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International Political Economy

International Political Economy. What is IPE?. IPE= 3 Sectors International Monetary System International Trade System International Investment & Finance. #1 The International Monetary System. About t he IMS. About the IMS Currency exchange Int’l Monetary Fund ( IMF ) S tability

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International Political Economy

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  1. International Political Economy

  2. What is IPE? IPE= 3 Sectors • International Monetary System • International Trade System • International Investment & Finance

  3. #1The International Monetary System

  4. About the IMS About the IMS • Currency exchange • Int’l Monetary Fund (IMF) • Stability • GDP measures of monetary wealth

  5. IMS: Interdependent Interdependence • U.S. debt ceiling video • Global impact on exports, interest rates, U.S. power • In 2013, $5.3T flowed through the system http://www.economist.com/news/economic-and-financial-indicators/21586351-global-foreign-exchange-turnover • ~$1.45 T/ per day • 60% of global capital through 4 cities ¤

  6. #1 London #4 Paris #2 NYC #3 Tokyo

  7. IMS: GN Domination • Colonization • Post WWII US Goals • Avoid repeating Post WWI errors • GN currencies buy more • Purchasing Power Parity (PPP) • Way to compare cost • Same goods in different countries • Big Mac index

  8. #2The International Trade System

  9. About the ITS • Exchange of goods & services • 2 types of trade • Merchandise trade • Primary goods • Raw foods, fuels, fibers, minerals, water • Manufactured goods • Processed • Service trade ¤

  10. ITS: Interdependent • Global trade flows • Who relies on what exports • Outsourcing • 3rd party • Offshoring • Abroad • Reshoring • Returning

  11. ITS: How States Trade Bilateral • China- Japan, Canada- UK, US- EU • US- EU trade deal-- How does this deal affect you? • Cheaper shoes • Cheaper drugs • EU cars cheaper, more available • Dairy availability • Standard products bt. US, EU • Headlights issue • Gas exports to EU ¤

  12. ITS: How States Trade Multilateral • Free trade agreements (FTAs) • NAFTA, APEC, proposed TPP • Fight protectionism • WTO ¤

  13. ITS: GN Advantage • Colonization • GS Primary goods • Cash crops • Uneven trade • Rising role of EEs • Bigger economy = more leverage ¤

  14. ITS: GN Advantage Trade as political tool • Economic sanctions • What are they? • Why are they used? • Effectiveness • Some examples • U.S.  Cuba • M23 U.K.  Rwanda for M23 support • Global, unilateral  Iran • Nuclear weapons program • Sanctions on Iranvideo ¤

  15. ITS: GN Advantage ‘Iranians Feel Sanctions Bite’ • What impact have sanctions had on Iran? • Cut business ties • High unemployment • Fewer w/ steady income • Increased prices • Shortages • Can’t transfer $ • Volatile prices • Rial value decreased • Trade $, buy gold • Oil exports affected http://www.bbc.co.uk/news/business-19800532

  16. #3The International Investment & Finance

  17. About II & IF Int’l Finance • Countries’ ‘checking accounts’ • Debits • Credits

  18. About II & IF Int’l investment • Funds invested abroad 2 ways: 1) Foreign Direct Investment (FDI) • MNCs • Control assets $$$ 2) Foreign Portfolio Investment (FPI) • Stocks, bonds, etc. • Earn dividends ¤

  19. II & IF: Interdependent • FDI, FPI  WWII • U.S.  MNCs invest abroad after war • Most FDI E Asia, SE Asia • Investment  not evenly distributed  GN, EEs ¤ http://www.finfacts.ie/irishfinancenews/article_1026203.shtml

  20. II & IF: GN Domination • Post-WWII US hegemony • Top 500 MNCs 80% GN • Gross Corporate Product (GCP) ¤

  21. II & IF: GN Domination • MNCs’ power • Shell • GCP of $484.5 B in 2012 • = 26th state GDP http://money.cnn.com/magazines/fortune/global500/2012/full_list/index.html/ http://www.businessinsider.com/25-corporations-bigger-tan-countries-2011-6?op=1

  22. Recap

  23. # 1 What IPE IS IPE: 3 Sectors • International Monetary System • Currency exchange • International Trade System • Exchange of goods & services • 2 types of trade • International Investment • Foreign Direct Investment (FDI) • Foreign Portfolio Investment (FPI)

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