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🧭 Political Economy of International Relations – Overview
Political economy deals with how politics and economics interact on a global scale. The economic structures like trade, finance, and monetary systems shape international power relations. Understanding institutions such as Bretton Woods twins, WTO, G-20, BRICS, and the North-South dialogue is crucial for analyzing global order.
🏛️ Bretton Woods System (1944)
Background:
- Originated at the United Nations Monetary and Financial Conference at Bretton Woods, USA.
- Attended by 730 delegates from 44 Allied nations.
- Key architects: John Maynard Keynes (UK) & Harry Dexter White (USA).
Key Outcomes:
- International Monetary Fund (IMF):
- Provides short-term loans to address Balance of Payments (BoP) crises.
- International Bank for Reconstruction and Development (IBRD):
- Now part of World Bank Group. Aids post-war and developing countries.
- Fixed Exchange Rate System:
- Currencies pegged to the US dollar, which was convertible to gold.
Objectives:
- Maintain currency stability (±1% fluctuation).
- Avoid competitive devaluations.
- Promote monetary cooperation.
- IMF enabled temporary BoP assistance.
End of Bretton Woods:
- 1971: Nixon delinked USD from gold.
- 1973 onwards: Move to floating exchange rates governed by forex markets.
🌐 World Trade Organization (WTO)
Formation:
- Established: 1 January 1995 via Marrakesh Agreement (1994).
- Replaced GATT (1947).
- HQ: Geneva. Members: 164 + 25 observers (e.g., Hong Kong).
Principles:
- Non-discrimination (MFN)
- Reciprocity
- Binding commitments
- Transparency
- Safeguards (safety valves)
Structure:
- Ministerial Conference (top decision-maker): Every 2 years.
- General Council: Implements WTO rules, functions as:
- Dispute Settlement Body
- Trade Policy Review Body
Major Conferences:
- Doha Round (2001): Focus on developing countries. Broke down in 2008 over agri trade disputes.
- Bali (2013):
- Bali Package adopted.
- Introduced Trade Facilitation Agreement (TFA).
- Permitted public stockholding for food security.
- Nairobi (2015):
- Nairobi Package: Special Safeguard Mechanism (agriculture), better market access for LDCs.
- Geneva (2022):
- Geneva Package: WTO response to food insecurity, COVID-19, e-commerce moratorium, and fisheries subsidies.
🤝 North–South Dialogue
Definition: A political-economic dialogue between the developed (Global North) and developing (Global South) nations over economic justice and global resource sharing.
Milestones:
- UNCTAD (1964): Created to voice the Global South's concerns—headquartered in Geneva.
- Bandung Conference (1955): Seeds of economic cooperation among Afro-Asian nations.
- NAM Algiers (1973): Called for NIEO.
- UNGA (1974): Adopted NIEO proposal.
- NAM Colombo Summit (1976): Unanimous support for NIEO.
Goals of NIEO:
- Restructure global economic relations.
- Advocate for equitable resource allocation.
- Reform international institutions (IMF, WTO, etc.).
- Empower South-South Cooperation.
- Address BoP crisis, debt burden, and currency instability.
- Propose a new international currency system.
🌍 G-20
- Establishment: 1999
- Members: 19 countries + EU + (from 2023) African Union → G21
- Includes: US, UK, India, China, Brazil, Germany, France, Japan, Russia, etc.
Key Facts:
- Represents 80% of global GDP.
- No permanent secretariat.
- Annual leaders’ summit, along with finance ministers’ and central bank governors’ meetings.
Objectives:
- Promote international financial stability.
- Address macroeconomic policy, climate change, terrorism, health, migration, and resource scarcity.
- Acts as a steering committee for global economic policy coordination.
🔗 BRICS
- Members: Brazil, Russia, India, China, South Africa
- Coined by Jim O’Neill (Goldman Sachs) in 2001.
- Formalized in 2009; SA joined in 2010.
Significance:
- 42% of world population.
- 23% of global GDP.
- 17% of world trade.
Key Developments:
- Annual summits with rotating chairmanship.
- New Development Bank (NDB):
- Agreed in Fortaleza Summit (2014).
- Operational since 2015.
- HQ: Shanghai, China.
- Offers alternative development finance to institutions like IMF/World Bank.
🔚 Conclusion
The political economy of international relations provides a lens to understand global inequalities, institutional power struggles, and collective efforts for reform. While institutions like the WTO and IMF represent older structures dominated by the West, emerging platforms like BRICS, G-20, and the NIEO movement reflect attempts to balance global power equations and address the historical injustices faced by the Global South.