1. IR306 FOREIGN POLICY ANALYSIS INTERDEPENDENCE IN INTERNATIONAL SYSTEM - LIBERALISM

2. INTERDEPENDENCE IN THE INTERNATIONAL SYSTEM  Liberal theories of international relations focus on the distribution of economic wealth as primary characteristics that affect states foreign policies  States cooperate because of expected mutual benefits and they are likely to form multilateral regimes to increase information certainty, lower transaction costs and foster mutual gains  Liberalism views economic interdependence as the key characteristic of the international environment that states must consider when they make foreign policy

3. HOW IS FOREIGN POLICY AFFECTED BY INTERDEPENDENCE?  According to liberalism states find cooperation rather than conflict more in line with their interests.  Arms control agreements, trade agreements and cultural exchanges are examples of cooperation that can benefit states  Cooperating with other states and building international institutions to facilitate that cooperation allows states to further their goals of economic wealth.

4. HOW IS FOREIGN POLICY AFFECTED BY INTERDEPENDENCE?  Liberalism argues that all states will be better off if they cooperate in a worldwide division of labor with each state specializing in what it is better at producing  Japan for example, decided long ago that it was not possible to produce all that it needed to consume  Its experience in World War II of trying to control access to resources through conflict was not successful.  Therefore, it came to see participation in regional and global trade networks as a more efficient way to generate wealth.

5. NEGATIVE IMPACT OF INTERDEPENDENCE  The more numerous the connections are between states the greater the opportunities for conflicts of interests  For example, Japan and Western European states are highly dependent on Middle East for oil and their economic interests have often diverged with Middle Eastern states and political and military interests  When states fail to resolve these difference through cooperation and compromise, states may resort to force to ensure access to resources on which they are dependent.  This logic partly explains the 1991 Persian Gulf war

6. NEGATIVE IMPACT OF INTERDEPENDENCE  Interdependence also means that states can be constrained in their foreign policy  Fortunes or wealth of one states are connected to the wealth of others, when one states harms another it does so at its own peril  States in an interdependent world harm themselves by destroying potential trading partners and markets in which to sell their goods

7. RICH STATES, POOR STATES  Some states are more dependent than others  All states are affected by the actions of other states. But richer states can afford to sacrifice part of their economic wealth in order to pursue other goals  Their wealth and centrality of their state in the world economy give them a choice in trading partners and they do not have to rely so much on others for economic assistance  Poor states are less engaged in global economy  Their economic existence depends on their relationship with other states as well as with nonstate actors like the MNC and international financial organizations.  Thus they are often forced to comply with the foreign policy wishes of other bigger powerful states

8. GLOBALIZATION  Globalization and liberalization complicate the effects of interdependence  Globalization connects more economies in world wide financial trading markets but it has not done so evenly  The gap between rich and poor states are widening  Poor states have very little ability to resist pressures to open up their markets even when they disagree with the liberal philosophy  The EU is an example of regional economic integration especially with the establishment of the common currency

9. INTERDEPENDENT AND DEPENDENT STATES IN INTEGRATION  Great Britain, France and Germany are all members of the EU. Despite economic benefits that all three could derive from the membership there are different approaches employed by these states when it comes to foreign policy  Economic integration has also affected all members of the EU differently  British foreign policy towards the EU has been one of hesitation. France and Germany have emphasized economic integration to a much greater extent

10. INTERDEPENDENT AND DEPENDENT STATES IN INTEGRATION  In contrast to Europe, the rest of the world had economic interdependence forced upon them  Colonies were exploited for economic gains and their economies were transformed to meet the needs of the colonial power  Upon independence, a lot of these economies were left with narrow range of export commodities, underdeveloped domestic economy and little prospect of industrialization  Often, the primary basis of income was foreign trade which tied their economies to their former colonial power and in some ways make them dependent on it