Why Did Multilateralism Become a Hallmark of International Economic Relations after 1945 - Literature review Example

Take home exam 2013 Name Institution Date Course 1. Why did multilateralism become a hallmark of international economic relations after 1945? According to Kahler (1992), after 1945, multilateralism was defined by the United States with regard to certain principles that particularly opposed discriminatory and bilateral arrangements believed to encourage the leverage the more powerful forces over the weak that increase international conflict. The post war multilateralism also meant advances towards universality which implied considerably low barriers to participation in such kinds of arrangements. Nevertheless, there was a ticket of admission requirement, whether the nation was acceding to the General Agreement on Tariffs and trade as well as joining the International Monetary Fund (IMF) or the World Bank. The prices for that ticket, however, were not set very high that could make less wealthy and less powerful states loss interest to participate. Multilateralism was therefore established to achieve universality and to welcome large numbers of other participants. The process was characterised by open admission and non-discrimination which implied that patronage of a great power was not a requirement. Multilateralism therefore became associated with the sovereign equality of states principle, one which became entrenched after 1945 while decolonization proceeded. The smaller and weaker states believed to be disadvantaged by bilateralism were awarded with non-discrimination that they had been denied during the 1930s. In their formal designs, most multilateral after the war incorporated a bigger role in making decisions for those states that did not have great influence as well as those that could not aspire to be. As Schenk (2011) further explains, the key principles revolved around ensuring that there will be no new preferences on trade, which would allow continuation of Imperial Preference; and that any new tariff reductions were to be based unconditional most favoured nations basis which applied to all partners in the trading transaction. All members were also required to have an obligation to engage in reciprocal negotiations when there was need to lower tariffs. These provisions, particularly the last provision, was intended to protect the interest of the smaller and less stable economies with little bargaining power to even start negotiations. In more general terms, the post-war international economic relations were greatly influenced by the two decades of disorder witnessed before the start of the Second World War as well as the commitment of several states to prevent such a calamity in future. The failure to maintain peace after the Treaty of Versailles was seen to be a consequence of the economic complications that arose from the financing of the First World War together with the reparations and economic sanctions that had been imposed on Germany in its aftermath. Huge motivation for increased co- operation, therefore, arose from the need to evade the cycle of war debts since the payment of these debts depended on extraction of reparations from those who lost the war. Secondly, the extent and depth of the Great Depression of the 1930s, which greatly destabilised governments and led to the spread of misery across the globe was partly blamed on the absence of effective co-operation in establishing and sustaining international trade as well as inattention to the significance of a properly monitored that could ensure exchange rate stability. Investors and other traders needed the assurance of a stable exchange that removed the element of risk from transactions in the international scene (Schenk, 2011). The United States was a great player in the establishment of the multilateral international economic relations. The US main goal was to re-establish a multilateral system where barriers to trade and payments were not discriminatory and were minimised. According to the US, if all countries were equally treated then minimal conflicts would be witnessed and American farmers and companies would gain fair access to markets in overseas countries. The British, also with desire to revive from the effects of the war and with priorities consistent those of the Americans, understood the need for revival of international trade with sustained growth. By the end of the World War II, the US remained in an unprecedented power position and weaker European nations attached a premium to harness and tame this powerful state. France, Britain and other major nations were more than willing to accept carefully devised multilateral agreements to the extent that they could also constrain an regularize US security and economic actions. The American agreement and commitment to Europe ensured that Germany and Western Europe integrated into a wider, international order that was centred on America. America’s post-war core objective therefore was to make sure that the world did not break apart like was the case in the 1930s. An open trade and investment system would provide a multilateral foundation to the post-war order (Ikenberry, 2003). 2. ‘China does not present a model for economic success that can be followed by other developing states. Its circumstances are unique and cannot be emulated.’ The Chinese development process was indeed unique. Naughton (2010) specifically identifies three initial conditions of great importance in Chinese development that may not be witnessed in most other countries: a) The large size of the country: the countries size means that it had a big potential internal market that encouraged competition and attracted a great number of investors. Very few economies enjoyed such size advantage during their economic growth and development: like the United States (in the 19th century) and India (in the 21st century) b) The country, with the labour-abundant economy, had followed for a long time a capital-intensive socialist development strategy. China had already started investing in human resources with its relatively healthy and properly trained labour force which greatly increased the country’s comparative advantage in labour intensive activities, though it had adamantly refrained from utilizing the benefits of its advantage in the labour intensive activities c) The Chinese, with a transitional economy, rebuilt and retained a hierarchical and authoritarian political system that it deployed in the market economy environment. An analysis of these feature shows that each is potentially important but again unique in a manner that disqualifies Chinese experience from generalisation. Considered together, these qualities confirm China’s uniqueness. A big number of researchers, however, considers China’s model to greatly embrace flexibility and pragmatism. Most of those with this belief link it to Justin Lin’s reasoning which proposed that China did not follow any model at all, but had to change its policies all the time (Batson, 2008). Deng Xiaoping, on the other hand suggested that adaptability and flexibility were the reasons for the countries success. Other approaches view China’s authoritarian government as responsive and decisive, responding very quickly to cut through any obstacles while it pursues its vision for the future According to the Glasshouse Forum (2008), there are claims that China has been able to combine economic development and authoritarian rule and have come up with a model that can exert considerable attraction outside the country. Johan Lagerkvist, a China expert, says that the communist party’s leadership guiding principle is the fear of political instability. The country has a huge economy but is highly unequal. Despite the democratic deficit, the leadership boasts of considerable popular legitimacy. Most surprising about the legitimacy of the regime is its lack of a clear long term vision. The leaders prefer seeing the country’s soft power become strengthened on the global arena but are too cautious to call China a superpower. Therefore, they do not want to officially launch a particular Chinese model but are of the view that everyone should chart their own route and follow own way as dictated by their own prerequisites Beeson (2009) explores another dimension in the debate on China’s economic growth and establishment as one of the world’s greatest economies. He makes this analysis by comparing the developmental process in China and in Japan. Beeson (2009) believes that the economic growth of China and the influence of the Beijing Consensus could be easily emulated by other nations. Beeson (2009) finds the influence of the ‘developmental state’ that was pioneered by the Japanese but later became emulated by other countries in East Asia was instrumental in this region’s economic expansion in general and China’s economic success in particular. He says that the adoption of the “Japanese model” by China was a great boast in acceleration and management of its own rise. He further points out that both countries had the common belief on Adrian Leftwich’s view that development must be a political process where the purposive interaction of power, resources and people in diverse historical and cultural contexts shapes the outcome and pattern at any given point. Breslin (2011), in his analysis, argued that the whole idea of a unique and distinct China model is to some extent misleading. He further points out that if China’s model is thought of as being deviating and abnormal from the usual norm of (neo-)liberal development, then this will simply ignore the normality associated with a strong state developmentalism across history. He says that the Chinese model, though unique with specific country features, can be considered as a modification of relatively well-trodden development path, atypical or less peculiar than it appears to be at first sight. He however confirms that if we focused on those distinct features about the model, it appears extremely doubtful as to whether other developing nations can have similar conditions, with regard to factor endowments as well as historical and social backgrounds to make them be able to emulate this model. The discussion above therefore brings the common understanding that while there is evidence of a deliberate effort and specific model that would describe the Chinese development, the conditions within the country were unique. This may be the greatest challenge for other developing nations since their individual structure and available resources might not sustain this kind of approach. References Breslin, S, 2011, The ‘China model’ and the global crisis: from Friedrich List to a Chinese mode of governance?, International Affairs 87:6, 1323–1343. Ikenberry, JG, 2003, Is American Multilateralism in Decline?, American Political Science Association, Vol. 1/No. 3, pp.533-550. Batson, A, 2008, Lin urges flexibility in fighting poverty, Wall Street Journal, p. A10. Kahler, M, 1992, Multilateralism with Small and Large Numbers, International Organization, Vol. 46, No. 3, pp. 681-708. Schenk, CR, 2011, International Economic Relations Since 1945, Taylor & Francis: Oxford. Greenhouse Forum, 2008, The Limits of the China Model Report from conference proceedings on authoritarian capitalism, Greenhouse Forum: Stockholm. Beeson, M, 2009, Developmental states in East Asia: A comparison of the Japanese and Chinese experiences, Asian perspective, Vol. 33, No. 2, 2009, pp. 5-39. Read More