The Political, Economic and Cultural Relations among States - Research Paper Example

Does understanding the political, economic and cultural relations among s help us determine the international business environment? The dynamics of interaction between states is more approachable than ever. Advances in communication have changed not only the time in which information spreads from one corner of the world to the other, but it has also made more information available than has been in the past. Whether there is a conflict on the national level, or a human rights violation has taken place at the distant corner of the globe, people are well-aware of the global interactions that are taking place between states and the range of actors involved (Salmon 289). It is not necessary for the global interaction to affect the daily life of the average person or his or her well-being. However, the reason why global interactions and their study has attracted so much attention is because a person in one country cannot say that he is immune from the affects of the global interaction, since the interaction is affecting people elsewhere. The interactions that take place on the international arena, therefore, encompass an array of fields such as the media, IGOs, trade agreements and business transactions (Salmon 289). Over the time, the field of business relations has undergone much change. Moreover, due to its diverse nature, it has been studied in great detail. The research conducted on the international business relations carried out between the states has found out that there is greater stress on the development of more accommodative and cooperative relationships between the involved parties. Governments share an interest in the development of healthy international relations in order to promote the business carried out and to achieve sustainable economic development. On the other hand, organizations of the partnering states are interested in the promotion of their trade and favor the development of mutual cooperative relations between the states (Grosse 3). The question arises that do factors that are determining the foreign relations of the states and the interaction that occurs between them influence business carried out between them. This paper explores the how political, economic and cultural relations between states impact the international business environment. International relations are defined in a number of ways. It is regarded and studied from a number of perspectives in order to gain more orientation of the global interactions that occur between states. The study came into existence in the early 1900s, and since then, it has been subject to a lot of scrutiny and has been the hotbed of debates relating to matters from international trade to political matters. For some critics, international relations primarily encompass the diplomatic-strategic relations of the states and how they can establish peaceful ties with each other (Brown 1). The policies that are pursued and debated about include matters related to war and clashes, and achievement of greater collaboration amongst the states. On the other hand, many critics regard international relations as an all-encompassing discipline that integrates and brings together all transactions that cross national borders. These transactions can be of different types such as cultural, economic and political, with the IR extensively delving into the development if trade agreements between states, making of trade blocs, peace talks and the operation of non-state institutions such as the UN (Brown 1). Since there is no precise definition of international relations, the issues of global interactions are studied and debated upon by integrating the experiences and happenings of the real world with theoretical knowledge. Keeping this essence of approaching international relations issues in mind, there is a need to discuss the international relations theories that define the dynamics of the relations between states and whether they affect the international business environment. The theories of international relations are largely concerned with the development of relations cooperative and peaceful relations between the states and how can they be used to the regulation of the international system of interaction. In the years soon after the conception of the IR discipline, the theory that was popularly studied and applied was liberal internationalism. Liberal internationalism developed in response to the First World War. Many critics affirmed t the point of view that the War was caused by inflexible continental bipolarity (Nau). After WWI, governments were concerned that the same conditions do not develop that led to the outbreak of the War and resulted in so much destruction. It was presumed that the study of the IR can help in preventing similar conditions to develop and in fostering prosperous relations between states. The concept of liberal internationalism originated in the 18th century, during the Enlightenment (Salmon 297). According to Scott Burchill, “the prospects of elimination of war lay with a preference for democracy over aristocracy, free trade over autarky, and a collective security over the balance of power system” (Salmon 297). According to Nau, author of Perspectives on International Relations, the international relations theory can be interpreted from a story on the prisoner’s dilemma. The story helps to explain the interaction between actors that occur at the global level. The prisoner’s view helps to explain the motivations of the prisoners; if they are given the choice of cooperating with or squealing others, they will chose the choice of asserting their power and authority, not subjecting themselves to the development of cooperative relationships with each other. This illustration of the prisoner’s dilemma provides insight into the realist point of view. Realism, as discussed in the later part of the paper, adheres to the notion of the development of an anarchic state. Since the states are embroiled in a security dilemma, they cannot, like prisoners, feel at ease in the environment that they are in without asserting their authority. Liberalism, on the contrary, bolsters the point of view that if formal and informal institutions intervene, the prisoners can be made to change their perspective due to the incentives that they are exposed to. The incentives, such as technological change and trade, can promote the prisoners to develop cordial ties with each other. The identity perspective defines the motives behind international relations based on the identities of the states. In the prisoner’s example, if two prisoners belong to the same gang, they are more likely to cooperate. This follows that if the prisoners, or the states, have conflicting identities, chances of their cooperation are very less (Nau). The development of cordial ties between states and the achievement of democracy in a country are two faces of the same card. In June 1982, President Ronald Reagan gave a speech in which he highlighted that states that have been established on a respect for the freedom of the common man should be able to incorporate self-control and diplomatic implications into their foreign policy. It was then that the President called for a “crusade for freedom” and a “campaign for democratic development” (Doyle). When the President asserted that liberalism is the key to the development of a strong and diplomatic foreign policy, he became part of the list of liberal theorists who believe that the foreign policy should be shaped taking into consideration three major aspects, i.e. peace, war and democracy. Liberalist theorists are of the perspective that it is the authoritarian leaders and totalitarian rule that paves the way for war and conflict. The concept of liberalism is that states that have been established on the principles of providing free speech and other civil rights as well as private property and the conductance of election for choosing leaders that the population wants are primarily against the notion of war and conflict in order to resolve problems (Doyle). Theorists argue that when people, who are aware of the burdens of war, come forward and elect a person whom they think is eligible for the management of the affairs of the company, there is no possibility of war. Therefore, states such as the US and the EU are representative of liberal states, where democracy and peace form the two faces of a card (Doyle). Liberalism is closely tied to the free trade and the international business environment. Liberal democratic internationalism, also known as Wilsonianism, is regarded as the most important contribution of the US to the IR in the past century. The US National Security Adviser, Anthony Lake, is of the point of view that liberalism in the US still continues to be an important part of the current government policy (Stanley 159). President Clinton’s foreign policy has been regarded as a normative example of pragmatic Wilsonianism. Lake argues this point by presenting facts that the Clinton policy has aimed to expand democracy and to take free trade to a higher level, as well as protecting the state from enemies and at curbing states that are not compliant to the norms of good governments and protect and safeguard human rights. Liberalism has been pursued by liberals in order to achieve free trade and development. According to liberals, the poverty in many parts of the world can be resolved through the establishment of western markets of goods in developing countries. However it should be noted that on order to achieve economic development through trade and international business, the recipient government should take steps to upgrade the quality of policies and to make the laws and government activities transparent (Liberal International). Since the Cold War, liberalism has become perhaps the most dominant form of government in many countries of the world (Chan 11). Dorn et al. argue that the core of classical liberalism has been economic freedom (289). Economic freedom is characteristic of relative freedom of the individuals to participate in economic activities, without the interference of the state. The Index of Economic Freedom measures the degree of economic freedom present in a state. The Index is suggestive of s strong link between economic freedom and economic development; it also stresses upon the transition from collectivism to liberalism since collectivism has done a lot of harm (Dorn et al. 290). The Index for Economic Freedom has established that the countries which achieve maximum economic freedom are the ones that prosper the most economically. The countries which have the high scores on the Index are the ones that have implemented low taxes, minimal trade barriers and have provided the greatest protection to private property. Liberalism also depends on freedom of contract and stable money; if liberalism is allowed to flourish and the aspects of liberalism are protected, only then can development that is induced and maintained by the market can be sustained (Dorn). Latin America has been following liberal policies for a very long time. In the 1960s and the 1970s, the economic policies of the region were inward-looking and did not contribute to the economic development of the region. The Latin American countries had strict rules for the foreign investments in place and there was large-scale nationalization going on (Christian and Campbell 1/12). It was in the 1980s when Latin America started introducing some of the concepts of liberalism. Free trade and other policies related to liberalism such as deregulation, privatization and a reduction of the role of the state were amongst the first policies to be introduced which Latin America saw during the shift to liberalism. According to Johnson and Turner, liberalism has resulted in the increased interdependence of global interactions and has made globalization more intense (22). This has had implications for the international strategies of diplomacy for interaction between Latin America and other states. It has been observed that the changing rules and notions about transactions have resulted in the development of more secure investment opportunities; these opportunities have been through entry modes such as mergers, acquisitions and joint ventures. The development of secure investment opportunities is also attributed to the increased privatization programs both within the country and abroad (Johnson and Turner 22). The incorporation of liberal ideas into the mainstream of economic and political activity has also made people think out of the box of conventional national market frontier. Hill and Jain assert that the implementation of liberal policies is leading the world towards an economic system which is more beneficial for international business (28). This can be demonstrated by the economic development that has taken place in Latin America through the implementation of liberalism. In the past, Latin American countries were ruled by dictators, mostly of the perception that the Western international businesses had been tools of imperialist supremacy, and had a poorly managed economic system; hence economic activity was never sustainable; direct investment in firms across the border was never encouraged. The countries of these regions were subject to poor growth, soaring debts and hyperinflation; these further impeded economic development since they did not attract foreign businesses to invest in the countries. However, with the changes in the governance and the introduction of liberal measures, debt and inflation have fallen. Moreover, there is increased privatization going on in the region and the government is promoting foreign investment. The consequence of these changes is that there is significant economic growth in Latin America, making these countries “both as a market for exports and as a site for foreign direct investment” (Hill and Jain 28). Venezuela has also been witness to policy changes that have embraced the concept of liberalism. Venezuela is a country rich in minerals, and there were chances of oil wealth and administrative corruption in the country since the 1930s; steps have been taken since then to overcome these shortcomings. The government has introduced many policy changes that augment the notion that the abundance of resources is the prime determinant of the choice of agency. During the time period, 1930 to 1957, the country practiced a liberal policy in its trade transactions. The 1990s were particularly notable for the liberal changes that took place in the country. This included privatization, trade liberalization and financial deregulation (John 86). The neoliberal policies that the country introduced helped to buttress cordial relations with the international economy. However, Rivas is of the point of view that it will take time to come to a conclusion if liberal policies have contributed to economic growth in the country (221). He adheres to the notion that the social inequities are increasing in the country, which is not a very good indication of economic development. Therefore, he asserts that gaining an understanding of the effects of liberal policies in the Venezuela requires a deeper research and more attention in order to confirm if economic development have occurred as a result of liberal policies. Another theory that is integral to the discipline of international relations is realism. International relations usually narrows down the global interactions to two main theories, i.e. liberalism and realism. Realism is often related to power politics and there is an intricate link between realism and the political environment. The word realism is derived from the Greek word realpolitik (Word IQ). Realpolitik is made up of two words: real meaning royal and politik meaning politics. Hence realpolitik literally means royal politics, or how authority and power is distributed amongst the monarchs. The concept of balancing the power held by monarchs was proposed by Bismarck. The balance of power between the parties was needed to prevent the development of an arms race amongst the European countries and disruption of peace. However, it was the loss in this balance of power amongst the European states that led to the World War. The field of realism has also been studied extensively in order to understand the political nature of the global interactions that occur between states. One of the main concepts of realism is that the international system is anarchic. This follows that there is no regulatory authority present to supervise and keep a check on the activities of the states. The states define the relations that they have with each other on their own; there is no single government that is governing all states and defining the nature of relations between them. The theory of realism also assumes that the actors that are involved in the development of foreign relations amongst states are the states themselves, rather than international organizations, NGOs and multinational companies (Word IQ). The main concept behind realism is that the sovereign states, which determine interactions on the global level, are working in their own self-interest and attach the most importance to national security. Since states are concerned with the development of a strong security, they try to gather resources and the relations between various states are governed by the level of power that they have. The degree of power that the states have is ideally dictated by the economic and military capacity of the states. Furthermore the theory of realism also talks about how states are naturally aggressive and are embroiled in matters of extending their territories. The reason why their territorial expansion measures are not put into practice is because of the resistive powers of other states (Word IQ). Amongst the people who studied international relations in detail, Morgenthau is a renowned name. He was of the point of view that the development of relations between different states relied greatly upon the political environment in which the theory is applied (Spegele 93). Realism encompasses that all the social and political factors should be taken into consideration which may offer opposition to the traditions and norms of the state, specifically the norms confining to the elements of self-interest and power. Realism is not consistent in nature. The reason for this is that there is a cyclical change in its acceptance and popularity over period of time. Since it considers the absolute elimination of war and conflict from a pessimist point of view, it is represents the “necessary corrective to the exuberance of utopianism” (Donnelly 194). The importance of realism in a particular time period depends on the social and political environment of that time. For instance, realism became prominent during the Cold War and this can be attributed to the superior insights of the postwar Realists (Donnelly 195). Moreover another aspect of realism is that it does not give much importance to the moral aspirations of the state. The realist view suggests an environment marked with competition and self-centeredness; elements that have been argued to form the basis of human survival. The concept of realism has undergone certain changes, and has thus been subjected to classifications into classical realism and neorealism. The emergence of neorelism has made it difficult to comprehend the nature and intent of global interactions occurring between states because the theories are not suited to the provision of answers to the current political environment. The theories of classical realism had aimed to achieve diplomatic practice in foreign relations and were meant to be a guide for people who wanted to fathom and manage the potential threats arising out of global interactions. One of the disadvantages of realism is that the concepts of self-interest and power can be misused by some states to make aggression appear justified. However despite the negative aspects of realism, it is useful for keeping the states in touch with the reality of national security and self-interest. Realism is also necessary for keeping aloof from against progressivism, moralism and legalism (Korab-Karpowicz). The neorealist approaches can be seen as the incumbent corrective that is required for disillusioning the overarching liberal concept of international cooperation. After the correction has been performed, the benefits of realism decrease. This is because realism adopts an ideological apparel by negating any possibility of developing healthy interstate relations (Korab-Karpowicz). Realists are likely to consider trade and exploit global markets for the promoting the countries’ defenses (Nau). Keeping the changing scope of realism in context, an analysis of the effect realism has on the international business environment in Latin America requires that the political environment and its effect on the foreign relations of the region are discussed. The political environment amongst the states does determine the business relations of the region. When Barack Obama was elected as the President of the US, the Latin American countries welcomed the election results. One of the reasons for such a welcome was the fact that Obama is black, and it came as a huge change in the history of the world that a black president was elected. The Latin American countries were in favor of Democrats because of the dark history of Nixon and Reagan in the Cold War (Erikson). When Obama was elected the President, six candidates who were standing in the Municipal elections in Brazil changed their names to either Barack or Obama in order to market upon the popularity that the US president had acquired. The impact of the election was that the Latin American countries were now more interested in the promotion of diplomatic ties with the US. The foreign minister of Brazil, Celso Amorim, was of the view that the election of the new president will provide a chance for fostering diplomatic and cordial interstate interactions. The foreign minister adhered to the notion that Brazil had a pragmatic relationship with the US during the presidency of Bush, but the changing times offer greater opportunities to strengthen the ties between the states. The Mexican president, Felipe Calderon, also talked to the newly elected US president regarding the promotion of interstate interactions and the passage of laws to fight crime and trafficking in the region. The Columbian president, Alvaro Uribe, also proposed that Obama should pass the controversial Columbia Free Trade (Erikson). This represents that the change in the presidency at the White House led to the Latin American region to reconsider their ties with the US, not only in terms of passage of laws to fight crime but also to promote interstate trade. Lessambo observes that the development of international ties is not only for the self-interests of the Latin American nations. Moreover the modern era is characteristic of intense competition for economic leadership. Blocs such as the EU and the US are trying to establish themselves in the Latin American region in order to acquire a large share of the market and to extract the raw materials that they require (6). This is representative of the how the political environment has impacted the international business and helps to establish that realism defines international relations in relative terms (Nau). Another theory of international relations is the constructivist point of view. The constructivist theory defies the concepts of international relations as put forward by neoliberalism and noerealism. The constructivist theory talks about how in international relations are construed through socially constructed attitudes and processes rather than the political or economical factors as liberalism and realism support. Constructivism stems from the idea that relations are forged as a consequence of the continuing social traditions and interactions. One of the most renowned names in the field of international relations who has applied the social constructivist theory to understand the interactions occurring between states is that of Alexander Wendt. In his article, Anarchy is What States Make of It: the Social Construction of Power Politics, Wendt talks about how neoliberalism and neorealism have their roots deeply sunk in materialism, constituting a major fault in the selection of these systems for understanding and evaluating international relations. The essence of constructivism is that international relations are not given by nature but instead are constructed socially. This follows that the interactions can be changed by human practice. The constructivist approach seeks to highlight how human consciousness affects the human life and how human interaction is determined by ideational elements, and not material ones. The ideational factor that is integral to the concept of constructivtism is that people have intersubjective beliefs and that these beliefs cannot be applicable to the individual level; rather it is the belief generated through the collective interests of the people (Finnemore and Sikkink 391). The identity theory explores the intellectual evolution of humans, from mythology to the Renaissance to the Enlightenment and beyond, as well as the course of changes that these ideational changes have brought to the society (Nau). Constructivism provides a review of the politics of the identity. It helps governments to decide and understand how various factors such as nationalism, race, ethnicity, sexuality and religion have an impact on the politics occurring across national boundaries. The constructivist approach gives an idea of how identities develop along with greater insight into the norms and practices that emerge with the development as well as their effect on each other. It has been argues that having knowledge of the identities of the states helps states to understand each other better since identities are much more consequential for the states than a mere label that the state is sovereign or not. Identities allow states to gain an understanding of their role, intentions and attitudes in a given political situation. For instance, Michael Barnett was of the view that the deterrence against Iraq in Kuwait in 1990 was not successful primarily because Saudi Arab was considered an “Arab” state instead of a sovereign country. This meant that Iraq did not expect Saudi Arab to allow the US to bring its forces into the country for attack on Iraq. However, from a realist perspective, the Saudi Arab would have been regarded as a sovereign state, and would not have objected to the entrance of US forces into their territory (Linklater 1770). In the Latin American region, there are long spans in the past where little or no warfare was reported. This attitude could not be attributed to the objective indicators of democracy (Linklater 1769). In conclusion, one can assimilate that the study of international relations provides an insight into how domestic factors can influence the unfolding of events on the international arena. However there is no one theory of international relations that can be implemented for the advancement of ties with the international community. The critical theory, in international relations, it is not easy to classify and establish the behaviors of the states in the perspectives discussed. In fact, the historical, social and political circumstances need to be evaluated since they are the prime determinants of the way in which events unfold (Nau). Liberalism may not be too pragmatic at times, and hence there is an increased need for self-interest and national security. Likewise, recognition of identities between states also impacts the relations between them. The liberalist approach, as demonstrated by the study of the Latin American region, shows how international business can be affected by the economic environment, since liberalism promotes economic development. The political and cultural environment of the states also impacts the course of international businesses carried out between states. Thus it can be established from the discussion above that economic, political and social factors do influence the international relations between states and hence the business activity carried out between them. Works Cited Brown, Chris. Understanding international relations. 2nd ed. Palgrave Macmillan, 2001. Print. Chan, Sylvia. Liberalism, democracy, and development. Cambridge University Press, 2002. Print. Christian Campbell Editor. Legal Aspects of Doing Business in Latin America [2008] I Donnelly, Jack. Realism and international relations. Cambridge University Press, 2000. Print. Lulu.com, 2008. Print. Dorn et al. The revolution in development economics. Cato Institute, 1998. Print. Dorn, James A. Sustainable development: a market-liberal vision. Electronic journal of Sustainable Development, 2007. Web. 13 Dec. 2010. Erikson, Daniel P. Article: Obama & Latin America: magic or realism? High Beam Global Economy. 2nd ed. Taylor & Francis, 2009. Print Hill, Charles W L and Arun K Jain. International Business: Competing in the Global Marketplace, 6/e. Tata McGraw-Hill, 2009. Print. John, Di John. From Windfall to Curse? Oil and Industrialization in Venezuela, 1920 to the Present. Penn State Press, 2009. Johnson, Debra and Colin Turner. International Business: Themes and Issues in the Mod Korab-Karpowicz, W. Julian. Political Realism in International Relations. Stanford Encyclopedia of Philosophy, 2010. Web. 14 Dec. 2010. Lessambo, Felix I. Taxation of International Business Transactions. iUniverse, 2009. Print. Linklater, Andrew. 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