ULUSLARARASI İLİŞKİLER TEORİLERİ I

Political economy is, in a generic sense, a discipline analyzing the relationship between economy and politics, or vice versa. The basic assumption on which the discipline is based is that neither politics, nor economy can be fully understood in the absence of the other. That is to say, economy affects politics, as politics affects economy. Even the two can be said to be intertwined most of the time.

The expansion of Western colonialism, mainly advances in ship design and navigation allowing global trade routes to be established may be considered the roots of both the global economy and of international political economy.

Economic liberalism, economic nationalism and economic structuralism are the three major approaches to international political economy.

Adam Smith argued that the key to national wealth and therefore national power is economic growth, which could be ensured through free trade, free flow of goods, services and investments across borders.

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. Emerging as a response to economic crises, nationalist movements and enlarged states, nationalists see companies as elements of state power and therefore contributory to state wellbeing. More advanced nations therefore have a competitive advantage and therefore ''infant'' industries must be protected by the state from foreign competition

While the General Agreement on Tariffs and Trade (GATT)was the treaty aimed at promoting liberal economic principles, and established the most comprehensive trade agreement in history, it became a formal institution in 1995 and was renamed the World Trade Organization. The WTO has the task of implementing the Uruguay Round of the negotiations conducted by GATT, serving as a forum for trade negotiations and providing a venue for trade review. It represents the states that conduct over 90 percent of the world's trade.

Despite the relative erosion of its position within the global economy, the United States continues to bear roughly the same major share of the international strategic burden, as it has done before. Yet a critical question in IPE with respect to the issue of hegemony today is whether China will challenge the United States hegemony and threaten the liberal international order. Another is whether Germany will move to establish itself as a hegemon within the European Union.

Liberal economists usually extoll the virtues of MNCs, and even go so far as to arguing that they result in an interdependence in international trade. This, in turn, requires states to put aside their national differences for economic wellbeing, resulting in peace.

Through globalisation and internationalism in the post Cold War era, it was argued that trade discrimination would be a thing of the past. The observable reality indicates that this is not the case, with localised trade agreements such as the EU and NAFTA being established and providing preferential benefits to member states.

It is remarkable that the economic north-south division has not yet led to military conflict, yet many critics see this issue as one main cause for the rise of terrorism in the 21st century as the power imbalance between the northern hemisphere and underdeveloped or developing nations in the southern hemisphere has also previously led to confrontation in the international arena.

The nationalists also 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.

Approach                        Representative

Economic Liberalism                   I- Adam Smith

Economic Nationalism                II- Alexander Hamilton

Economic Structuralism             III- Karl Marx

In the late 19th century, the gold standard system was first adopted by the economically-developed nations, under the leadership of the 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.

Multinationals have undue political influence over governments, exploit developing nations, and create job losses in their own home countries. In addition, they argue that MNCs tend to develop
a monopoly for certain products, driving up prices for consumers. MNCs are also said to have a detrimental effect on the environment because their operations may encourage land development and the depletion of local resources.

David Ricardo (1772-1823) is a representative for economic liberalism.

That is, states should produce and export those products which they can produce most efficiently, relative to other states. If international trade is free and is away from certain restrictions, it is believed that all nations win in the final analysis out of a great amount of international exchanges. This way, nations also get to know each other, cultural exchanges can occur, stereotypes can be reduced, and peace can spread all over the world.

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.

Marx and Engels started their critiques of the capitalist system by examining the most advanced
capitalist nations at that time, namely the Great Britain and Prussia. To them, advanced capitalism
divides people into several classes, two of which are especially important: the capitalists and the workers, or the rich and the poor. The capitalists own everything, have all the power and all the
money, whereas the workers do all the work, but have no power and no money. (A)

The main theorists of economic nationalism are Alexander Hamilton (1780-1804), the first United
States Secretary of the Treasury, who wrote The Report on the Subject of Manufactures (1791) and Friedrich List (1789-1846), a Prussian economist, who wrote The National System of Political Economy (1841). According to them, the simple formula is that industrial power equals national power and national power equals independence (Hamilton, 2001; List, 1991). (B)

Advocates of MNCs argue that they create job opportunities for many and technologically advanced goods. It is also said that MNCs tend to establish operations in markets where their capital is most efficient or wages are lowest. By producing the same quality of goods at lower costs, multinationals reduce prices and increase the purchasing power of consumers worldwide.

The illicit market refers, in a generic sense, to economic activities that circumvent the institutional rules. To be more specific, what makes a market illicit can either be the illegal nature of goods and services themselves, or the illegal ways of their transaction. Thus, illicit market activities may include the illegal movement of commodities to evade tariffs, trade restrictions and sanctions, or
the illegal movements of the banned materials, like drugs, human organs, endangered species, even protected intellectual property.

Uruguay Round took seven and a half years, almost twice the original schedule. By the end, 123 countries were taking part. It covered almost all trade, from toothbrushes to pleasure boats, from banking to telecommunications, from the genes of wild rice to AIDS treatments. It was the largest
trade negotiation ever, and most probably the largest negotiation of any kind in history.