Rizwan Qadir (PAS/PMS)

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 Solved MCQs From Previous Lecture
Deterrence is military strategy under
which one power uses the threat of
reprisal effectively to preclude an
attack from an adversary power.
a. True
b. False
“Casus Belli” means
a. Situation that justifies war
b. Situation that justifies diplomacy
c. Situation that justifies cooperation
d. None of them
 Solved MCQs From Previous Lecture

Attack on the Indian parliament in How many soldiers killed in Uri

New Delhi occurred attack?
a. 2000 a. 9
b. 2001 b. 19
c. 2002 c. 29
d. 2003 d. 39
 Solved MCQs From Previous Lecture

26/11 attack occurred in Pakistan has ‘No-First Use Nuclear

a. 2007 Policy”.
b. 2008 a. True
c. 2009 b. False
d. 2010
 Solved MCQs From Previous Lecture

Pakistan has adopted ‘Counter Force Kargil war occurred in 1999.

Targeted Policy’ in nuclear a. True
deterrence. b. False
a. True
b. False
 Solved MCQs From Previous Lecture

Cold Start doctrine was adopted by The nuclear attack occurred in which
a. India city or cities during WW-2.
b. Pakistan a. Hiroshima
c. Germany b. Nagasaki
d. None of them c. Both of them
d. None of them
 Rizwan Qadir (PAS/PMS)
International Relations
Lecture # 12

Topic:
International Political Economy
 International Political Economy

• International political economy (IPE) studies:

• How politics shape developments in the global economy?

• How the global economy shapes politics?

• It focuses most heavily on the enduring political battle between the winners and
losers from global economic exchange.
 International Political Economy

• Global economic exchange raises the income of some people and lowers the
income of others.

• The distributive consequences of global economic exchange generate political

competition in national and international arenas.
 CASE: AMERICA VERSUS CANADA

• IPE studies the political battle between the winners and losers of global economic
exchange.

• Consider, for example, the decision by the Trump administration to raise tariffs on
softwood lumber imported from Canada in April 2017.

• The decision to raise tariffs was prompted by lobbying by American lumber mills
and timberland owners.
 CASE: AMERICA VERSUS CANADA

• The U.S. Lumber Coalition pressed for higher tariffs on Canadian lumber because
they were losing trade.

• Imported Canadian lumber was capturing a large share of the American market,
resulting in mill closings and layoffs.

• Higher tariffs would protect American lumber from competition, thereby reducing
the number of American mills in distress.
 CASE: AMERICA VERSUS CANADA

• Groups that suffered from the lumber tariff turned to the political system to try to
reverse the decision.

• In the United States, The National Association of Home Builders pressured the
Trump administration and Congress to reduce and even remove the tariff.
 CASE: AMERICA VERSUS CANADA
• The tariff hurt American industries that use lumber to produce goods, such as home
builders, because these firms had to pay more for wood.

• Higher lumber prices would cause home prices to rise, higher prices would cause demand
for new homes to fall, and as many as 8,200 jobs would disappear.

• Groups that suffered from the lumber tariff turned to the political system to try to reverse
the decision.

• In the United States, The National Association of Home Builders pressured the Trump
administration and Congress to reduce and even remove the tariff.
 CASE: AMERICA VERSUS CANADA

• The Canadian government responded to pressure from its producers by imposing a

tariff on American gypsum (drywall) exported into Canada.

• Canada is currently considering retaliatory tariffs on American coal and a variety

of products made in Oregon (the home to an American Senator who has been a
strident advocate of the U.S. tariff on Canadian lumber)
 Components of Global Economy

• The global economy is broken into four such issue areas:

• The international trade system

• The international monetary system

• Multinational corporations (MNCs)

• Economic development.
 International Political Economy

International Political
Economy

Agricultural Production/
National Power Trade Surplus / Deficit
Manufacturing
 Theories in IPE
Theories in IPE

Mercantilism

Liberalism

Marxism
 Mercantilism

• Mercantilism is rooted in seventeenth- and eighteenth-century theories about the

relationship between economic activity and state power.

• First, the classical mercantilists argued that national power and wealth are tightly
connected.

• Second, the classical mercantilists argued that trade provided one way for
countries to acquire wealth from abroad.
 Mercantilism

• Third, the classical mercantilists argued that some types of economic activity are
more valuable than others.
• Manufacturing activities should be promoted.

• Agriculture and other nonmanufacturing activities should be discouraged.

 Liberalism

• Liberalism, the second traditional school, emerged in Britain during the eighteenth
century to challenge the dominance of mercantilism.

• Adam Smith and other liberal writers, such as David Ricardo (who first stated
the modern concept of comparative advantage), were scholars who were
attempting to alter government economic policy.
 Liberalism
• Liberalism challenged all three central propositions of mercantilism.

• First, liberalism attempted to draw a strong line between politics and economics.

• The purpose of economic activity was to enrich individuals, not to enhance the state’s
power.

• Second, liberalism argued that countries do not enrich themselves by running trade
surpluses.
• Instead, countries gain from trade regardless of whether the balance of trade is
positive or negative.
 Liberalism

• Finally, countries are not necessarily made wealthier by producing manufactured

goods rather than primary commodities.
• Countries are made wealthier by making products that they can produce at a
relatively low cost at home and trading them for goods that can be produced at
home only at a relatively high cost.

• Note: governments should make little effort to influence the country’s trade
balance or to shape the types of goods the country produces.
 Marxism

• Marxism, the third traditional school, originated in the work of Karl Marx as a
critique of capitalism.

• Capitalism is characterized by two central conditions:

• The private ownership of the means of production (or capital)

• Wage labor.
 Marxism

• The capitalists who owned the factories paid workers only a subsistence wage and
retained the rest as profits with which to finance additional investment.

• Marx predicted that the dynamics of capitalism would lead eventually to a

revolution.

• That would do away with private property and with the capitalist system.
 Marxism

• Three dynamics would interact to drive this revolution.

• First, Marx argued that there is a natural tendency toward the concentration of
capital.
• Capitalism is associated with a falling rate of profit.

• Capitalism is plagued by an imbalance between the ability to produce goods

and the ability to purchase goods
 Conclusion

• The three traditional schools of political economy thus offer three distinctive
answers to our question of:

• How politics shapes the allocation of society’s resources?

• Mercantilists argue that the state guides resource allocation in line with objectives
shaped by the quest for national power.
 Conclusion

• Liberals argue that politics ought to play little role in the process, extolling instead
the role of market-based transactions among autonomous individuals.

• Marxists argue that the most important decisions are made by large capitalist
enterprises supported by a political system controlled by the capitalist class.
Conclusion
 Readings

• International Political Economy by Thomas Oatley

• Chapter # 01

• https://oxfordre.com/internationalstudies/view/10.1093/acrefore/9780190846626.
001.0001/acrefore-9780190846626-e-239