Class Notes Global Political Economy (5182V8GP)

Lecture Notes:

Global Political Economy




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, Lecture 1: Introduction to International Trade 4
Reading Notes (Chapters 1-3) 4
International Trade 7
Refresher 8
Comparative Advantage 10
The Heckscher-Ohlin (HO) Model of Comparative Advantage 15
Tutorial Reading + Reading Report 19
Lecture 2: Trade Policy and Regulation 21
Trade Policy Analysis 21
Quotas 23
International Trading Regimes 24
WTO Functioning 24
Preferential Trade Agreements 25
ROOs (Rule of Origin) - Stepping stone in any PTA (regionalism) 26
Trade Diverting PTA 28
Lecture 3: International Production: MNEs, FDI, and Regulation 31
Foreign Market Entry + International Production 31
Global Value Chains 37
Attracting International Production 44
Lecture 4: Introduction to International Finance 48
Accounting Frameworks 48
Global Capital Flows 52
Lecture 5: Exchange Rates and the IMF 57
Exchange Rates and Purchasing Power Parity 57
Trade-Based Model 61
Assets-Based Model 63
Interest Rate Parity Condition (part of A-B model) 64
Fixed Exchange Rates 66
Lecture 6: Monetary Unions & Crises 70
Reading Notes: Crises and Responses 70
Reading Notes: Monetary Unions 76
European Monetary Union (EMU) 77
Crises in a Monetary Union 81
Crises in a ‘Normal’ Currency Regime 83
Models of Currency Crisis 84
Lecture 7: Introducing Global Political Economy 86
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, Agenda 86
Complementary Insights & Counterpoints 86
Theoretical Traditions in GPE 88
Historical Capitalism and Trade (1431-2020) 91
Reading Notes 94
Lecture 8: Going for Growth 97
The World Economy Since 1945 97
The Developmental State Debate 101
The Rise (and fall?) of Neoliberalism 102
Tutorial 3: Inequality 105
Lecture 9: Transnational Production and Finance 107
Transforming Logics on the World Market 108
Global Commodity Chains (GVCs) 110
Financialization 116
Lecture 10: Welfare and Inequality 118
Welfare + Inequality in a Marketizing World Economy 118
Theoretical Perspectives on Inequality 121
Social Reproduction & Global Social Policy 123
Lecture 11: Hyper-globalization, Democracy & Inclusive Growth 126
Hyper-Globalization & Democracy 126
Inclusive Growth and the Pandemic 129
Neoliberal Globalization, Democracy & the Social Contract 131
Lecture 12: Capitalism and Nature 132
Roots and Dimensions of the Crisis 132
Responses to the Crisis 134
Sustainability and Equity 136




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, Lecture 1: Introduction to International Trade

Reading Notes (Chapters 1-3)

Windows on the World Economy

I. International Trade: The exchange of goods and services among the countries of the world

• Development of containers led to a revolution in global goods shipping

• ICTs have enhanced the development of container shipping - increasing international trade



II. International Production: Production of a product in multiple countries (through two modes)

• Contracts (international licensing and franchising): Arm’s length relationship across national

boundaries - low-commitment-low-control option

• Foreign Direct Investment (FDI) undertaken by Multinational Enterprises (MNEs): Firms

based in one country, owning at least 10% of a firm producing in another country and thereby

exerting management influence - high-commitment-high-control option (5)

• Significant growth of FDIs due to improvements in ICTs, expansion of global mergers/

acquisition activity, general friendliness towards ICTs growing



III. International Finance: The exchange of assets among countries

• Importance highlighted in 1990s: Capital flight - investors selling country’s assets and

reallocating their portfolios into other countries’ assets



IV. International Development: The processes of international trade, production, and finance

contributing to improved levels of welfare and standards of living throughout the countries of

the world

• One measure of differences in living standards is the human development index (HDI)

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