ULUSLARARASI İLİŞKİLER TEORİLERİ I

The liberal approach can perhaps be best summarized by the writings of Adam Smith (1723-1790), a famous English economist. Smith argues that the key to national wealth, and therefore national power, is economic growth. The key to economic growth is free trade, the free flow of goods, services and investment across borders.The correct answer is "A".

A hegemon is a powerful state supplying public goods to the international system. These public goods include stable money, security and a system of free trade that can be shared by all. The correct answer is"D".

Pax Britannica refers to the period between the end of the Napoleonic Wars in 1815 and the start of the First World War in 1914. That period, under the leadership of the Great Britain, was comparatively free of military conflict among major powers. The correct answer is A.

In the period from the late Middle Ages through the end of the 18th century, Mainly due to the advances in ship design and navigation system, the European explorers opened up new frontiers in the American continent and the Middle East to trade. In the beginning of 19th centruy, the European states needed raw materials found in colonies, hence international trade expanded throughout the world. Throughout 19th century it became necessary for European industrialized nations to expand their markets globally in order to sell products that they could not sell domestically in their countries. The period following World War I, the world experienced a major decline in trade and investment in the period following World War I, so states enacted policies to protect themselves from the effects of the crisis. The post World War II period, the goals were to promote free trade to stimulate international capital flow and to establish a stable exchange rate system. The correct answer is B.

Economic structuralism is concerned with the international division of labor created by the capitalist system. It sees that the division of labor is unfair, creating categories of rich and poor people, as well as rich and poor nations, at the macro level. The correct answer is E.

Economic liberals believe that individuals act in rational ways to maximize their self-interests, that when individuals act rationally, markets are created to produce goods and services that people need, and that market functions best when it is free of government interference. At the international level, international wealth is believed to be maximized with free exchange of goods and services on the basis of comparative advantage. Economic nationalism, on the other hand, refers to an ideology that favors state interventionism in the economic sphere. The nationalists believe that closing off an economy to external influences can be beneficial to growth and economic progress. Thus, economic nationalism can be defined as a mixture of trade protectionism and economic planning, with an aim to preserve national interests in the context of world markets. Economic structuralism, finally, stresses that the relationship among individuals, society, state and the market, in general, can be characterized by severe competition which is conflictual and exploitative. By extension, the relationship among states, which support owners of the means of production, is also conflictual because of inherent expansion of capitalism. It is also argued that constantly expanding markets of capitalism inevitably lead to economic crises, and dangerous speculation by holders of capital only exacerbates these crises. To eliminate economic problems and conflict inherent in the capitalist system, the capitalist system must be overthrown. The correct answer is C.

Financial stability is very important for the growth and expansion of international trade. In order to achieve financial stability, in the late 19th century, the gold standard system was adopted by the economically-developed nations, under the leadership of Great Britain, the hegemonic power at that time. The gold standard was a monetary system where a country’s currency or paper money had a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that used the gold standard set a fixed price for gold and bought and sold gold at that price. That fixed price was used to determine the value of the national currency. The correct answer is C.

The third part of the economic order formed after the Second World War was the General Agreement on Tariffs and Trade (GATT). This treaty was aimed at promoting liberal economic principles, such as non-discrimination in trade, support for foreign enterprises, preferential access to developed markets, and so on. In short, the GATT was essentially a series of multilateral trade negotiations, with an aim to stimulate international trade by lowering trade barriers. The correct answer is D.

After the Second World War, the Bretton Woods system came into being. Under the Bretton Woods Agreement, currencies were pegged to the price of gold, and the United States dollar was seen as a reserve currency linked to the price of gold. In 1958, the Bretton Woods system became fully functional, as national currencies became convertible. In order to convert currencies, countries settled their international balances in dollars, while United States dollars were fully convertible to gold. The exchange rate applied at the time was $35/ounce. The system had worked well for a while, but eventually dissolved between 1968 and 1973. The overvaluation of the United States dollar led to concerns among the members of the system over the exchange rates and their tie to the price of gold. An attempt to revive the fixed exchange rates failed and by March 1973, major currencies began to float against each other. The correct answer is C.

Liberal economists are in favor of MNCs. They believe that through stronger bonds between states, MNCs can also help world peace. The correct answer is A.

There are five areas posing a serious challenge to economic globalization and the triumph of economic liberalism. These are high-tech trade rivalry, trade discrimination, unpredictable economic crises, North-South inequalities, and illicit market. The correct answer is D.

Many critics, nevertheless, see the NorthSouth inequalities as one main cause for the reflashing of terrorism in the 21st century. The correct answer is B.