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CHAPTER 1 -Theories of Global Political Economy

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CHAPTER 1 -Theories of Global Political Economy

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When talking about political economy, theories are used to understand and explain the relationship between these two fields. Each of these theories exists for a different purpose. If we were to exemplify these theories through a crisis, let's take the 1997 Asian financial crisis. There are different stories about the crisis. While the liberal story attributes the cause of the crisis to the fiscal policies implemented by Asian states, the realist story sees the cause of the crisis as the result of premature liberalization. And he argues that caution should be exercised regarding the liberalization of economic activities. The critical story, on the other hand, looks at the event from a completely different perspective and talks about the liberalization pressures of the US government against developing countries. In other words, events are interpreted in different ways in theories.

We can outline the theories as follows. The economic nationalist perspective draws attention to the importance of the state in international relations and economy. Since its equivalent in international relations theory is realism, we can understand how important the issue of national security is in this perspective. It has various shapes. One of these is mercantilism. Mercantilists imply that there is a limited amount of wealth in the world and that each state wants to protect its own interests by preventing other countries from accessing this wealth. In fact, this is also known as the zero sum game. In this theory, the state is the main actor. In fact, it is long in detail, but to summarize briefly, there are two assumptions in economic nationalist thought. First, the interstate system is anarchic and therefore each state wants to protect its own interests. Secondly, the state has priority in political life. It recognizes the importance of other actors in the market but subordinates their importance to that of the state. The state is a rational actor

Liberal theory, on the other hand, extends to a wide range of areas such as companies, individuals, states, NGOs and IGOs. The state ceases to be a unitary actor and is seen as under the influence of many factors. It does not focus on conflict like the Natinoalist perspective and draws attention to cooperation. Because, according to them, the world is not anarchic and there is interdependence. In this section, positive sum game is mentioned. They see companies as the source of economic wealth. The free market is important. Individuals should freely participate in the economy. International organizations are very important for liberals.

Finally, let's look at critical theory. This theory emerged as a reaction to liberal theory. There are three types. Marxist, feminist and environmentalist. Marxist theories focus on workers and class. He does not pay much attention to state interests. Firms such as multinational corporations are tools of exploitation. They describe capitalism as unstable and conflictual. They see the system as hierarchical. Feminists within this theory also see the world as exploitation, but they look at gender roles. Environmentalists also study how people are shaped by the environment.

As a result, this diversity of theories provides options by allowing us to analyze events or situations from different perspectives.

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The process of improving a nation's financial status, income level, standard of life, and overall wellbeing is known as economic development. This process typically involves the advancement of variables including a nation's industrialization, economic growth, equitable income distribution, investment potential, technical advancement, and standard of living. A nation's greater production, expanded employment possibilities, improved general welfare, and more efficient use of its resources are all examples of objectives that might be the focus of economic growth. This process typically takes a long-term view and may entail several reforms in a nation's political, social, and economic domains. Economic development is linked to social indices including poverty reduction, enhanced health and education services, and reinforced infrastructure. Consequently, the goal of economic development is not just to increase economic growth but also to raise societal standards of living and overall well-being. There are many theoretical perspectives on economic development. Liberal economic theory brings a perspective on economic development in which free market economics and individual freedoms play an important role. Critical theory approaches economic development from a more critical perspective and often highlights structural problems in economic, social and political systems. This theory analyzes power relations, inequalities and injustices, and considers social and political contexts when considering economic development processes. "Internal Causation Theory" is an approach that tries to explain economic development by focusing on a country's internal factors. This theory tries to explain the sources, processes and results of economic development through the country's own internal dynamics. "External Causation Theory" is a theoretical approach that argues that economic development generally depends on external factors, such as foreign aid, global economic relations, and interactions with other countries. This theory suggests that most of the factors affecting a country's economic development are beyond the country's control, and therefore external interventions or factors are important. Modernization theory is an approach that tries to explain the economic development of developing countries. This theory is generally based on the development process that started in the West and argues that other countries can modernize by undergoing a similar evolution.

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CHAPTER 2-International Political Economy and its Methods

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CHAPTER 2-International Political Economy and its Methods

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In this section, I will touch upon international political economy and its method. IPE emerged in the mid-1970s as a separate subfield of international relations covering topics such as international trade, the influence of multinational corporations, and international finance. First, let's examine the fields one by one. If we consider the economy. Today, when we talk about economics, we will talk about neoclassical economics. This view briefly points out that human wants and desires are unlimited, but resources are limited. It seeks solutions on how to allocate these resources. They see markets as useful places where individuals can shop. They do not want politics and politicians to intervene in the economy. Because they believe that they disrupt the free market economy. Keynesian economics, on the other hand, emphasizes the importance of government. They think that the government should step in in times of economic recession or crisis. Institutional economics, on the other hand, argues that markets are not natural and that markets are shaped as a result of institutions such as legal structures.

In another field, political science, the use of power and politics is the subject of this field. In fact, the biggest difference between it and the field of economics is that the decision-making process in politics is not always rational, it is affected by ideologies and arguments. The field of international relations focuses on interactions between states. That is, they are interested in how the international system works. Political economy briefly focuses on how politics structures the economy and how the economy affects politics.

Now let's take a look at 4 methods for research. Case studies are detailed investigations of a specific event or issue. Of course, this only provides the description of the event, that is, it does not provide analysis, and therefore it is not included in theoretical discussions. There are fields such as 'least likely case study', 'most likely case study' and 'large n studies'. The disadvantage of this method is that you can never be sure how representative the case is. Rational choice assumes that individuals try to maximize their profits and minimize their losses. Institutionalism, on the other hand, focuses on the impact of institutions on politics.Constructivism, on the other hand, argues that there is an interconnection between individuals and the social world. They emphasize the changing nature of social reality.

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CHAPTER 3-Forging a World Economy: 1400–1800

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CHAPTER 3-Forging a World Economy: 1400–1800

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In this section, I will touch upon the formation of the world economy between 1400 and 1800. It's  quite detailed and complex, but I'll outline it. In fact, it is possible to answer why there is such a difference in terms of life chances and wealth between today's regions and how the racial hierarchy began by going back to the 1400s. Is the success of the West a coincidence? To answer this question, let's first look at the regions of a world economy in those periods. In the early 1500s, the Ottoman Empire maintained its superiority in the Middle East and began to expand its dominance towards Europe. The resource competition experienced in Europe was also present here. In China, the products desired by the world were produced and it had military power and advanced technology. It was the greatest power among civilizations in the 15th century. But over time, their engagement with the outside world decreased and they began to lag behind Europe. Afria was a rare mine. The gold mines in West Africa adequately met Europe's demand for money. And most importantly, Europe strengthened its relations with foreign powers and increased its economic activities between the 13th and 15th centuries.

At that time, the emergence of new trade models encouraged Europeans to make new breakthroughs. The necessity of purchasing luxury goods that could not be compensated by trade with silver or gold offered Europeans three ways. They will either find these resources, seize the goods they want by force, or develop more preferred goods for commercial purposes. Europeans had started to do all these strategies. This situation especially put Americans and Africans in a difficult situation. European expansion had begun. America is the region where Europeans achieved the most striking and success in subjugating the people and environment of this continent. Europeans quickly plundered its riches. The same scenarios were happening in Africa. Slavery and epidemics brought by Europeans were slaughtering the population of that region.

In other words, these early periods when the world economy was taking shape were not very pleasant. Europe was beginning to expand and everything was in the interests of the elite. Of course, the rise of sovereign regional states was another factor. Sovereign states created a competitive environment. That's why Europeans are relentless and see other regions as resources they can use to further their competition. Additionally, the creation of credit made trade easier at that time.

As a result, cross-border trade started at that time. When Europeans could not get what they wanted by force, they resorted to trade. During these years, production was mainly agricultural. Long-distance trade opened the door to financial innovation. The emergence of division of labor brought diversity to production.

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CHAPTER 4-Industry, Empire and War: 1800–1945

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CHAPTER 4-Industry, Empire and War: 1800–1945

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This section focused on industry, empire and wars between 1800 and 1945. The most important development during these periods was the industrial revolution. The industrial revolution had begun to increase power and wealthy in England. But after the 2nd Industrial Revolution, it was left behind by the USA and Germany. This revolution began to increase competition between countries. The industrial revolution also had an impact on gender. While children and women, who were exploitable populations at first, were employed, later male power took their place. As a result of industrialization, the harsh living conditions and labor exploitation in the factory led to the establishment of unions and the growth of democratic movements. In fact, the industrial revolution created new economic relations in society. There are three elements in this new system. First of all, there was the industrial population. In other words, capitalist employers and workers who sell their labor for wages. Secondly, production in the factory. And the last element is that the entire economy has come under the domination of profit-seeking capitalism.

The industrial revolution also disrupted the balance between Asia and Europe. The innovations brought by the industrial revolution made Europe stronger. These; The emergence of the liberal state, free labor market. Of course, these innovations triggered democratic movements. Thinkers like Marx began to envision communism by addressing class relations.

Japan was the only state in Asia that could respond to these changes. Going back to England, there were three elements that England tried to make the basis of the international system. These; the gold stand was free trade and balance of power. In addition, finance played an important role in the construction of the international economy in this period.

After all this, it is possible to talk about a renewed imperialism. This situation was an inevitable feature of capitalism.

With the start of World War I in 1914, the liberal and imperialist order of the 19th century almost came to an end. The economic collapse between the two world wars left its mark on the period. Of course, this situation increased the role of the USA after 1945 and contributed to the establishment of a number of organizations that supported the global economy.

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CHAPTER 5-Growing a Global Economy: 1945–2015

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CHAPTER 5-Growing a Global Economy: 1945–2015

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In this section, the global economy that grew between 1945 and 2015 is mentioned. First of all, if I were to touch upon the cold war period. Cold war rivalry led to an increase in violence and poverty in many countries. At that time, the USA had begun to work on building a series of institutions to manage the world economy. Of course, these institutions reflected US interests. The aim was to create a system that had liberal characteristics but did not harm internal stability. Three international organizations were created to monitor the liberal international economic order. IMF, World Bank and GATT. In addition, there is the Marshall plan. Another important development in the post-war global political economy was the creation of regional economic institutions.

Besides the capitalist system, the communist political economy was also remarkable. But in the early 1990s, the two largest communist states, Russia and China, also broke off their ties with communism. If we look at the Southern political economy, we can talk about decolonization. Nationalist movements began to emerge within the colonies, so colonial states became an increasing economic burden for Europeans.

If we come to the period between 1990 and 2015 after the cold war. After the end of the cold war, three trends in the world were remarkable. One is the continuation of capitalism competition and its spread to rising powers, the other is the impact of the information revolution and the last one is new developments in international organizations.

I will focus primarily on competition capitalism. Just as there was capitalism-communism competition. Competition for capitalism models took place among Western states. Of course, we cannot talk about the winner in this competition because each model has its strengths and weaknesses. In fact, countries were experiencing a fluctuating economic process. For example, from 2008 to 2012, both the USA and Europe experienced a serious economic crisis. While the USA experienced an economic revival in 2015, Europe continued its recession.

States outside the developed world were also affected by the pressures of global markets. They were trying to find a place for themselves in the global market.

The information revolution was one of the important developments of this age. With this revolution, the development of information technology facilitated the globalization of economic activities.

Finally, when we come to the field of international organizations and governance, we realize this. The increase in international organizations has an important place in the regulation of the global economy.

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International trade refers to the buying and selling of goods and services between different countries. It is a cross-border trade. But in today's international trade system, we encounter two features. First, the political importance of national borders still continues. Secondly, the economic importance of national borders is decreasing. When it comes to international trade, two issues discussed are important. One of these is the existence of barriers or restrictions to international trade that continue today. Whether these restrictions should be lifted or whether they are necessary for security and politics is a complex question. Another important issue is the exchange environment in which trade is conducted. The components of this trade environment are as follows: foreign trade policies and tariffs, free trade agreements, exchange rates, etc.

When we talk about national borders in trade, we should also talk about protectionism. Protectionism is policies designed to restrict imports of goods and services. These protections can take many forms. But the most common are tariffs. In addition, quotas, subsidies and administrative regulations are among them.

So should trade be free or protectionist? This is a matter of debate. Those who advocate free trade embrace liberal trade theory. They specifically address specialization. That is, a country should specialize in and produce the goods and services for which they are most efficient. In this way, economic growth in countries will increase and they will become more stable. In addition, since free trade increases competition, productivity also increases. Of course, it is also true that inequalities may increase. After all, even the geographical structure of a country can determine which field that country should specialize in. I think this can create injustice in some cases. But no matter what, protectionist policies should be abandoned, especially today. Because protectionist policies do not even give hope to poor countries. And it encourages the growth of monopolies

Another issue I will touch upon is the great developments in trade after World War II. Especially after the war, the institutional arrangements that guided world trade were transformed. Namely, the trade regime is based on 4 basic principles. These; non-discrimination, reciprocity, transparency and multilateralism. These principles became a guiding path for institutions. GATT was established in 1947. But GATT was quite unsuccessful in resolving the disputes. THAT'S why the WTO was established in 1995. WTO provides a comprehensive structure for the regulation and promotion of international trade. The WTO oversees trade agreements, resolves trade disputes and promotes free trade among member countries. When we look at WTO's policies regarding developing countries, it wants to include these countries as full participants in the system. But most developing countries remain dependent on exports of agricultural products. In addition, regional trade agreements also have a positive or negative impact on developing countries. On a positive note, it provides these countries with greater market access, investment and economic growth. But the negative effects are competitive pressure, tariffs or trade barriers.

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This week's topic is transnational production. Transnational production generally refers to a production model in which a company's activities are carried out in multiple countries rather than just one. In this model, a company tries to make the most of its resources by carrying out different stages of production in different countries. This situation is generally a result of globalization and can be applied to companies to provide cost advantages, access markets more effectively and gain competitive advantage. The main actors of the process are TNCs. These companies make up almost 50% of the global manufacturing structure.

THIS chapter touched on 2 types of foreign investment. One of these is direct foreign investment, the other is indirect foreign investment, also known as portfolio investment. What was most influential in the transformation of the global production system was the levels of foreign direct investment. Foreign direct investment; These are investments in which the investor has control over the resources made and transferred outside the investing companies' own country. Indirect investment refers to certain assets or products, such as capital, debt, technology, etc., that are transferred separately between two independent economic actors. That is, control over the resources is left by the seller to the buyer.

So, what are the leading TNCs? These companies operate across borders. This term is often used to refer to large companies that cross borders, operate in many countries, and are often multinational.

Theoretical perspective has offered various explanations for the growth of TNCs. These transnational production discussions focus on two issues. The first is how multinational companies grow, and the second is what influence these companies have on sovereign states. While the nationalist perspective emphasizes the importance of states, it focuses on the ability of states to control the activities of multinational companies. Liberal theory, on the other hand, emphasizes more the importance of the market. Critical theory, on the other hand, speaks of the changing nature of capitalist relations and casts doubt on the impact of multinational corporations on host economies.

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There are 2 very important points in the global financial system. One of these, IMS, evolved from a fixed exchange rate system to a system using floating exchange rates. Another important point is that in the global credit system, the creation and supply of credit has shifted from the responsibility of public authorities to being provided by companies.

First, let's consider the international monetary system. In the late 19th and early 20th centuries, many countries adopted the gold standard. Currencies were pegged to a certain weight of gold. This system contributed to the orderliness and stability of international trade, but was shaken after World War I. The gold standard was revised with the Bretton Woods Agreement between 1944 and 1971. The dollar was pegged to gold and other currencies were pegged to the dollar. However, due to dwindling US gold reserves, in 1971 US President Richard Nixon suspended gold conversion, which led to the collapse of the Bretton Woods system. From the late 1970s on, many countries left the value of their national currencies to free market conditions (floating exchange rates). ). This is a flexible system where exchange rates are determined by free market supply and demand. And later the Euro emerged as a currency, which was officially introduced in 1999. Since Eurozone countries have a common currency, exchange rates between them have disappeared. This process of evolution shows that the international monetary system is constantly adapting and changing. Today, the increase in international trade, technological developments, changes in financial markets and shifts in the global economic power balance continue to have an impact on the international monetary system.

When it comes to the global credit system; There are some conditions that are effective at this point. These are financial liberation, change in banking regulations, financial innovation, globalization and regulatory changes.

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In this section, the global division of labor was mentioned. The global political economy has led to an increase in the division of labor. The most important point here is that a person's position in the division of labor determines how long that person will live and what his quality of life will be. First, let's look at what division of labor is. Division of labor refers to the roles people play in the production process. That's why different societies and economies have different organizations and methods. Work divisions can be simple or detailed, that is, based on specialization. International division of labor refers to the process by which countries specialize in the production of certain things for export. The global division of labor shows us that work is not limited to certain states. It is possible to see that activities are now available in many different types of states.

There are many discussions about these divisions of labor. There are those who say that the division of labor leads to inequality and injustice because it is based on terms such as gender and race. On the other hand, there are liberals who say that division of labor is beneficial to economic development. First of all, I will touch upon the liberal view. They think that an improved division of labor provides economic benefits. According to them, division of labor increases productivity. Smith attributes the increase in productivity with the division of labor to three factors. First, practicing a specific task increases manual dexterity, which builds speed. Secondly, the need to switch from one task to another is eliminated and saves time. Finally, machines can be applied to tasks, simplifying the production process through task specialization. In summary, Smith and liberals generally believe that the more developed a society is, the greater the division of labor. Therefore, states should support this division of labor. So

On the other hand, there are also criticisms of the liberal approach. These critics claim that the division of labor is unnatural and shaped by power relations. For example, the sexual division of labor refers to the ideas that societies have about what social roles and forms of employment are most appropriate for men and women. We can cite the practice of slavery in America as an example of the racial division of labor.

In summary, it is obvious that there are some negativities regarding inequality with the increasing division of labor around the world. Political parties and unions are resorted to in order to combat these negativities. They work in social associations or institutions to reduce inequality and increase the benefit of division of labor in the world.

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In this section, the connection between gender and global economic politics was touched upon. The distinction between men and women has actually existed since the development of global economic history. He played a role in many areas such as trade, production and finance. Gender in economic relations examines the effects of women and men on economic decisions, opportunities, and access to resources. A gender perspective highlights gender inequality in the global economy and reveals that women are often in low-paid jobs, insecure employment, and have limited economic power. Feminist economics focuses on increasing women's economic power by examining how economic policies affect gender equality. Many national governments and international organizations are also currently focused on solving problems arising from gender inequality.

Recognizing the importance of gender, a theoretical perspective on GPE aims to reveal how global economic processes and structures are affected by and contribute to gender inequalities. It highlights the need to consider the experiences of men and women differently and address the unequal distribution of resources and opportunities in the global economy. Additionally, considering the relationship between men, women and the global economy can contribute to the development of more inclusive, fair and sustainable economic policies. Gender-based analyzes allow for a more holistic assessment of the effects of economic policies.