International Political Economy

566 Pages·04.969 MB·English

by  Thomas Oatley

International Political Economy
Fifth Edition
THOMAS OATLEY
University of North Carolina Chapel Hill
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First published 2012, 2010, 2008, 2006 by Pearson Education, Inc.
Published 2016 by Routledge
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ISBN: 9780205060634 (pbk)
Cover Designer: Nancy Danahy
Library of Congress Cataloging-in-Publication Data
Oatley, Thomas H.,
International political economy / Thomas Oatley.—5th ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-205-06063-4 (alk. paper)
ISBN-10: 0-205-06063-3 (alk. paper)
1. International economic relations. 2. International finance. 3. Globalization. I. Title.
HF1359.O248 2012
337—dc22
                           2011000588
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Brief Contents
Preface
CHAPTER 1 International Political Economy
CHAPTER 2 The World Trade Organization and the World Trade System
CHAPTER 3 The Political Economy of International Trade Cooperation
CHAPTER 4 A Society-Centered Approach to Trade Politics
CHAPTER 5 A State-Centered Approach to Trade Politics
CHAPTER 6 Trade and Development I: Import Substitution Industrialization
CHAPTER 7 Trade and Development II: Economic Reform
CHAPTER 8 Multinational Corporations in the Global Economy
CHAPTER 9 The Politics of Multinational Corporations
CHAPTER 10 The International Monetary System
CHAPTER 11 Cooperation, Conflict, and Crisis in the Contemporary International
Monetary System
CHAPTER 12 A Society-Centered Approach to Monetary and Exchange-Rate
Policies
CHAPTER 13 A State-Centered Approach to Monetary and Exchange-Rate Policies
CHAPTER 14 Developing Countries and International Finance I: The Latin
American Debt Crisis
CHAPTER 15 Developing Countries and International Finance II: A Decade of
Crises
CHAPTER 16 Globalization: Consequences and Controversies
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Glossary
References
Index
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Detailed Contents
Preface
CHAPTER 1 International Political Economy
What Is International Political Economy?
Studying International Political Economy
Traditional Schools of International Political Economy
Interests and Institutions in International Political Economy
The Global Economy in Historical Context
CHAPTER 2 The World Trade Organization and the World Trade System
What Is the World Trade Organization?
Hegemons, Public Goods, and the World Trade System
The Evolving World Trade Organization: New Directions, New Challenges
The Greatest Challenge? Regional Trade Arrangements and the World Trade
Organization
CHAPTER 3 The Political Economy of International Trade Cooperation
The Economic Case for Trade
Trade Bargaining
Enforcing Agreements
CHAPTER 4 A Society-Centered Approach to Trade Politics
Trade Policy Preferences
Factor Incomes and Class Conflict
Sector Incomes and Industry Conflict
Organizing Interests: The Collective Action Problem and Trade Policy Demands
Political Institutions and the Supply of Trade Policy
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CHAPTER 5 A State-Centered Approach to Trade Politics
States and Industrial Policy
The Infant-Industry Case for Protection
State Strength: The Political Foundation of Industrial Policy
Industrial Policy in High-Technology Industries
Strategic-Trade Theory
Strategic Rivalry in Semiconductors and Commercial Aircraft
CHAPTER 6 Trade and Development I: Import Substitution Industrialization
Domestic Interests, International Pressures, and Protectionist Coalitions
The Structuralist Critique: Markets, Trade, and Economic Development
Market Imperfections in Developing Countries
Market Imperfections in the International Economy
Domestic and International Elements of Trade and Development Strategies
Import Substitution Industrialization
Reforming the International Trade System
CHAPTER 7 Trade and Development II: Economic Reform
Emerging Problems with Import Substitution Industrialization
The East Asian Model
Structural Adjustment and the Politics of Reform
Developing Countries and the World Trade Organization
CHAPTER 8 Multinational Corporations in the Global Economy
Multinational Corporations in the Global Economy
Economic Explanations for Multinational Corporations
Locational Advantages
Market Imperfections
Locational Advantages, Market Imperfections, and Multinational Corporations
Multinational Corporations and Host Countries
CHAPTER 9 The Politics of Multinational Corporations
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Regulating Multinational Corporations
Regulating Multinational Corporations in the Developing World
Regulating Multinational Corporations in the Advanced Industrialized Countries
Bargaining with Multinational Corporations
The International Regulation of Multinational Corporations
CHAPTER 10 The International Monetary System
The Economics of the International Monetary System
Exchange-Rate Systems
The Balance of Payments
Balance-of-Payments Adjustment
The Rise and Fall of the Bretton Woods System
Creating the Bretton Woods System
Implementing Bretton Woods: From Dollar Shortage to Dollar Glut
The End of Bretton Woods: Crises and Collapse
CHAPTER 11 Cooperation, Conflict, and Crisis in the Contemporary International
Monetary System
From the Plaza to the Louvre: Conflict and Cooperation during the 1980s
Global Imbalances and the Great Financial Crisis of 2007–2009
Exchange-Rate Cooperation in the European Union
CHAPTER 12 A Society-Centered Approach to Monetary and Exchange-Rate
Policies
Electoral Politics, the Keynesian Revolution, and the Trade-Off between Domestic
Autonomy and Exchange-Rate Stability
Society-Based Models of Monetary and Exchange-Rate Politics
The Electoral Model of Monetary and Exchange-Rate Politics
The Partisan Model of Monetary and Exchange-Rate Politics
The Sectoral Model of Monetary and Exchange-Rate Politics
CHAPTER 13 A State-Centered Approach to Monetary and Exchange-Rate Policies
Monetary Policy and Unemployment
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The Time-Consistency Problem
Commitment Mechanisms
Independent Central Banks and Exchange Rates
CHAPTER 14 Developing Countries and International Finance I: The Latin
American Debt Crisis
Foreign Capital and Economic Development
Commercial Bank Lending and the Latin American Debt Crisis
Managing the Debt Crisis
The Domestic Politics of Economic Reform
CHAPTER 15 Developing Countries and International Finance II: A Decade of
Crises
The Asian Financial Crisis
Bretton Woods II
The Heavily Indebted Poor Countries
CHAPTER 16 Globalization: Consequences and Controversies
Globalization and Global Poverty
Globalization and “Sweatshops”
Trade and the Environment
Glossary
References
Index
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Preface
Local economic developments reflect global forces. Consider the sovereign debt crisis
that struck Greece in the spring of 2010. The Greek government borrowed heavily
between 2006 and 2009. Greece’s ability to borrow so much was made possible by two
global developments: high savings rates in China created a large pool to draw from; the
creation of the euro seemed to make Greece a low-risk borrower. German banks
intermediated much of the funds that flowed to Greece in this period. When the Greek
government’s financial position deteriorated sharply in the fall of 2009, financial markets
began to doubt Greek solvency and sold Greek debt in massive quantities. Because
German banks held such large amounts of Greek debt, a possible Greek default would
possibly precipitate a severe banking crisis in Germany that could ripple across the EU
and potentially undermine the euro itself. To stave off this possibility, EU governments
agreed (reluctantly) to provide financial assistance to Greece in order to restore stability.
Hence, global forces enabled Greece to get into financial difficulty, and once Greece
encountered problems, its difficulties threatened economic stability throughout the EU.
And had the crisis brought euro down, the global economy would have suffered a
terrible blow. In this “era of globalization,” the factors that shape our economic lives are
as likely to originate in far away places as they are to stem from local events.
Understanding the global economy requires knowledge of politics as well as
economics. For globalization is not a spontaneous economic process; it is built on a
political foundation. Governments share a broad consensus on core principles; core
principles inform the elaboration of specific rules. Specific rules establish international
institutions—the World Trade Organization, the World Bank, and the International
Monetary Fund. These international institutions in turn facilitate a political process
through which governments reduce barriers to global exchange and create common rules
to regulate other elements of the global economy. This political system—the foundation
and the process—has enabled businesses to construct the network of international
economic linkages that constitute the economic dimension of globalization.
Understanding the global economy, therefore, requires a political economy approach: We
must study its political as well as its economic dimensions.
Studying the political and economic dimensions of the global economy requires us to
develop theory that simplifies an inherently complex world. This book develops a
theoretical framework in which politics in the global economy revolve around enduring
competition between the winners and the losers generated by global economic exchange.
As economists since Adam Smith have told us, global exchange raises aggregate social
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