POLI 315 FINAL EXAM—SUBJECTS • International Trade • International Finance • International Monetary Relations • Development • International Law • Human Rights • Environment • WMDs & the Rise of China • Midterm Review • Past Quiz Questions & Answers INTERNATIONAL TRADE—VOCAB • Comparative Advantage: the ability of a country or firm to produce a particular gDon't forget about the age old question of What are the six principles of interal control assests?
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ood or service more efficiently than other goods or services, such that its resources are most efficiently employed in this activity. • Absolute Advantage: the ability of a country or firm to produce more of a particular good or service than other countries or firms using the same amount of effort and resources. • Hecksher-Ohlin trade Theory: the theory that a country will export goods that make intensive use of the factors of production in which it is well endowed. A labor rich country will export goods that make intensive use of labor. • Protectionism: the imposition of barriers to restrict imports. Tariffs, quantitative quotas and other non-tariff barriers. • Trade Barriers: Government limitations on the international exchange of goods. (EX: tariffs, quantitative restrictions (quotas), import licenses, etc)• Tariff: A tax imposed on imports; this raises the domestic price of the imported good and may be applied for the purpose of protecting domestic producers from foreign competition. • Quantitative Restrictions (Quotas): Limit placed on the amount of a particular good that is allowed to be imported. • Non-Tariff Barriers to Trade: Obstacles to imports other than tariffs (trade taxes). (EX: quotas) • Stolper-Samuelson Theorem: the theory that protection benefits the scarce factor of production. It flows from the Heckser-Ohlin theory: if a country imports goods that make intensive use of its scarce factor, then limiting factors will help that factor. So in a labor-scarce country, labor benefits from protection and loses from trade liberalization. • Ricardo-Viner Model: a model of trade relations that emphasizes the sector in which factors of production are employed rather than the nature of the factor itself. This differentiates it from the Hecksher-Olin approach, for which the nature of the factor— labor, land, capital—is the principal consideration • Reciprocity: a mutual agreement to lower tariffs and barriers to trade. • Most Favored Nation Status: status established by most modern trade agreements guaranteeing that the signatories will extend to each other any favorable trading terms offered in agreements with third parties. • World Trade Organization (WTO): institution created in 1995 to succeed the GATT and to govern international trade relations (most legalized institution in the world). • General Agreement on Tariffs & Trade (GATT): an international institution created in 1947 in which member countries committed to reduce barriers to trade and to provide similar trading conditions to all other members, replaced by WTO in 1995 INTERNATIONAL TRADE—NOTES • Winners & Losers of Trade o Winners: Domestic Industries ▪ Returns above normal rate of profit by artificially restricting competition/supply o 3 groups lose from trade protection ▪ consumers of imported goods (incl. consuming industries)2 • tariffs raise prices ▪ exporters • barriers may provoke foreign market retaliation ▪ politicians • citizens can punish politicians for negative ramifications • Absolute Advantage vs. Comparative Advantage o Comparative Advantage: applies the principle of specialization to countries—do what they do best ▪ Implies that a nation gains most by specializing in producing/exporting what it produces most efficiently ▪ Necessary for country to produce something profitable to export • Earn the max possible in order to pay for imports of the best products of other countries o Absolute Advantage: The ability to do something better than others ▪ Unnecessary in order for a country to produce something profitable to export • Trade Restrictions & Theorems o The Stolper-Samuelson Approach ▪ Protection benefits the scarce factor of production • Raises domestic demand for capital & reduces demand for local labor ???? raises return on profits ???? reduces wages • Helps owners of capital & hurts workers ▪ Opposition claims that entire industries (steel/sugar etc…) work for trade barriers/support –NOT the classes within the industry o The Ricardo-Viner (Specific Factors approach) ▪ Focuses on why whole industries often act together ▪ Key difference from Stolper-Samuelson: some factors of production tied to their industry are specific to their industry NOT capital profits in general3 • Ex: capital in steel industry takes form of steel factories/machinery—can’t be turned into capital for food industry. Therefore, steel manufacturers care about profits avail only in steel NOT capital profits in general ▪ Groups may support trade policies bc they might complement/permit other policies they favor o Trade Restrictions are the RULE, not the exception ▪ Protectionism: the use of specific measures to shield domestic producers from imports—common worldwide gov’t policy ▪ Trade Barriers: impediments to the import of foreign goods • Most common historically is the tariff (tax on imports levied at border/paid by importer) o Raises price of import directly—consumer of imported good has to pay more for it • Quantitative Restriction (Quota): limits quantity of a foreign good that can be sold domestically o Reduced quantity causes increase in domestic price o Makes imported goods more expensive to domestic consumers o Why do government restrict trade? —The Domestic Political Economy of Protection ▪ Most direct cost of protection is to consumers of the protected good • Tariffs/quotas raise domestic price of imported goods and may lead to price increases for similarly domestically produced goods o Barrier to steel imports makes imported steel more expensive/allows domestic steelmakers to raise prices ▪ Producers gain; Consumers lose from protection—Redistributive Effect • income redistributed from domestic consumers to the protected domestic industry ▪ Another cost: ability of society to use resources most effectively 4 • Trade barrier introduces economic distortions o Make more domestic goods they aren’t good at making o Consumers consume less of goods that protection has made artificially expensive • Leads to allocation of domestic resources—labor, capital, land, skills—that is not to country’s C.A o England using land for wheat rather than dairy/veggie farming • Factors that Affect Collective Action Problems o Small Numbers make it easier for govts to monitor each-others’ behavior— less free riding among small groups of countries VS. entire world ▪ Hegemonic Stability—extreme version—existence a single powerful nation facilitates solution of problems of collective action/free riding • large and strong enough to be both willing and able to solve problems for whole world ▪ Less extreme versions suggest that smaller # of countries—privileged groups—find it easier to monitor/enforce trade agreements than v large groups of nations • Easier monitoring/enforcement = more likely to succeed at liberalizing trade • Why many trade agreements take form of regional accords (European Union/NAFTA/Mercosur) o Information—many failures of cooperation bc of fear of hidden action AKA one govt might use superior knowledge of own domestic conditions to take advantage of other govts o Repeated Interaction—btwn govts on a continuing basis gives reason to avoid cheating/appearance of cheating o Linking concessions granted in 1 arena ???? concessions received in another ▪ Ex: govt otherwise uninterested in negotiating lower barriers in steel, might be willing to exchange steel concessions if its partner gives it concession in another industry5 ▪ AKA trade among trade policies—giving in an area they care less about in return for getting in area they do care about INTERNATIONAL FINANCE—NOTES • Why invest/borrow abroad? o Country’s avg. profit rate depends on how plentiful capital is o Scarcity—certain factors are scare = expensive—factors are plentiful = cheap o higher rate of return—interest rate = “price” of capital THEREFORE more expensive capital = higher rate of return ▪ Scarce in poor countries—borrowers pay higher interest rates for something in short supply ▪ Abundant in rich countries—interest/profit rates much lower ▪ greater scarcity of capital + higher interest rates, in developing countries encourages capital flow from rich ???? poor countries o Chance of striking better deal w/ foreign investors • Different types of Investments—FPI vs. FDI o Foreign Portfolio Investment—give investor a claim on some income but NO ROLE IN MANAGING the investment ▪ Purchase of stocks (equities)/bonds/loans etc. ▪ Most of FPI that goes ???? developing countries is sovereign lending— loans from private financial institutions ▪ Interest purely in rate of return o Foreign Direct Investment—made by a company that owns facilities in another country, of which the company MAINTAINS MANAGERIAL CONTROL ▪ Ex: Toyota opens factory in Thailand ▪ DIs have full authority & take on risks • Repression vs. Depression o Recession: A sharp slowdown in rate of economic growth/activity 6 ▪ Shorter span o Depression: A severe downturn in the business cycle—associated w major decline in economic activity/production/investment; severe contraction of credit; sustained high unemployment ▪ Longer period of time • Heckscher-Ohlin Trade Theory o countries will export goods that makes use of resources the country has in abundance; will import goods that makes use of resources of which the country is scarce o Explains national comparative advantage/national trading patterns ▪ Productivity of farmers depends on characteristics of land not just their hard work o Characterizes basic economic characteristics of a country in terms of its basic factors of production—resources essential for economic activity ▪ Land—agricultural production ▪ Labor—undifferentiated/unskilled labor ▪ Capital for investment—machinery/equipment for production & financial assets for funding ▪ Human Capital—skilled labor (enhanced by training/education) o Good at broad outline of international trade ▪ Industrial countries—rich in capital/skilled labor (human capital)— export manufactured goods ▪ Developing countries—rich in land/raw materials/unskilled labor— export agricultural products/minerals/labor intensive manufactures • International Monetary Fund—controversy & bias o Created to manage int’l monetary relations and has reoriented itself to focus on the int’l financial system—esp. debt/currency crisis o Negotiates agreements directly w an individual country’s gov’t ▪ Closely tied to relations btwn debtor gov’t/private international creditors 7 ▪ Understanding that agreement w IMF will facilitate agreement w private lenders—major part in negotiations btwn sovereign gov’ts & private financiers o Bias & Controversy ▪ Supporters: plays important role in managing int’l financial system • Orderly resolution of debtor/creditor issues • Focus on info difficulties in sovereign debt/need for reliable monitoring • Cooperative arrangements • IMF’s power from its central role in resolving $$ issues beneficial to both parties ▪ Opponents: IMF as tool of int’l financiers/basically int’l debt collector • IMF as biased agency whose actions reinforce subordinate position of debtor nations & do little to assist them in achieving econ growth/development • Creditors can be politically influenced at home & defaults threaten to bankrupt major financial institutions in industrial nations ???? destabilize own financial markets INTERNATIONAL MONETARY RELATIONS—NOTES • Gold Standard Monetary System o Monetary system btwn 1870-1914. Country promises to exchange currency for gold at an est. rate. Made country’s currency equivalent to gold/interchangeable at a fixed rate w money of any other gold-standard country—much of world essentially shared same currency o Contracted prices wouldn’t fluctuate bc exchange rates didn’t change • Bretton Woods System o Followed Gold Standard, from 1945-73. A compromise btwn rigidity and complete unpredictability. Based on a fixed rate/gold standard for US. On a fixed but adjustable (an adjustable peg) rate for other currencies on a dollar standard—required gov’ts keep currency values fixed for long periods, permitted to alter when need be. 8 o US dollar’s value couldn’t change—other gov’ts also fixed their currency against the dollar BUT other countries were able to adjust currency value if necessary o Middle ground: like gold standard—stable exchange rates to encourage int’l trade/investment; like more flex system—exchange rates varied as necessary (rarely though) • Fixed Exchange Rates vs. Floating Exchange Rates o Fixed Exchange Rates: gov’t promises to keep national money at an est. value in terms of another currency/precious metal (ex: Gold Standard) ▪ PROS: • Provide currency stability/predictability—greatly facilitated int’l trade/investment/finance/migration/travel. • Large stimulus to trade—raised trade w 2 countries btwn 30- 70% • Provides stability that facilitates int’l econ exchange/monetary anchor to keep prices stable—kept inflation relatively low ▪ CONS: • Reduces/eliminates gov’t’s ability to have own independent monetary policy (can’t depreciate/appreciate if advantageous) ▪ Winners: those engaged in cross-border trade/investment/finance/travel/those who want inflation low ▪ Losers: economy in recession/producers of goods wanting to make it easier to sell products o Floating Exchange Rates: Most used in the present day. Price moves of currency moves around line w changes in supply/demand ▪ PROS: • currency’s value allowed to change more/less freely—driven by markets etc. • gives gov’t more freedom to pursue own monetary policies— not hampered by need to keep rates fixed ▪ CONS9 • Can move around a lot ???? impose costs on international trade/investment ???? impede int’l econ exchange • Volatility in currency values make int’l trade/investment/travel/finance more difficult ▪ Winners: gov’t who wants to pursue own policies ▪ Losers: those engaged in cross-border trade/investment/finance/travel/those who want inflation low • Currency Crisis o Result when gov’t exchange rate commitments are NOT fully credible—in case of currency affairs, when private econ actors don’t believe the promises of a gov’t w respect to its exchange rate. REACTION can cause major crises o Trajectory: ▪ In order to reap benefits of fixed currency, gov’t commits itself to a fixed exchange rate ▪ Gov’t faces econ/poli difficulties in maintaining fixed rate ▪ Gov’t face pressure to devalue currency ???? people doubt credibility of gov’t’s commitment to keep exchange rate stable ▪ Unease gives investors strong reasons to sell nation’s currency ???? investors at home/abroad begin converting local currency to more reliable foreign currency ▪ Doubts about govt’s cred grow & more people go to banks to exchange local currency for something more reliable ▪ Gov’t split—positives/negatives to devaluing currency (reduce purchase power/boost competition) ▪ Gov’t tries to convince investors etc. to hold onto the nat’l money— must raise interest rates to make local currency more attractive • Raising interest rates likely to exacerbate country’s econ difficulties ▪ Gov’t runs out of time/money/patience ???? currency devalue ???? negative effects • Ur screwed if u have foreign currency debts 10 ▪ Debtors go bankrupt ???? bank failure ???? recession ▪ Can turn to deep financial/debt crisis ???? broader banking crisis o Can be transmitted from country ???? country—esp. those similar economically/politically DEVELOPMENT—NOTES • Factors Affecting Development of Countries o Geographic Location ▪ geography/climate ▪ landlocked countries w diseases difficult to control/cure ▪ far from major markets at developmental disadvantage ▪ tropical environments less conducive to urbanization/industrialization than temperate zones o Infrastructure—physical/economic/social o Security of Property—improvements unlikely if unsafe o Gov’t/Economic Stability o History/Colonialism o Resource Curse—focus on one natural resource prevents innovation in other departments & fertile ground for corruption • Industrialization Policies o Import Substituting Industrialization: policies encouraging industrial development so domestic producers supply goods that had previously been imported—1930s-80s ▪ Goal to reduce imports/encourage domestic manufacturing through trade barriers/subsidies/state ownership of basic industries ▪ Domestic interests in favor: • move from primary ???? industrial production • national security for indigenous industrial capacity 11 • gain influence ▪ Outline most LDCs followed • Trade barriers—to protect domestic manufacturers from foreign competition • Gov’t incentives to industry—draw investors ????modern industrial sector • Basic industrial services by public enterprise—supplement/replace private provision seen as too expansive/limited ▪ Resulted in rapid industrialization ▪ Weaknesses: • Not efficient/difficultly selling abroad • Selling only to small/poor home market • Low quality products • Had little buying power bc didn’t sell much • Bias against agriculture ???? impoverished farmers ???? mass migration o Export-Oriented Industrialization: spur manufacturing through incentives/subsidies for export—esp. American consumers ▪ low-cost loans/tax breaks to exporters ▪ weak currency = cheap product ▪ relying on volatile int’l markets ???? goods meeting good quality/price standards ▪ Dominated by East Asia • Washington Consensus o Policy recommendations advocated by developed country economists/policy makers in 1980s—incl.… ▪ Trade Liberalization—removal of barriers to make national producers more competitive in world markets12 ▪ Privatization—selling off gov’t enterprises to private investors to run them more efficiently ▪ Fiscal/Monetary policies—avoid large deficits/high inflation ▪ Openness—foreign investment/int’l capital flows • Economic Institutions o Shift from economic nationalism ???? econ openness; LDCs demanded to globalize bc of MDCs role in international institutions ▪ Actors in developing world resent bias of int’l economic institutions— many LDC gov’ts attempted to counter power imbalance w power of #s o Attempts to remedy bias ▪ Group 77—group of developing countries in UN; now 130+ ▪ New International Econ Order—reorg of management of int’l economy demanded by LDCs in 1970s in order to make it more favorable toward developing nations ▪ Commodity Cartels—Associations of producers of commodities that restrict world supply ???? cause price of goods to rise INTERNATIONAL LAW—NOTES • International Law o Components: ▪ Primary: ▪ Secondary: o Characteristics: ▪ Obligation: degree which agents are legally bound • High Obligation—compliance unconditional (WTO treaties) • Low Obligation—compliance aspirational (human rights treaties) ▪ Precision: Specificity of obligations—reduces scope of reasonable interpretation13 ▪ Delegation: 3rd party interpretation/application—courts make new laws when precision low & delegation high • Ex: European Court of Justice, o Hard vs. Soft Law ▪ Hard Law: Obligatory/precise/high delegation— Binding/mandatory/enforceable ▪ Soft Law: Exhortatory/ambiguous/low delegation • Better suited for uncertain circumstances/issues central to sovereignty • International Norms o How nations behave/rulers act—how bureaucracies work ▪ Hard/soft law ▪ Can exist/influence without codification o Types ▪ Constitutive: decides who is legitimate/appropriate ACTOR under what circumstances ▪ Procedural: Due process of law—define how DECISION involving multiple actors should be made—usually well structured ▪ Regulative: Govern BEHAVIOR of actors in their interactions w other actors o Transnational Advocacy Networks (TANS): Set of individuals/non governmental organizations acting in pursuit of a normative objective o Norms Life Cycle—3 stages; how it is diffused and achieves taken for granted style ▪ 1. Norm Entrepreneurs work to convince mass of individuals in other states to embrace their beliefs ▪ 2. Norms cascade occurs as # of adherents passes tipping point— beyond which the idea gains sufficient support that it becomes nearly universal14 ▪ 3. Internalized—so widely accepted it acquire taken for granted quality making it almost automatic o Boomerang Model: the notion that internal groups repressed by their own states can turn to TANs to put pressure on other states and those states then put pressure on the repressive states from the outside. In short repression against internal groups can boomerang back and cause new external pressure on the repressive state HUMAN RIGHTS—NOTES • International Bill of Rights o Refers to 3 agreements that form core of int’l human rights regime ▪ Universal Declaration of Human Rights (UDHR) • Adopted by UN General Assembly in 1949 • Defines a common standard of achievement for all peoples • Forms foundation of modern human rights law ▪ International Covenant on Civil & Political Rights (ICCPR) • Agreement completed in 1966; in force since 1976 • Details basic civil & political rights of individuals/nations ▪ International Covenant on Economic, Social & Cultural Rights (ICESCR) • Agreement completed 1966; in force since 1976 • Specifies basic economic/social/cultural rights of individuals/nations • Why sign human rights treaties? o Constrain themselves—demonstrate commitment to democracy/political liberalization ▪ Promote peace/prosperity o Gain from benefits of committing—inducements/reputation ▪ Use HRTs to lock-in domestic political reforms ▪ Stable democracies need them less bc they benefit less and are still scrutinized15 o To constrain others—facilitate and spread democracy ▪ Prevent civil conflicts that could potentially spill into neighboring countries o Empathy/Altruism—we are human ▪ Promote respect in practice • Inconsistency in Enforcement o 3 possible explanations ▪ human rights laws don’t matter—dependent on self-help; absence of 3rd party enforcers • int’l law places burden of enforcement on victims of crime— politically powerless individuals/groups o others must speak and act on their behalf—others have weaker interest in penalizing violators • sporadically enforced ???? states can choose to violate with degree of impunity ▪ international law offers expressive value in which states seek to benefit by taking positions rather than self-modification • hope to give appearance of conforming w civilized norms while continuing to violate human rights behind the scenes/out of public eye • hope to gain contingent benefits & evade scrutiny—duplicitous ▪ countries most likely to violate human rights also more likely to sign/ratify human rights agreements • domestic opponents seem viable & rule unstable—most likely to abuse incl. use of torture against insurgents • International Criminal Court (ICC) o court of last resort from human rights cases that possesses jurisdiction only if the accused is a national of a state party, the crime took place in the territory of a state party, or the UNSC has referred the case to the prosecutor16 o Highly controversial in USA ▪ Treaty signed by Bill Clinton before leaving office permitting US to participate in further negotiations on Court’s rule of procedure ▪ GWB unsigned treaty ▪ Fear of frivolous/politically motivated prosecutions against poli leaders/American military personnel for security actions to protect USA ENVIRONMENT—NOTES • Free Rider Problem o Even if individual chooses NOT to invest time/money/resources in changing environmental policy, they will benefit from the improvements ???? Tragedy of the Commons ▪ Easier to defect—looks like things are improving without changing personal habits • Public Goods vs. Common Pool Resources o Public Goods: non-excludable/non-rivalrous—Climate/Air ▪ UNLIMITED o Common Pool Resources: Goods available to everyone (open ocean fisheries); non-excludable but one user’s consumption; rival in consumption ▪ LIMITED • Privatization of Public Goods o England’s enclosure movement in feudal period—divide commons into private plots o Kyoto Protocol: 1997 adoption; into force 2005. Creates carbon trading system that privatizes public good that previously existed. Ability to pollute restricted. ▪ Europe uses Emissions Trading Scheme (ETS) that covers 5 dirtiest industries/13k factories • Each firm received tradable allowances for greenhouse gases— must purchase credits from other UN certified nations17 • Creates incentives to reduce emissions by selling credits they have not used • Harnessing profit motive to reduced emissions key for reducing free riding incentives • Privileged Groups o Comprised of one or a small # of actors who receive sufficient benefits from public good that they are willing to bear cost for the good of all ▪ US produces 30% of CFCs but banned it anyway • Ozone Depletion vs. Global Warming Situation o Cooperation in ozone depletion easier to achieve due to highly concentrated nature of the CFC industry—small # of firms & within relatively small # if countries w/ most production/usage occurring in handful of developed states. ▪ Smaller number of firms/countries involved ???? lowered costs of Collective Action ???? effective cooperation o Montreal Protocol: International treaty, signed 1989 designed to protect OZONE layer by phasing out production of a number of CFCs and other chemical compounds ▪ Vienna Convention: the framework convention adopted in 1985 to regulate activities—especially emissions of CFCs that damage ozone layer ???? Montreal Protocol o Framework Convention on Climate Change (FCCC): Int’l agreement enacted 1992/entered into force 1994—provided overall framework for intergovernmental efforts on climate change WMDS & THE RISE OF CHINA—NOTES • Nuclear Deterrence o Promoting Peace—possession of WMDs should create condition of mutual deterrence which neither side would contemplate an attack on the other—forcing them to resolve disputes other ways—literally anything is better than nuclear war even nothing o Requirements of Mutual Nuclear Deterrence18 ▪ Must possess a survivable second-strike force—each state must possess enough weapons so that its arsenal could survive a 1st strike & still be able to wreak shit on initiator • arsenal too easy to destroy ???? commitment issues (stronger state could easily destroy smaller one) • if both can survive 1st strike—less likely to be a 1st strike ▪ leaders must be rational AKA care about survival ▪ weapons not subject to accidental launch—well fucking duh ▪ in event of attack, each side can reliably verify where attack originated • Coercive Disarmament o Ultimate tool for stopping/reversing nuclear proliferation—threat/use of military force o Obstacles to Coercive Disarmament success: ▪ Threat of force alone unlikely to work bc disarmament generates potentially dramatic shift in power—state gives up weapons making itself weaker ???? vulnerable to further demands • Credible commitment problem—threatening state must credibly commit if target gives in & can’t exploit weakness ▪ Force—as last resort, can lead to chain reaction that increases risks of accidents allocation of weaponry in wrong hands • Rise of China o Pessimistic Outlook: rise dangerous bc conflicts of interest btwn the communist nation & US. Will seek to overturn world order/replace w its own (think Germany WW1/WW2) ▪ Response is a policy of containment—would slow down China’s ruse/deter war by increasing costs o Optimistic Outlook: Faith in role of international/domestic institutions to mitigate risk of war. China’s participation in int’l institutions + reform of domestic institutions ???? supporter rather than challenger of status quo—war can be avoided by eliminating conflicts worth fighting over ▪ Strategy of engagement—encourage positive institutional changes19 • Power Transitions o Risk of war greatest when challenger to dominant world power emerges/seeks to alter existing int’l system—shifting/distribution of power/resources more likely to lead to war o Stable/unequal distributions more conducive to peace o Hegemonic power challenged by rising great powers in cycles of 60-90 years MIDTERM REVIEW—NOTES • Bargaining Range Line Model • Deterrence vs. Compellence o Deterrence: Effort to preserve status quo through threat of force ▪ “Don’t do X or else” ▪ Don’t attack my ally, X, or else” o Compellance: Effort to change status quo through threat of force—intended to coerce target state ???? concession/changing current policy ▪ “Give me Y or else” ▪ “Stop doing X or else” • Domestic Explanations of War o Diversionary Incentive: incentive state leaders start int’l crises to rally public support at home o Rally Effect: tendency for people to be more supportive of their gov’t in response to dramatic int’l events (crises/wars) o Weakness of Diversionary Effects20 ▪ Most leaders not as cynical as we assume ▪ War imposes domestic political costs • Public support decreases as costs grow • War as a gamble NOT a pure opportunity • Democratic Peace o Observation that there are few/no cases of war between mature democratic states o Not less war-prone in general but they do not fight each-other—more frequently at war w nondemocratic states • International Perspective o Balance of Power: Military capabilities of 2 states are roughly equal. Military capabilities refers to distribution of power in world system & policy of balancing other powers to prevent a state from gaining a majority of power ▪ Assumes that in an anarchic int’l system, the hegemonic aspirations of powerful states will be checked by smaller/weaker states thru internal/external balancing in attempt to ensure own survival ▪ Criticisms: • Does not fully account for ALL alliance decisions—not all alliances are formed w intent of balancing a stronger state • States often can choose many potential partners in order to balance the capabilities of a stronger state. Does not explain why some are MORE desirable than others • Not all strong powers provoke similar balancing responses o Bandwagoning: states join forces w stronger side in conflict—If a state believes it faces more risk by allying w other states to balance against a rising dominant power, it many instead choose to join forces w the dangerous but stronger state ▪ may be defensive—divert a potential attack elsewhere ▪ may be offensive—hopes of sharing spoils of victory ▪ risky—weaker state’s survival conditional upon benevolence of aggressors • Collective Security Organizations 21 o Broad-based institutions that try to promote peace/security among members. Either global/regional in scope. Facilitate cooperation designed to resolve disputes/prevent use of force/punish acts of aggression btwn/within states ▪ ex: League of Nations/United Nations o 2 Major Challenges ▪ collective action problem—CSOs do not have power to tax/raise & field military forces ▪ free rider problem—member states could allow burden of providing public good fall on others o Mediators & Buffers ▪ Mediators provided to help member states resolve disputes peacefully. Help ID mutually beneficial bargains ▪ Peacekeepers diminish first-strike advantages by interposing themselves btwn 2 adversarial factions • Civil War o 2 Sources Of Rebellion: grievances & greed—they want something ▪ Grievances • policies of the gov’t to discriminate against members of a particular group • repression of language culture • blocked access to jobs/political office/services ▪ Greed • desire to control more of economic resources • greater share of natural resources • privileged access ???? jobs/gov’t money o 3 Options for Conflict ▪ leave the state ▪ alter its policies 22 ▪ try to take over—territory/policy/gov’t regime o Reasons to Rebel ▪ Territorial Conflict—separatism (desire to create independent state) ▪ Change Policies ▪ Change Regime ▪ Ethnic/religious divisions o Commitment Problems—difficulties w contracting over time/inability of side w rising power to commit to abide by terms of settlement (may demand more) ▪ mandatory disarming/weak institutions/cemented cleavafes/anticipated power shifts • Terrorism o Strategies: ▪ Coercion: Induces policy change by imposing/threatening to impose costs (harm) on target ▪ Spoiling: Intended to sabotage a prospective peace between the target & moderate leadership from terrorists’ home society ▪ Outbidding: Designed to demonstrate capability for leadership & commitment relative to another, similar terrorist group (impress audience at home) ▪ Provocation: provoke target gov’t to making disproportionate response that alienates moderates in the terrorists’ home society/other sympathetic audiences—civilian casualties—creates larger pool of supporters PAST QUIZ QUESTIONS & ANSWERS 1st Half of Semester • Why did the US fight proxy wars during the Cold War? o The US feared a devastating war if it directly attacked the Soviet Union • Why did some countries after World War 2 form what would become the Soviet Union? o To increase trade and improve economic cooperation within Europe23 • Which of the following is NOT considered a threat to the nature of sovereignty? o Centralization of Power • Why are some interactions considered to be strategic interactions? o In strategic interactions, each actors plan of action depends on what the other actors are expected to do • Even though currently powerful countries like Germany, Brazil & Japan would like a permanent seat on the UN Security Council, they have not started their own competing international organization but have kept their protests within the UN’s system. This is the best example of what? o Often it is cheaper and easier to use existing institutions even if they do not exactly match an actor’s preferences • Which of the following is an example of compellence? o The US threatening Cuba if it did not remove Soviet missiles during the Cuban missile Cuba • In Figure 1, what set of deals does A prefer to war? o Costs to A + costs to B + value of war to B • How did the incomplete information cause Kuwait to make a mistake when Iraq threatened to attack in 1990? o Kuwait did not know that Saddam Hussein was willing to wage wat and decided not to make sufficient concessions • Why is bargaining over future power especially difficult in international relations? o A state cannot make a credible commitment to not use increased power to make further demands • Why might an apparently indivisible good actually be indivisible? o Sometimes states falsely claim that a desired object is indivisible in order to strengthen their bargaining positions • Which of the following is an example of an interest group successfully pushing a state into conflict? o The U.S removing Guatemalan president Arbenz to protect United Fruit assets • How can the level of influence an interest group has had in making a foreign policy decision be determined? o Measuring the influence of an interest group in difficult, because usually one cannot observe the connection between a group and the ultimate decision24 • What is a diversionary incentive? o An attempt to avoid war by creating a distraction • How do democratic institutions help solve commitment problems? o Elected leaders face greater costs if they back down from threats • How do democratic institutions help reduce informational problems? o Policy decisions are usually debated in public, so foreign governments can obtain more information about resolve Second Half of Semester • Why does Division of Labor make international trade profitable? o The countries that are most efficient at producing particular products produce them • Which of the following would be expected by the Hecksher-Ohlin trade theory? o A country with abundant fertile land exporting agricultural product • Which of the following is explained by the Stolper-Samuelson theorem? o Farmers in land-rich Argentina tend to favor liberal trade policies • Which of the following is an example of a portfolio investment? o A US bank makes a loan to a Mexican shoe manufacturer • Which of the following is NOT a reason that international finance is considered beneficial? o Capital-scarce countries have access to investment money from wealthier countries • Why would a country want a depreciated currency? o Depreciation makes a country’s exports more competitive • The Gold Standard is a monetary system in which: o The exchange rates of the major currencies remained fixed to gold • Why would a country adopt floating exchange rates? o Floating exchange rates allow a government the freedom to pursue its own monetary policies 25 • What is import substituting industrialization (ISI)? o A policy of promoting industrialization to replace foreign goods with domestically produced ones • Why do rich countries sometimes promote policies that hurt less developed countries? o Rich countries often protect the interests of powerful domestic groups at the expense of poor countries • If a state can ignore a set of international laws without any international repercussions, it suggests that the set of international laws are: o Low obligation • Which of the following is an example of the boomerang process? o Nongovernmental organizations in a state contacts transnational organizations, which brings pressure on their government to change policies • States violate international human rights law for all of the following reasons EXCEPT governments: o Do not understand the implications of their human rights agreements • What does it mean for the International Criminal Court (ICC) to be a court of last resort? o It cannot act if a national judicial authority has already prosecuted the case • Which of the following is an example of a common pool resource? o The Grand Banks fishery off the coast of North America26