The international political economy is one of the main reasons why engagement between the nations takes place. For instance, a cursory review of history allows one to understand that long before definitive theoretical approaches to international relations, nations, people, and regions traded with one another…
Whereas IPE (international political economics) can be understood as a basic concept, it should not be seen as static. In other words, the interactions between states in the economic realm are continually evolving with a massive level of importance attached to the way in which international interaction, agreement, and discord takes place. Above all, it must be understood that international political economics is just that: international. As such, the fact of the matter is that the agreements, and economic levels of understanding that take place, are not self-contained; instead, they are inherently the work of two or more nations. Naturally, as with any financial agreement or level of cooperation, the interests of the two parties factor heavily in the decisions that are ultimately agreed upon. Within such a level of understanding, the current state of international political economics deals heavily with preferential trade agreements, development of trade blocs, debt administration/creation/repayment, and issues pertaining to resources. As can easily be noted, the broad level of impact that IPE has upon the way in which international relations takes place, as well as the impacts that it has on trade itself, is profound and can be attributed to a litany of different decisions and choices that individual states make. Yet, instead of IPE merely being concentric upon monetary or domestic economic interests, it must be understood that international political economics has a massive impact on the way in which certain states within the global system are coerced into participation and action that they would otherwise seek to avoid. Whereas the authors reference the fact that engagement with the global power structure is expected, this level of engagement is not always a positive for nations that choose to interact within the current paradigm of international political economics. In short, the current level of coercion that exists allows for a great power to set a price and force a poorer nation to meet this demand, revealing a situation in which the wealthier and more powerful state is the ultimate price maker and the client state is the ultimate price taker. The authors further reference the fact that the mechanism of debt is oftentimes utilized as a means of forcing the will of a particular state or group of states onto a poorer nation. However, beyond trade interaction, the chapter focuses heavily upon the way in which the United States dollar has come to be definitive of the foreign exchange and reserve status. As such, the impact that the dollar has on setting supply and demand ratios and equilibrium point is profound. However, even though this power is profound, the demand for the dollar is not something that is set in stone. Although the United States government necessarily has a great deal of latitude with regard to the amount of dollars that are in global circulation and “supply,” the demand for these dollars fluctuates based upon fear or confidence, restricting or expanding the global economy as a function of this faith or fear in the international currency of exchange. The chapter moves on to discuss the ways in which currency speculation allows for the individual member of society to have a profound impact on the way in which monetary policy and levels of value are defined. Whereas the preceding analysis has been focused upon defining international pol ...
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(International Monetary and Finance Structure Essay)
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BOP compares the difference in Dollars due to exports and imports in a country and also includes financial exports and imports (Investopedia, 2011). The exchange rate decision of the government policy affects the balance of payment. It is the policy that might turn out to be positive or negative, which might lead to BOP crisis (Williamso, 2004).
about evaluating various measures taken up by the government of a country for resolving balance of payment (BoP) crisis. The aim of this paper is to critically evaluate the degree of relationship between those measures. But before presenting an in-depth discussion on this topic area, it would be essential to understand the root cause of the crisis in balance of payment.
They promote means of payment between buyers and sellers of different nations including deferred payments. It provides the framework for ensuring liquidity without fuelling inflation and corrects the global imbalances or restricts their emergence, while facilitating an orderly payment system.
General fund profited intra-European trade through assisting shareholders accumulate great sums of finances at the expense of money exchanges. The time the Euro was launched in 2002, its worth was nearly one for one versus the U.S dollar. Since that time, the Euro has slowly grown in worth versus other monies.
It is through the flow of the international currencies to economies that affect the rules under which institutions are formed and governed, while also determining the success of businesses (IMFS 126). The structure of the international monetary and finance affects the political relationships between countries globally, thus explaining why the powerful countries are able to exert their authority and power over the less developed and less influential countries in the world.
International monetary finance structure is explained in detail in chapter 7. The chapter begins by comprehensively throwing light upon the exchange rate. The math of exchange rate has been very well explained at the beginning of the chapter. The foreign exchange market diagram explains how the demand of goods produced in the United States changes the value of the Mexican Peso and based on that how the value of the United States Dollar changes.
These new economic ties and technologies, in turn, have led to a decline in the territorial nature of everyday life. Globalization first emerged with the end of the Second World War, especially after the dire economic policies of the 1930s led to a sharp decline in international trade.
Robert Olivier declared: "their major objective was to provide a world within which competitive market forces would operate freely, unhampered by government interference, for they supposed that market forces would produce optimum results for the entire world.
This rapid growth was because of the following factors. The gold average refers to the technique, which controlled the worth of exchanges around the world in expressions of a convinced quantity of gold (Staiger, 2006).