Special Topics in International Relations - Essay Example

Over the last 30 years, governmental institutions have been influenced by the liberal movement to instill more market-oriented policies into the economic system of nations around the globe. Four of the factors that influence the development of a market-oriented economy are the privatization of state-owned firms, formal separation of the regulatory authority from the executive branch, the de facto elimination of executive political influence on the regulatory authority, and the opening of the retail market to multiple service providers (Henisz, Zelner, Guillen, 2005). The general perspective of the liberal movement is that policies that close the market and give too much-controlling power to the government inhibit the functionality of the economy by placing constraints that decrease the efficiency of the system.

An example of an economy that went from extreme protectionism towards becoming an open economy is the People’s Republic of China. The Chinese story is one that has led to a radical turnaround of a nation that was on the verge of economic collapse in the 1970s. The country overpopulated and its socialist regime needed to find a way to integrate the country into the global economy. The result of its leader decisions to adopt market-oriented policies has been three decades of GDP growth of approximately 10% per year. The state-owned corporations have been replaced by privately-owned companies. The country joined the WTO in 2001 after brutal and long 15 year negotiations which help increase intercontinental trade with other parts of the world (Cnn, 2001).  As the China case illustrated developing countries benefit from instilling market-oriented policies.

A controversial economic policy that is often utilized in developing nations to instill economic growth is structural adjustment programs. Structure adjustment programs are economic policies nations must adopt in order to qualify for World Bank and International Monetary fund loans (Whirledbank, 2003). The existence of these programs allows developing nations to receive the funds and financing they badly need to develop their infrastructure, increase their production and pay off their outstanding debts. Despite these benefits, these programs have a lot of negative aspects due to restrictions imposed on the developing nations that utilize SAP funds. One of the first things that occur under an SAP scenario is that the country’s national currency systematically devaluates against the dollar. It becomes much more expensive to buy goods and equipment from importing companies, while the nation's production is sold at cheaper relative prices which do not help the poor nation create wealth. Important incentives such as subsidies which are of utter importance for the nutritional needs of the poor are eliminated once SAPs are adopted. SAP seems to attempt to find a solution to the long-term economic growth of a developing nation by implementing policies that totally disregard the well-being of the common citizen in the short term. The use of SAP increments poverty in developing nations, thus it is the duty of the United Nation to intervene in order to eliminate all the restrictions associated with the benefit of receiving SAP funds in order to protect the well-being of the citizens of developing nations.   

The North-South American international relations have been characterized by the US being the leader that provides assistance to the South-American countries. The US and Canada have provided the Latin American nations with economic assistance through programs such as subsidies and foreign direct investment. As the South American nation continues to evolve economically higher levels of trade and new trade treaties will surge. The success of the euro in the European community may be followed in the future in the Americas with a common currency for all nations. The weakening American economy whose levels of the national debt has reached a historical high and its currency has lost a lot of value may be better off joining forces with all member nations of South and North America. The South American nations have lots of natural resources such as Venezuelan petroleum which could be more accessible under a common American economic community. Along with greater interdependence in economic affairs the south-north American relation would benefit politically from a shift towards more democratic regimes across South America and greater progress would be achieved in the war against drugs.