goods. 
IRL 3209: Lecture 2-Focus of IPE
We do not have the means to transport the goods that we sell to, or
buy from, others.  The ships are built in foreign countries.  Often, they
are owned by persons in other countries.  Without that exchange for
mutual benefit, the economic welfare of each country will be lower.  

Moral Justice
Moral justice has been equated with social justice. Social justice as
articulated by John Rawls believes that people give up some of their
rights to the state in exchange for protection from the state.
IRL 3209: Lecture 2-Focus of IPE
Implicit in that argument is that all countries should have an interest in
preserving that contractual relationship between people and the
government of their country. 

That action brings out several things about international political

economy. 

One, countries use the abuse of human rights and public corruption as
justification for imposing sanctions on countries that they do not like. 
IRL 3209: Lecture 2-Focus of IPE
The US for example publishes reports about various policy issues in
countries. In responding to real or perceived issues of human rights
abuses, public policy of the US is often transferred to other countries. 
Two, the way in which they respond are supposed to respect the social
contract between the people and their government. If they impose
sanctions, those sanctions are supposed to avoid hurting the people of
the country.   
Three, there is no certainty that affected countries will react the way
the imposing country wants them to reach. Russia, for example, often
retaliates against the USA.    
  
IRL 3209: Lecture 2-Focus of IPE
The uncertainty of that response and its implications for the people of
Guyana do not allow us to ignore the actions of the US Government
against Venezuela. 

We have to analyze the economic and political impact on Guyana.  As

Veseth noted, Guyana should not use a single discipline to undertake
the analysis. 

If it did that, it would miss some important consequences or fallout

from Venezuela’s actions
IRL 3209: Lecture 2-Focus of IPE
About past and future of social science
Another thing that we should understand about IPE is that it is as much
about the past as it is about the future of social science. 
In the past, social science was studied as an unintegrated field.  The
future study of social science will depend on an integrated approach
because of the multinational or multidimensional character of
problems. 
IRL 3209: Lecture 2-Focus of IPE
The point to emphasize here is that IPE unites the various disciplines in
social science rather than tear them apart.

How is IPE used in international issues?

IPE is used to synthesize methods and insights derived from economics,
political science and sociology connected our history, culture and
philosophy. 
This perspective supports the view that academic specialization renders
an understanding of the relations among countries very difficult. 
IRL 3209: Lecture 2-Focus of IPE
Let us return to the Guyana-Venezuela relationship. 

Some persons might look at the relationship from the perspective of

the microeconomic impact of the Petro-Caribe deal. 

Another person might consider it from the perspective of the

macroeconomic implications.  IPE suggests that the focus should be on
the overall economic effects on the two countries. 

As such, we might consider the effect on employment, interest rates if

farmers lose their markets and cannot pay their debts. 
IRL 3209: Lecture 2-Focus of IPE
Yet another person might look at it from the security point of good
neighbourliness or what a changed relationship could mean for peace.

How to use IPE?

It is used to analyze relations between states.  That analysis could take
place at three levels.  One is the level of the individual.  What this tells
us is that international problems can be caused by disagreements
between individuals (Bush and Noriega in 1989). 
That was critical in Venezuela under Chavez. 
IRL 3209: Lecture 2-Focus of IPE
He had such a powerful influence on the country that everything
appeared to revolve around him. 
In Cuba, it was the same thing where Fidel Castro was concerned.  Until
he got sick, Fidel Castro was the fulcrum around which Cuban political,
economic and social relations revolved. 

In North Korea, everything revolves around the maximum leader, Kim

Jon Eun.  His birthday is celebrated as a national holiday. 
IRL 3209: Lecture 2-Focus of IPE
We see a similar situation in Russia where everything appears to
revolve around Vladimir Putin.

In Guyana, people feel that nothing could take place without President
Jagdeo’s blessing. 

Analysis at the individual level helps to isolate leaders and draw a

straight line from that person to actions with global consequences.

War crimes and corruption are two such situations. They enable
leaders to be singled out for sanctions and even trial.
IRL 3209: Lecture 2-Focus of IPE
Analysis could take place at the level of the state as well. 
One could look to see how involved the government is in the
governance of the country.  One perspective is that of the
interconnection between religion and state. 
Such an approach is especially useful in studying Middle Eastern
countries.  One could also look to see how involved the State was in
investment. 
For example, in Guyana the level of investment by the state is very
high.  At one time, the role of NICIL would have been very critical in any
analysis at the level of the state.
IRL 3209: Lecture 2-Focus of IPE
The third is the level of the international system. 

There are many people who fear the conflict in one region could
eventually drag in many other parts of the world.  We can see, for
example, in the war between Ukraine and Russia that many European
countries have thrown their weight behind Ukraine. They are sending
arms, tanks and even military advisors.

The risk exists that the war can spread to other parts of Europe,
particularly if economic interests were at stake.
IRL 3209: Lecture 2-Focus of IPE
Moreover, international entities like the United Nations Security Council
could become involved in making decisions about how widely the war
can spread.

There were about 40 countries that participated in the US-Iraq War. 

This war was called because of the perceived threat to the international
community from weapons of mass destruction.  
IRL 3209: Lecture 2-Focus of IPE
Vocabulary and Analytic Tools
IPE also provides us with a vocabulary and set of analytic tools with
which to study and understand international issues. 
In this regard, we will acquaint ourselves with the three levels of
analysis just discussed, the types of power found in international
relations that we referred to earlier, the four international power
structures and the three perspectives that are often used to examine
international issues which are mercantilism, liberalism and Marxism or
Structuralism.  
IRL 3209: Lecture 2-Focus of IPE
We will begin our study with Mercantilism. 

Mercantilism looks at IPE from a point of view of state power. 

Mercantilism is about the relationship between economic activity and
state power. 

The central focus of Mercantilism is that of security and the role of the
state and markets in providing and maintaining the security of a
country. 
The term Mercantilism tends to be used in three different ways. 
IRL 3209: Lecture 2-Focus of IPE
Sometimes it is used to refer to a period in history.  It is used also to
denote a theoretical perspective of political economy. 
The most prevalent use of Mercantilism is to describe state policies and
actions aimed at maintaining a country’s economic independence and
security.
When Mercantilism is discussed as a historical phenomenon, it seeks to
describe the rise of the nation-state in Europe.  A nation is a collection
of people who possess or share certain common characteristics such as
a well-defined territory, a common language, a common history and
similar customs among other things.
IRL 3209: Lecture 2-Focus of IPE
During the period from the 15th Century to the 18th Century (1400-
1799) territories were being consolidated in Europe.  Germany as we
know it today was still being formed. 

We will not go into the details of those wars but suffice to note that
war and violence were always present during the 15th and 18th
Centuries in Europe.  Security therefore was the number one concern
of the states. 

Justice, prosperity and peace were all deemed unattainable if the new
nation-state was not secure. 
IRL 3209: Lecture 2-Focus of IPE
The countries needed to maintain armies and navies.  This was an
expensive proposition and countries needed wealth.
IRL 3209: Lecture 2-Focus of IPE
The state is a legal entity that is free from interference.  Those of you
who did public policy would recall that the state is part of the nation or
society. 
It is also a legal entity is reflected in the concept of sovereignty.  The
concept of sovereignty of a state is reflected in its indivisibility,
absoluteness, inalienability, exclusiveness, permanence and
universality.