GLOBAL POLITICAL ECONOMY THEORY AND PRACTICE Fifth Edition

Theodore H. Cohn Simon Fraser University

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BRIEF CONTENTS Preface xi Acronyms and Abbreviations xvii

PART 1 Introduction and Overview

1

Chapter 1

Introduction

2

Chapter 2

Managing the Global Economy Since World War II: The Institutional Framework 17

PART 2 Theoretical Perspectives

51

Chapter 3

The Realist Perspective

55

Chapter 4

The Liberal Perspective

77

Chapter 5

Critical Perspectives

103

PART 3 The Issue Areas 130 Chapter 6

International Monetary Relations

Chapter 7 Chapter 8

Global Trade Relations 167 Regionalism and the Global Trade Regime

Chapter 9

Multinational Corporations and Global Production 250

Chapter 10 International Development

131

296

Chapter 11 Foreign Debt and Financial Crises

341

PART 4 Concluding Comments 382 Chapter 12 Current Trends in the Global Political Economy 383 Glossary 409 Index 419

209

CONTENTS Preface xi Acronyms and Abbreviations

Part 1

xvii

Introduction and Overview

1

Chapter 1 Introduction 2 What is International Political Economy? 2 The IPE Theoretical Perspectives 4 Purposes and Themes of this Book 5 Focus of this Book 11 Questions 13 Further Reading Notes 14

13

Chapter 2 Managing the Global Economy Since World War I The Institutional Framework 17 T

Global Economic Relations Before World War II 18 The Functions of the IMF, World Bank, and GATT 22 International Economic Organizations and the United Nations 23 Postwar Economic Institutions and the North 23 Postwar Economic Institutions and the South 31 Postwar Economic Institutions and the Centrally Planned Economies 38 Nonstate Actors 42 Conclusion 43 Questions 44 Further Reading Notes 45

45

Part 2 Theoretical Perspectives

51

Chapter 3 The Realist Perspective 55 Basic Tenets of the Realist Perspective 56 The Mercantilists 58 Realism and the Industrial Revolution 58 Realism in the Interwar Period 59 Realism after World War II 60 vi

Contents The Revival of Realist IPE 60 Hegemonic Stability Theory and Debates over U.S. Hegemony 61 Realism and North-South Relations 68 Critique of the Realist Perspective 69 Questions 70 Further Reading 71 Notes 71

Chapter 4 The Liberal Perspective 77 Basic Tenets of the Liberal Perspective 77 Orthodox Liberalism 80 The Influence of John Maynard Keynes 81 Liberalism in the Postwar Period 82 A Return to Orthodox Liberalism 82 Liberalism and Institutions 84 Liberalism, Global Governance, and Regimes 89 Liberalism and Domestic-International Interactions 90 Liberalism and North-South Relations 92 Critique of the Liberal Perspective 94 Questions 96 Further Reading 96 Notes 97

Chapter 5 Critical Perspectives 103 Basic Tenets of Historical Materialism 103 Early Forms of Historical Materialism 106 Whither the Historical Materialist Perspective? 110 Constructivism 114 Feminism 116 Environmentalism 118 Critique of the Critical Perspectives 121 Questions 123 Further Reading 123 Notes 124

Part 3 The Issue Areas

130

Chapter 6 International Monetary Relations 131 The Balance of Payments 132 Government Response to a Balance-of-Payments Deficit 134

vii

viii

Contents

The Functions and Valuation of Money 138 International Monetary Relations Before Bretton Woods 138 The Formation of the Bretton Woods Monetary Regime 140 The International Monetary Fund 141 The Functioning of the Bretton Woods Monetary Regime 142 The Regime of Floating (or Flexible) Exchange Rates 148 Alternatives to the Current Monetary_Regime 150 European Monetary Relations 151 What is the Likely Future of the U.S. Dollar as the Key Currency? 153 Sovereign Wealth Funds 157 Considering IPE Theory and Practice 158 Questions 160 Further Reading 161 Notes 162

Chapter 7 Global Trade Relations 167 Trade Theory

168

Global Trade Relations Before World War II 172 GATT and the Postwar Global Trade Regime 173 Principles of the Global Trade Regime 174 Formation of the WTO 180 The WTO and the Global Trade Regime 184 The South and Global Trade Issues 185 The Transition Economies and Global Trade Relations Civil Society and Global Trade Relations 195 Trade and the Environment 196 Considering IPE Theory and Practice 199 Questions 201 Further Reading 201 Notes 202

190

Chapter 8 Regionalism and the Global Trade Regime 209 Regionalism and the IPE Theoretical Perspectives 211 Regionalism and Globalization 212 A Historical Overview of RTAs 213 Explanations for the Rise of Regional Integration

214

Contents The GATT/WTO and RTAs The European Union

218

222

The North American Free Trade Agreement Mercosur

229

234

East Asian Regionalism 236 Considering IPE Theory and Practice 239 Questions 241 Further Reading 242 Notes 242

Chapter 9 Multinational Corporations and Global Production 250 Definitions and Terminology 251 Why do Firms Become MNCs? 252 The Historical Development of FDI 254 MNC-Host Country Relations: Determinants and Effects of FDI 262 Host Country Policies Toward MNCs 265 MNC-Home Country Relations 269 A Regime for FDI: What is to be Regulated? 276 Bilateral Investment Treaties 277 United Nations 278 Regional Approaches: The EU and NAFTA 279 The GATT/WTO to the OECD and Back to the WTO 281 Private Actors 283 Considering IPE Theory and Practice 284 Questions 287 Further Reading Notes 288

287

Chapter 10 International Development

296

IPE Perspectives and North-South Relations 298 Official Development Assistance 299 The World BankGroup 303 LDC Development Strategies 308 Import Substitution Industrialization 309 Socialist Development Strategies 312 Export-Led G rowth 313 The Revival of Orthodox Liberalism

319

Another Shift in Development Strategy?

324

IX

x

Contents Considering IPE Theory and Practice

Questions 332 Further Reading Notes 334

330

333

Chapter 11 Foreign Debt and Financial Crises 341 What is a Debt Crisis? 341 The Origins of the 1980s Debt Crisis 343 The Foreign Debt Regime 348 Strategies to Deal with the 1980s Debt Crisis 355 Transition Economies and Foreign Debt 363 The IMF, World Bank, and the Debt Crisis 365 The 1990s Financial Crisis 367 The Global Financial Crisis—2008 to ? 371 Considering IPE Theory and Practice

Questions 375 Further Reading Notes 376

Part 4

373

375

Concluding Comments

382

Chapter 12 Current Trends in the Global Political Economy 383 Globalization 383 North-North Relations 394 North-South Relations 400 A Final Word on IPE Theory and Practice 404 /Votes 405 Glossary Index

409

419