What is International Political Economy?

#1 The International Monetary System

About the IMS Int’l Monetary Fund (IMF), World Bank (WB) Currency exchange Int’l Monetary Fund (IMF), World Bank (WB) WB = Development IMF = Stability GDP measures of monetary wealth GDP per capita ¤

Country GDP (IMF 2016) GDP per capita (IMF 2016) United States (1) $18.57 T $57,400 (14) China (2) $11.22 T $15,400 (81) Japan (3) $4.7 T $38,894 (30) Germany (4) $3.49 T $48,190 (19) India (7) $2.25 T $6,658 (126) EU $17.1 T $35,604

China’s Income Distribution http://www.theatlantic.com/china/archive/2013/09/mapping-chinas-income-inequality/279637/

Calculations based on IMF data 2015 and 2016 Big Mac Index IMS: Buying Power How money works Purchasing Power Parity (PPP) Compare currency values Currency exchanges 2013- $5.3 T exchanged http://www.economist.com/news/economic-and-financial-indicators/21586351-global-foreign-exchange-turnover ~$14.5 B/ per day Top 5 city currency exchange centers? ¤ Big Mac (ave. cost) Could Buy Abroad U.S. $4.93 11,028 Big Macs 28,616 Big Macs in India India $1.90 895 Big Macs 345 Big Macs in U.S. Calculations based on IMF data 2015 and 2016 Big Mac Index

#1 London #2 NYC #5 Tokyo #4 Singapore #3 Hong Kong http://www.longfinance.net/programmes/financial-centre-futures/fcf-publications.html?id=953; also see https://en.wikipedia.org/wiki/Financial_centre

IMS: GN Domination Created IGOs Colonization Post WWII US Goals Democracy, capitalism Created IGOs Bretton Woods Conference -1944 IMF, WB http://www.wsj.com/articles/SB122489333798168777

Europe Tries to Compete European Union – 1992 Expansion- 28 members Brexit- U.K. votes to leave= 27 Adoption of euro -1999 19 members Global recession - 2008 Eurocrisis – 2010 ¤ http://www.economonitor.com/nouriel/2015/01/05/9-ways-the-eurozone-is-more-fragile-than-the-us/

#2 The International Trade System

About the ITS GN- services EEs- mix GS- primary Exchange of goods & services 2 types of trade Merchandise trade Primary goods Raw foods, fuels, fibers, minerals, water Manufactured goods Processed Service trade GN- services EEs- mix GS- primary ¤

ITS: Interdependent Global trade flows Outsourcing Offshoring 3rd party Offshoring Abroad Reshoring Returning ¤ Goods & Services http://www.bbc.co.uk/news/business-22093304 1913 $20 Billion = $55,000/ day 2013 $18.3 Trillion = $50 B/day Barcelona, Spain

ITS: Trade Pacts Why countries trade How they trade Bilateral China- Japan, Canada- UK, US- EU Multilateral  NAFTA, WTO, etc. How do trade deals affect you? Cheaper imports More product choices Standardized products One adapter ¤

ITS: Trade Pacts What pacts do Challenges WTO’ dispute mechanism Jeep Billboard in Shanghai http://www.nytimes.com/2014/05/24/business/wto-ruling-on-chinese-tariffs-on-us-cars.html?_r=0 What pacts do Fight protectionism Challenges WTO’ dispute mechanism Ruled on 450+ cases Recent rulings US tariffs on steel from India, China Chinese tariffs on US cars ¤

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

#3 The International Investment & Finance

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

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 ¤

II & IF: Interdependent http://www.finfacts.ie/irishfinancenews/article_1026203.shtml FDI, FPI  WWII U.S.  MNCs invest abroad after war Most FDI  China, US EEs, EU Not even ¤

II & IF: GN Domination Post-WWII US hegemony Top 500 MNCs 80% GN Gross Corporate Product (GCP) ¤ Rank Country # of top 500 MNCs 1 US 134 2 China 103 3 Japan 52 4 France 29 5 Germany 28 http://beta.fortune.com/global500

Economic Sanctions

Economic Sanctions What are they? IMS, ITS, II Why are they used? Boycott, embargo, aid, assets, etc. IMS, ITS, II Why are they used? Political sanctions Embassy, travel, sports, etc. ¤

Economic Sanctions (cont.) Effectiveness U.S.  Cuba E.U., U.S.  Russia Global, unilateral Iran N. Korea ¤ https://iran2407.wordpress.com/author/iranuclear/page/13/ http://themillenniumreport.com/2014/07/nine-eu-countries-to-block-economic-sanctions-against-russia /

NK Trade & Workers 90% of NK trade is w/ China NK workers ~35% of NK’s GDP Rejected $1M coal shipment NK workers Earn in China, Russia, ME, Poland, Uruguay Most goes to NK gov’t Goods exported to US ¤

Sanctions & NK UN Resolution China’s concerns Shared border Missile tests Assassinated brother Trade ¤ http://www.npr.org/sections/thetwo-way/2017/02/18/515955289/china-suspends-coal-imports-from-north-korea-dealing-big-blow-to-pyongyang

Recap

IPE Recap IPE: 3 Sectors Monetary System Trade System Investment & Finance Economic Sanctions