Contemporary Issues In World Politics - Essay Example

Contemporary Issues In World Politics Introduction World politics and the global economy are two phenomena that can not be looked at in isolation. Generally, politics and international relations influence economic policy. The political undertakings of nations determine world trade and financial flows. On the other hand, the resulting financial structure determines the capacity of the nation state to create a favorable environment for investors. Political interests of nation states are mutually dependent on the economic well-being. This paper presents a critical assessment of the argument that world politics can not be understood without recourse to Global Political Economy (GPE). World Politics and the Global Political Economy International trade is one of the aspects of the global political economy that are prominent with regards to international relations. Foreign investment is one of the resultant aspects of economic globalization. As nations continued to advance technologically after the industrial revolution, better means of transport and communication led to the movement of investors beyond political boundaries, especially during the colonial period (Oatley, 2011). As economies expanded, trade grew and exchange of goods and services between investors from different countries continued to grow. This made international trade a phenomenon of political scrutiny. The political view point depicts foreign trade as different from domestic economic activity (Jeffrey et al. 2000). Foreign trade between different countries generates various political issues that are of interest to the nation state, particular issues regarding the financial and military security of a country. A nation exporting products to a foreign country increases its monetary well-being and also promotes job creation. Nevertheless, national security may be jeopardized especially if the product is used to strengthen a foreign country’s military strength (Gilpin, 2001). For example, the discovery of gun powder by Chinese researchers in the 11th century led to a great transformation of the world order by the 17th century and subsequent centuries. China as a nation state could not achieve the military might of European countries that resulted from the application the invention of gun powder (Friedberg, 2005). On the other hand, importing leads to the development of dependency of the receiving nation in foreign countries. It also leads to a reduction in national reserves thereby contributing to inflation. Moreover, local businesses, as well as the labor market, are threatened. On the other hand, the importing nation may experience security concerns especially with regards to high tech military hardware. These are addressed through ensuring that the imports are sourced from a trusted source to guarantee security. The decision to import or export is an economic development that influences the political interest of a nation state (Oatley, 2011). Nations react to influences that may have an impact on the military and economic strengths through export controls. A nation may resort to controlling its exports despite having the capacity to maintain an excessive export surplus over imports. Maintaining high export surplus may be interpreted by the recipient nation states as an aggressive policy that may have an impact on economic and military security hence the need to establish the defensive mechanism for the purpose of safeguarding the security interests of the targeted nation for export. Trade affairs between nation states are therefore viewed cautiously in a political perspective (Sachs, 2006). Permission for imports from particular nations and not others is one of the tools that are applied in the establishment of the foreign policy of many nation states. It is applied to persuade governments to adhere to certain agreements that are meant to protect the interests of other nation states. For example, trade embargos have been enforced on countries such as Iraq by the US during the Saddam Hussein’s regime, Cuba to compel Fidel Castrol to relinquish power (Aronson et al. 2001). There is also a recent positive compulsion by the US for China to have a greater participation in global economic affairs and confirming that Chinese investments in US dollars were safe. This is an economic development that has political implications with regards to the interests of the US (Friedberg, 2005). Global powers are focused on maintaining their economic supremacy to dominate global politics, hence the need to appreciate the global political economy in the quest to understand world politics. The international law has provision aimed at protecting foreign investors from losing their property. This is mainly emphasized through treaties such as NAFTA, WTO, and COMESA among others. Such treaties have been significant in promoting international trade, especially advocating the elimination of protectionism (Sacerdoti, 1997). Multinational companies operating under these treaties are shielded from the impact of unfavorable political climate that may be created by host regimes. Many less developed nation states usually encourage foreign investment to enhance economic development and therefore tend to offer subsidies and removal of trade barriers to encourage international trade (Schedler et al. 1999). Nevertheless, a closer scrutiny of the international agreements reveals an inclination to the global political economy. For example, the North American Free Trade Area and the European Union apply economic influence for the accomplishment of political goals. This was evidenced by the strategic European integration for the purpose of fortifying the Western alliance to win the cold war (Schedler et al. 1999). On the other hand, NAFTA was strategically established to stabilize and enhance the democratic system of Mexico. These agreements acted as recompense for the economies that forfeited their autonomy and political standing in favor of a regional alliance, which signifies that regional blocs present the participating nation states with economic and political gains (O’Brien, R. & Marc, 2007). Nevertheless, the regional alliances tend to present political challenges with regards to the democratic space of nation states. For example, policy development is influenced by a greater authority than the government, which increases the distance between citizens and policy development. On the other hand, nation states are compelled to trade within the regional bloc. An opportunity cost emerges due to the fact that there might be competent producers outside the bloc and hence there is a great value forgone when the privilege of trade is enjoyed by an incompetent producer within the regional bloc. Oatley (2011) observes that incompetence within a regional bloc leads to a decline in the global economic welfare as it hinders global free trade where nations are free to choose the source of their imports as well as their export market. On the basis of international trade and the political influence, international relations are understood through a combination economic security issues and foreign economic policy aspects, which on the other hand introduce political aspects in the analysis of global economics (Easterly & Easterly, 2002). Some of the strategies to encourage foreign investment are considered to undermine the supremacy of the state, for instance losing the goodwill of powerful international organizations such as World Bank and the International Monetary Fund (IMF) that have great influence with regards to foreign investment (Sacerdoti, 1997). For example, the fact that the World Bank is capable of offering an annual credit of up to USD23 billion puts the borrowing nation states in a particular situation whereby they have to adhere to the interests of the global financial institution. The international financial organizations tend to form cartels that finance development projects in developing countries through long term public debt (Woods, 2001). Most probably, the less developed countries are affected by conflicts of interests from foreign countries such as the US and the UK that spearheaded the establishment of World Bank and IMF and are among the nations that have a permanent seat on the executive board of IMF. Other nations that are influential to IMF and have permanent seats on the executive board include Japan, France, Germany, China, Russia and Saudi Arabia (Moyo & Ferguson, 2010). The US has remained predominantly in the lead regarding IMF policies due to its economic advantage acquired since the institution's inception at Breton Woods where it was decided that the US dollar was to become the standard currency for the international monetary system. This development meant that the US was to have a great influence in the management of the global monetary system because the US dollar was its major exchange reserve. The US was given a significant international response. There emerged a conflict of interest as domestic political issues were given greater attention than the international obligation (Schedler et al. 1999). The influential countries ensure that their political interests, as well as the economic objectives of the multinational companies that they support, are satisfied in the borrowing nation states. Multinational companies enjoy great support from home and have some times been considered to be agents of their country of origin such as during the cold war. Borrowing nations are compelled to develop favorable investment policies for the foreign multinational companies in order to qualify for credit from IMF (Woods, 2001). For example, the US influences borrowing from IMF through compelling nation states to ratify anti-terrorism, anti-money laundering and proceeds of crime laws. This pressure is meant to protect the political and economic interests of the US that have often been threatened by global terrorism (Moyo & Ferguson, 2010). The European Union countries also engaged in an economic agreement of adopting the Euro as their single currency, which would help to maintain economic stability. The treaty was politicized by the fact that its main aim was to bind the Cold War Alliance partners EU. For example, the agreement would prevent Germany from realigning itself with East and Central Europe. Generally, as Oatley (2011) observes, economic agreements generate political responsibilities that are prone to political exploitation. Conclusion The global political economy is manifest through international trade and international relations. Exports increase the economic well being of the exporting country but a high export surplus may be viewed by other nation states as an aggressive policy that may not promote friendly international relations. Treaties such as NAFTA, WTO, and COMESA have been significant in promoting international trade. Regional alliances among nation states present various economic and political challenges including a decline in democratic space. The policies of IMF and the World Bank are significantly influenced by the US. Nations that get financial assistance from these organizations are compelled to pass laws that serve the economic and political interest of the dominant economies that are involved in the management of the institutions. Generally, recourse to the global political economy is important in understanding world politics as presented in this paper. References Aronson, B. W., Rogers, W. D., Zweig, J. & Mead, W. 2001, U.S.-Cuban Relations in the 21st Century: A Follow-On Chairman's Report of an Independent Task Force Sponsored by the Council on Foreign Relations, New York: Council on Foreign Relations Press. Easterly, R. & Easterly, W. 2002. 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