International Economics: Theories, Themes, and Debates - Report Example

International Political Economy The “International political economy” (IPE) is an educational regulation within the boundaries of the social sciences that evaluates the global relations in arrangement with the political economy. As an interdisciplinary area it draws on many diverse educational schools, most remarkably “political science and economics”, but as well sociology, history, and cultural studies. The academic restrictions of the IPE are flexible, and along with adequate epistemologies are the issues of strong debate. This debate is fundamentally framed by the discipline's status as a new and interdisciplinary field of learning. (COHEN, B. J., 2008) International Political economy, traditionally representing the discipline which as in modern times is simply recognized as ‘economics,’ is an holistic inquest into the composition, foundation and communal actors which determines the productivity, resource mining, allocation, utilization and accrual of the economic surplus. (COHEN, B. J., 2008) The detailed learning of above processes at the international scale and their various territorial, political, fiscal and social effects globally is known as IPE. Regardless of such discrepancies, a lot of scholars agree that IPE is eventually concerned with the ways in which the political forces i.e. “states, institutions, individual actors, etc.” outline the system through which the economic exchanges are articulated, and conversely the results that economic connections have over political structures and outcomes. (KEVIN LAWLER, H. S., 2001) IPE materializes as a heretical approach to global studies at some point in the 1970s as the 1973 global oil crisis and the collapse of the “Bretton Woods system” alerted academics, particularly in the United States of America of the significance, eventuality, and limitations of the economic foundations of the world order. IPE scholars affirmed that the prior studies of global relations had positioned extreme prominence on bylaw policy and diplomatic history. (KURT BURCH, R. A. D., 1997) Correspondingly, neo-classical economics was blamed of abstraction and being a historical. Portraying deeply on “historical sociology” and economic history, the IPE projected a blend of economic as well as political investigation. In this logic, both “Marxist and liberal” IPE scholars dissented against the dependence of “Western social science” on the territorial state as a unit of analysis and stressed out the international system. The affiliation between the workers and the IPE has always sparked a concern amid the IPE experts as the migration of the experienced labors to the higher paying countries impacts most on a countries international political economy. (TÉTREAULT, M. A., 2003) One of the major emphases of International political economy is to encourage the industries to employ the locals and retain the workers to sustain a stable industrial economy through the adoption of following policies: 1. Confine the mobility of funds in order to limit the industries shopping for the cheaper employees in the emergent countries or inferior-wage industrial countries. 2. Lift up the cost of establishing trades in other countries through “worldwide organizing, International labor standards and multinational bargaining companies.” 3. Acknowledge the mobility of money; choose to contend in the global economy on the similar basis regardless of wages for instance, a high wage/high performance policy. The workers are the core of any industry as well as any economy. It is the combined efforts of workers, which decide whether a company do well or be unsuccessful. Going ahead of the demands of redeployment to the issues of “control and management” has enhanced the experts, sense of the kind of leadership labor can provide in economic development. The “transnational corporation” (TNC) signifies an annexure or exceptional case of the standard trade firm. The standard trade firm is a hierarchical societal organization integrating both supportive as well as variant social relations, which subsists mainly to generate wares and services at a profit, those profits belongs as the classified property of its possessors. (SKULLY, M. T., 2007) The cooperative social aspect of the trade originates from the common interest of all main stakeholders “i.e. owners, creditors, management, employees, the state” that the firm produces an ample income flow so as to endure and persist to transmit resources to these assemblages. The characteristic of clash crop up from the dissimilar interests of the main stakeholders over the distribution of the attractive income flow between them. (www.berr.gov.uk) Usually, the TNCs maneuver in several host nations. The TNC’s comprises of the prospect to improve their structural negotiation power in opposition to the employees and local states and hence, trim down claims by these stakeholders on their earnings. This amplification in bargaining supremacy is accomplish most simply by deploying numerous groups of workers situated in different countries in contest with each other for the career opportunities provided by he TNC’s and likewise putting local states in the contest with each other for the careers, funds, equipment, tax revenue etc. which is allied with the TNC ventures. (SKULLY, M. T., 2007) The “Foreign direct investment” {FDI} is when a business corporation of one nation buys an enduring management interest in a corporation or trade house operational in another nation. The attainment can be in a lot of forms like a direct possession of a foreign firm, erection of a facility or investment in a mutual project or tactical coalition with a local firm with assistant input of expertise and licensing of intellectual assets. (MORAN, T. H., 2002) The Foreign direct investment benefits the IPE of United States, U.K. and specifically the operational SMEs in the technology sector. Theoretically, the foreign investment ought to be equal to 10 % or more of the “shares or voting power” in a foreign business to meet the criteria and acknowledged as “foreign direct investment.” Global business houses introduce innovative products and processes to the markets that they would not have otherwise infiltrated. This step hoists up the revenues of both the home country as well as the host nation. Firms are lustrated by the low costs when the motive of the company is to manufacture for the purpose of export from the host nation. (MORAN, T. H., 2002) States introduce the flexible labor market in order to attract FDI. Businesses take into account the technology gaps that they are required to fill and extra benefits they can utilize from the state. As of the past, the U.S. has been the principal investor in the area of FDI. During 2006, the United States acquired its pose as the largest solitary host nation for FDI all over the world, leaving the United Kingdom behind. In 2006, the FDI inflow into the USA was $177.3 billion, escalated from the previous amount of $99.4 billion in 2005. Due to the liberal IE policy of USA the foreign firms find American markets more lucrative and investment worthy which is a good signage of progression for the US economy. (www.berr.gov.uk)The profits of “foreign direct investment” are particularly manifested for the “small- and medium-sized enterprises.” The inflow of FDI boosts the deliverance of money in the form of loans to companies and individuals, thereby diminishing the rate of borrowing funds for domestic entrepreneurs. This is of vast significance to SME’s which noticeably have fragile financial facilities available in comparison to their bigger counterpart. (TONY BUXTON, P. G. C. P. T., 1998) Due to the FDI in the local states, the un-employment levels trim down making the lives of the citizens more comfortable. With the FDI the scope of globalization of the markets elevates, pushing the nation towards the superiority. The Flexible labor markets aids in magnetizing foreign investment to the UK, and FDI always has a very optimistic effect on the state’s as well as the national economy. Ever since 1985, for instance, FDI in UK’s manufacturers industry had lifted production growth by 2% a year. (TONY BUXTON, P. G. C. P. T., 1998) One of the rewards of “foreign direct investment” is that it aids in the “economic development” of the host nation. This is particularly pertinent for the “economically developing countries.” Throughout the 90s the foreign direct investment was one of the key peripheral sources of financing for the majority of the countries that were emerging from an economic perception. The foreign direct investment helps quite a lot of countries in the times of economic adversity. This is completed fundamentally in the means of proviso of capital inputs. (THE WORLD BANK (WASHINGTON, D.C.)., WORLD BANK, 2007) The significance of this factor lies in the fact that the transition of technologies cannot be achieved by method of trading of “goods and services” over and above investment of monetary resources. It also supports in the encouragement of the competition within the home input market of a kingdom. The nations that obtain “foreign direct investment” from another country widen their “human capital resources” by training their employees to operate a particular business. (JONATHAN JONES, C. W., 2006) The earnings generated by the foreign direct investments that are yielded in the host country can be utilized for the intention of: Contributions to the revenues of corporate taxes Generation of novel employment opportunities. Escalating wages of the workers. Augmentation in the output efficiency of the host nations. Possibility for the beneficiary nation to maintain the interest rates at a subordinate level. Bibliography COHEN, B. J. 2008. International Political Economy: An Intellectual History. Princeton University Press. JONATHAN JONES, C. W. 2006. Foreign Direct Investment and the Regional Economy. Ashgate Publishing Ltd. KEVIN LAWLER, H. S. 2001. International Economics: Theories, Themes and Debates. Financial Times Prentice Hall. KURT BURCH, R. A. D. 1997. Constituting International Political Economy. Lynne Rienner Publishers. MORAN, T. H. 2002. Beyond Sweatshops: Foreign Direct Investment and Globalization in Developing Countries. Brookings Institution Press. SKULLY, M. T. 2007. A Multinational Look at the Transnational Corporation: An International Collection of Academic and Corporate Views on the Future of Transnational Enterprise. Dryden Press Australia. TÉTREAULT, M. A. 2003. Rethinking Global Political Economy: Emerging Issues, Unfolding Odysseys. Routledge. THE WORLD BANK (WASHINGTON, D.C.)., WORLD BANK. 2007. Global Development Finance 2007: the globalization of corporate finance in developing countries. World Bank Publications. TONY BUXTON, P. G. C. P. T. 1998. Britain's Economic Performance. Routledge. www.berr.gov.uk. [online]. Read More