POLITICAL SCIENCE 4860
International Political Economy
Fall 1999
Instructor: David Leblang, Wooten 145, x2313,
Time and Location: MWF 11:00-11:50, Wooten 110.
Office Hours: M 1:00-2:00, W 9:00-10:00, and by appointment.
Course Description
“International Political Economy,” broadly conceived, is concerned with the interaction of politics and economics as it is manifested on the global level. In particular, it addresses the following questions: What is the relationship between political power and economic performance? What causes conflict between actors in the world economy? Why do nations cooperate with each other on international economic issues? What causes this cooperation to break down? Is the empirical evidence consistent with theoretical expectations?
This course addresses these questions in their theoretical, historical, and contemporary contexts. That is, it seeks to understand (1) How the capitalist world economic system as we now know it evolved; (2) How political and economic forces shape the functioning of that system today; and (3) How nations go about changing conflictual situations into cooperative ones. We will begin by examining the philosophical foundations of political economy: the writings of Smith, Ricardo, and Marx. The arguments developed by these thinkers have been debated and continue to find their way into contemporary scholarship. We will spend the remainder of the semester investigating two major problems in international political economy: international capital flows and currency crises and the effect of globalization on national economic policy. In analyzing these issues we will utilize the tools of game theory, transaction cost economics and public goods analysis. This will enable us to understand the politics of international finance and trade on two levels: the politics of foreign economic policy and the organization of the international political economy.
Prerequisites
This is an upper level course in the political science department. Much of the discussion in class as well as in the readings assumes that you have had PSCI 3810 (Introduction to International Relations). Please let me know if you have not had this course so that I can provide you with the necessary background material. In addition, some exposure to economics would be desirable, although not necessary.
Course Requirements
There is a great deal of reading in this course--some of it very difficult. As a result, the fundamental requirement for successful completion of this class is that you actively read the material. By active reading, I mean that your read and ask yourself if you understand the fundamental arguments being made by the author. If you do not, ask. The only way I know if and what you (don't) understand is if you ask questions in class.
Your course grade will be based on three criteria: (1) Class Participation (15%); (2) Two Class Presentations (20% each), and (3) Midterm (20%) and Final Exams (25%). Details pertaining to these criteria will be distributed in class.
Required Texts
Douglass C. North (1981). Structure and Change in Economic History. New York: W.W. Norton and Company.
Barry Eichengreen (1996). Globalizing Capital: A History of the International Monetary System. Princeton: Princeton University Press.
Most of the readings come from either journal articles or unpublished papers. This material will be on reserve in the library.
Course Outline and Readings
I. Preliminaries: Power, Wealth, Markets, Institutions
· James Alt and K. Alec Crystal (1983). Political Economics. Berkeley: University of California Press. [only pp.3-10].
II. The Rise of the West: Classical Accounts
A. Background
· James Alt and K. Alec Crystal (1983). Political Economics. Berkeley: University of California Press. [only pp.13-18].
· Robert Gilpin (1987). “Three Ideologies of Political Economy,” Chapter 2 in The Political Economy of International Relations. Princeton: Princeton University Press
B. Explaining Structure and Change
· Douglass North. Structure and Change in Economic History. Chapters 1-6, 11, 13 15.
III. Application I: International Money and Finance.
A. Background
· Barry Eichengreen. Globalizing Capital: A History of the International Monetary System.
B. Issue One: The Rise of Global Financial Markets
· “Capital Flows in the Global Economy.” Chapter 6 in The Economic Report of the President 1999. http://www.access.gpo.gov/usbudget/fy2000/pdf/1999_erp.pdf
C. Issue Two: Global Financial Crises
· “Models of Currency Speculation.” Federal Reserve Bank of San Francisco, Economic Letter April 1996. http://www.frbsf.org/econrsrch/wklyltr/el96-13.html.
· The A-Zs of Crashes. http://www.adtrading.com/adt12/crashaz.hts
· Krugman, Paul. “Bahtulism: Who Poisoned Asia’s Currency Markets?” http://www.slate.com/Dismal/97-08-14/Dismal.asp
· Krugman, Paul. “Paradigms of Panic: Asia Goes Back to the Future.” Futurehttp://www.slate.com/Dismal/98-03-12/Dismal.asp
· A Collection of articles from the New York Times on the Asian Crisis. http://www.nytimes.com/library/financial/index-global-fin-crisis.html
· A Collection of articles from the New York Times on Global Contagion. http://www.nytimes.com/library/world/global/index-global-econ.html
· Feldstein, Martin 1999. “A Self-Help Guide for Emerging Markets.” Foreign Affairs 78:93-109.
D. Issue Three: Reforming the International Financial System
· “The Evolution and Reform of the International Financial System.” Chapter 7in The Economic Report of the President 1999. http://www.access.gpo.gov/usbudget/fy2000/pdf/1999_erp.pdf
· Rodrik, Dani. 1999. Governing the Global Economy: Does One Architectural Style Fit All? http://www.ksg.harvard.edu/rodrik/ifa2.pdf
E. Issue Three: The European Monetary System
· Rudi Dornbsbusch. 1996. “Euro Fantasies,” Foreign Affairs, September-October.
· Jeffry Frieden. 1998. “The Euro: Who Wins? Who Loses?” Foreign Policy 112:25-40. http://www.fas.harvard.edu/~jfrieden/euro.pdf
· Jeffry Frieden 1994. “Making Commitments: France and Italy in the European Monetary System, 1979-1985" [from Barry Eichengreen & Jeffry Frieden, eds., The Political Economy of European Monetary Integration, ch. 2 (Westview Press, 1994)] http://www.fas.harvard.edu/~jfrieden/commit.pdf
· Martin, Andrew and George Ross. 1999. “Europe’s Monetary Union: Creating a Democratic Deficit?” Current History 98:171-75
IV. Application II: Globalization and the Nation State
A. Background
· Rodrik, Dani. 1997. Sense and nonsense in the Globalization Debate,” Foreign Policy Spring 1997
· Epstein, Gerald, James Crotty and Patricia Kelly. 1996. “Winners and Losers in the Global Economic Game.” Current History 95:377-81
· Strange, Susan. 1997. “The Erosion of the State.” Current History 96:365-69
· Sachs, Jeffrey. 1998. “International Economics: Unlocking the Mysteries of Globalization.” Foreign Policy 110:97-111.
· Krugman, Paul. “The Accidental Theorist: All Work and No Play Makes William Greider a Dull Boy.” http://www.slate.com/Dismal/97-01-23/Dismal.asp
· Judis, John. “Stop the World, I Want to Get Off.” http://www.slate.com/BookReview/97-01-14/BookReview.asp
· Garrett, Geoffrey. 1998. “Global Markets and National Politics: Collision Course or Virtuous Circle? International Organization 52:787-824.
B. Empirical Studies
· Rodrik, Dani. 1998. “Why Do More Open Economies Have Bigger Governments?” Manuscript: Kennedy School of Government. http://www.ksg.harvard.edu/rodrik/last.pdf
· Garrett, Geoffrey. 1999. “Globalization and Government Spending Around the World.” Manuscript: Yale University. http://pantheon.yale.edu/~gmg8/Research/globgovt/apsa99.pdf
C. Empirical and Theoretical Critiques
· Rodrik, Dani. 1999. “How Far Will International Economic Integration Go?” Manuscript: Kennedy School of Government. http://www.ksg.harvard.edu/rodrik/jep.pdf
· Rogowski, Ronald. 1998. “`Globalization’ and Convergence: Getting the Theory and the Evidence Right.” Manuscript: UCLA. http://www.sscnet.ucla.edu/soc/groups/scr/global.htm