Using chapters 6,7,9 and 10 attached

Write 1000 words

Assignment Instructions

1. Find a newspaper article that discusses an International Political

Economy (IPE) issue of the UAE or the Gulf Cooperation Council
(GCC) member states, such as financial challenges, investment,
production, and trade strategies; violence conflict and arms
competition, technology development, climate change, poverty, and
immigration policies.

2. Provide a concise summary of the article.

3. Apply relevant theories and concepts from class to critically

examine the article’s content. Identify the roles of the state, market,
and society, and analyze any tensions among these entities and
their key actors. Utilize the principle of cui bono to assess who
benefits and who loses in the given context. Additionally, consider
alternative perspectives and explore other aspects that could have
been emphasized for a more comprehensive analysis.

Length: 800–1,000 words, double-spaced, Times New Roman 12

Due: Submission and Presentation on 29 April 2025.

Each student will make a five to seven-minute presentation of the news
analysis.

The student must submit two files:

1. A copy of the original news report and,

2. The analysis.

There is a 5% penalty per day for a late submission.

Article:

Savage, R. (2024, December 24). UAE becomes Africa’s biggest investor

amid rights concerns. The Guardian; The Guardian.
[Link]
biggest-investor-amid-rights-concerns
UAE becomes Africa’s biggest
investor amid rights concerns
This article is more than 3 months old
Activists alarmed at emirati companies’ poor record on labour rights and
fear projects may fail to address environmental concerns
Rachel Savage Southern Africa correspondent
Tue 24 Dec 2024 05.00 GMT
Share

The United Arab Emirates has become the largest backer of new
business projects in Africa, raising hopes of a rush of much-
needed money for green energy, but also concerns that the
investments could compromise the rights of workers and
environmental protections.

Between 2019 and 2023, Emirati companies announced $110bn

(£88bn) of projects, $72bn of them in renewable energy,
according to FT Locations, a data company owned by the
Financial Times.

The pledges were more than double the value of those made by
companies from the UK, France or China, which pulled back
from big-ticket infrastructure investment projects in Africa after
many failed to deliver expected returns. African leaders were
also disappointed with climate finance pledges by western
governments. At the Cop29 climate conference, for example,
wealthy countries promised $300bn annually, whereas
developing countries had demanded $1.3 tn.

Although African leaders have welcomed the increased interest

from the Emiratis, some activists and analysts have expressed
fears that the UAE’s poor record on labour rights for migrant
workers, continued support for hydrocarbons and failure to
address environmental issues will characterise its investments in
Africa.

“African countries are in dire need of this money [for] their own
energy transitions. And they plug huge holes, the Emirati
investors, that the west failed to,” said Ahmed Aboudouh, an
associate fellow at the Chatham House thinktank. “But at the
same time they come in with less attention to labour rights, to
environmental standards.”

The UAE has long been a political player in north Africa and the
Horn of Africa, where it has been accused of fuelling conflicts
in Libya and Sudan. Now, its leadership is trying to diversify its
economy away from oil and gas, including to green energy and
“critical minerals” such as copper that are needed for electric
cars and batteries.

Dubai’s port and airline companies were early movers to Africa.

Dubai’s Emirates airline has flights to 20 African countries. DP
World, controlled by Dubai’s royal family, has been present in
the region since 2006. It manages six ports, with plans to build
two more. Abu Dhabi Ports has managed Kamsar port in Guinea
since 2013, and recently won concessions in Egypt, the Republic
of Congo and Angola.

“Angola is, at the moment, the only country where both DP World
and Abu Dhabi Ports have a presence,” said Maddalena Procopio,
a senior policy fellow at the European Council on Foreign
Relations. She said the UAE was not shifting away from east
Africa. “This has to do with a growing interest from the UAE in
expanding connectivity towards the Americas, in particular Latin
America.”

UAE companies also have investments in agriculture and

telecoms. Since 2022, the Dubai royal Sheikh Ahmed Dalmook al-
Maktoum has struck deals to sell carbon credits from
forests covering a fifth of Zimbabwe, 10% of Liberia, 10% of
Zambia and 8% of Tanzania.

Emirati investments have also shaken up the mining industry.

International Resource Holdings, part of a conglomerate
controlled by the Abu Dhabi national security adviser Sheikh
Tahnoon bin Zayed, paid $1.1bn to Zambia’s state mining
company, ZCCM, for a 51% stake in Mopani Copper Mines.

The deal was a surprise to most observers. ZCCM took over the
debt-laden mine from Glencore in 2021 and had been searching
for a new investor. Throughout 2023, the shortlist was widely
reported to be down to two companies: China’s Zijin Mining and
South Africa’s Sibanye Stillwater.
That was until IRH was unveiled as the preferred bidder. The
company of Sheikh Tahnoon – often labelled the second most-
powerful Emirati after Abu Dhabi’s ruler, Sheikh Mohammed bin
Zayed Al Nahyan, – had no track record. But Zambian officials
and advisers said IRH had hired world-class mining expertise and
that its pledge to invest in the mine while preserving jobs made it
the best choice.

Many Emirati announcements may never fully materialise or are

at an early stage. For example, the 2023 announcement of a
$34bn “green hydrogen” project in Mauritania was a
Memorandum of Understanding, not a contract.

Some pledges have hit hurdles. In January 2023, the renewable

energy company Masdar announced $2bn for 2GW of solar
power in Zambia. However, financial problems at the state-
owned energy company ZESCO have delayed the investments,
said Jito Kayumba, a special assistant to Zambia’s president.

Meanwhile, the amount of illegally smuggled gold to Dubai from

Africa has grown, according to researchers. The NGO
Swissaid found a difference of 2,569 tonnes between official
exports from African countries to the emirate and its imports
from Africa from 2012 to 2022, worth $115.3bn.

“African countries need all the financing and trade they can get,”
said Ken Opalo, an associate professor at Georgetown University.
“However, there is also the opportunity for the attention to breed
criminality – like we are seeing in the gold sector.”

Course materials:

Chapter 6:
International Political Economy – POL 343

The Production and Trade Structure

Part II: STRUCTURES OF INTERNATIONAL POLITICAL ECONOMY

6 The Production and Trade Structure

7 The International Monetary and Finance Structure
8 International Debt and Financial Crises
9 The Global Security Structure
10 The Knowledge and Technology Structure

 How do the four main structures of IPE serve as its underlying institutional
arrangements and interconnected systems that ultimately connect the people of the
world and condition the behavior of states and markets?
 Note that elements of one structure influence development in another structure, ex.
Trade and finance and debt

Part II: STRUCTURES OF INTERNATIONAL POLITICAL ECONOMY

• Each structure accounts for a set of relationships or arrangements and distinct rules (if not
tacit understandings) between and among different political, economic, and social actors in
each area.

• In looking at the characteristics of each structure, Susan Strange also encourages us to ask
the simple question “cui bono?” (who benefits?). Asking this question forces us to go beyond
description to analysis—to:

 What are the features of the structure and how it works?

 What benefit it provides to those who founded it or to those who manage it?
 What sources of power did they use to create the structure and how has it been
managed since?
 What is the role of each structure and what is the relationship of one structure to
another?

Overview

• This chapter surveys developments and changes that have occurred in the post-World War
II production and trade system in which officials in the Northern industrialized developed
nations have sought ways to liberalize the international trade system—that is, to reduce the
level of protectionist barriers.
• The United States and its allies created the General Agreement on Tariffs and Trade
(GATT) in 1947 to promote liberal trade values and objectives commensurate with U.S.
political and military strategic objectives.
• In an effort to further liberalize world trade, in 1995 the WTO replaced and incorporated the
GATT.
• Despite some successes these organizations have had in bringing down protectionist barriers
and promoting free trade, the result is an impasse of sorts whereby simultaneously both
protection and free trade are promoted by a growing number of actors with an interest in trade
policy.

Introduction

• The production and trade structure is the set of relationships between states, international
organizations (IOs), international businesses, and nongovernmental organizations (NGOs)
who together influence and manage international rules and norms related to what is produced,
where, by whom, how, for whom, and at what price.

BASIC CONCEPTS

• GDP: Gross domestic product tracks the health of a country's economy.

It represents the value of all goods and services produced over a specific time period within a
country's borders and it includes anything produced by the country's citizens and foreigners
within its borders.
GDP can be expressed in two different ways—nominal and real GDP. Nominal GDP takes
current market prices into account without factoring in inflation or deflation. This figure
looks at the natural movement of prices and tracks the gradual increase of an economy's value
over time.
GDP = private consumption + gross private investment + government investment +
government spending + (exports – imports).
Economists can use GDP to determine whether an economy is growing or experiencing a
recession.
Investors can use GDP to make investments decisions—a bad economy means lower earnings
and lower stock prices.

Basic Concepts

• Balance of Payments. The Balance of Payments or BoP is a statement or record of all

monetary and economic transactions made between a country and the rest of the world within
a defined period (every quarter or year). These records include transactions made by
individuals, companies and the government.

 The Current Account including Merchandise (Exports Imports), Investment income

(rents, profits, interest)
 The Capital Account measuring Foreign investment in the U.S. and U.S. investment
abroad, and
 The Balancing Account allowing for changes in official reserve assets (SDR's, Gold,
other payments)
  Importance of Balance of Payments. It highlights the direction of economic growth
or otherwise of any country and is a ground on which many important policy
decisions are based

Gross Domestic Product (GDP)

• GDP is a key economic indicator that represents the total monetary value of all goods and
services produced within a country's borders during a specific period, typically measured on a
quarterly or annual basis. It serves as a measure of a nation's economic activity and provides
insights into an economy’s overall health and size.
• GDP can be calculated using different approaches, including the production approach
(value-added by industries), the income approach (total income earned), and the expenditure
approach (total spending on consumption, investment, government, and net exports). It is a
fundamental metric used for comparing the economic performance of different countries and
tracking economic growth or contraction over time.

The three major theses:

1. Controversies about production and international trade: the compulsion of nation-

states (rich and poor alike) and businesses to capture the benefits of production and
trade while limiting their negative effects on producers and society.
2. Recent criticisms of neoliberalism and globalization, and the impact of the current
global financial crisis, have exacerbated the resistance of many emerging economies
to further trade liberalization.
3. Many state and business officials in the industrialized nations are increasingly
resisting some aspects of free trade and globalization.

GLOBAL PRODUCTION

• The rapid spread of production processes throughout the world (most recently to India and
China) has empowered individuals to collaborate and compete globally.
• The transformation and globalization of production processes in manufacturing, food,
agriculture, and sophisticated national security systems.
• Changes in where production takes places are frequently tied to changes in patterns of
foreign direct investment (FDI).
• Capital mobility -- FDI has grown—still concentrated in developed nations, The BRIC
countries producing a rapidly growing share of the world’s goods and services.
• The world’s poorest countries (LDCs)—roughly 20 percent of all countries—do not
contribute significant goods and services to world trade.

INTERNATIONAL TRADE

• International trade has increased both in value and volume dramatically since the 1980s, in
part, as a reflection of the internationalization of production processes.
• Trade promotes social, political, and economic interdependence between trading partners.
• In the absence of comprehensive and binding international trade rules, tensions between
trading partners are likely as states try to maximize domestic gains from trade, often at the
expense of the welfare of trading partners.
• China’s policies in supporting its companies to export to Thailand = dumping
• Thailand’s seafood

THREE PERSPECTIVES ON INTERNATIONAL TRADE

• Early European mercantilists (chapter 2) emphasized the role trade plays in generating
national wealth and power. Exports were encouraged and imports discouraged.
• Changes in the terms of trade can make one nation better off and another worse off.
• Pomeranz and Topik emphasize how states adopted a mix of mercantilist, imperialist, and
free trade policies to advance their interests.
Note: There are virtually no examples of any state using “pure” free trade policies to achieve
industrialization).

Economic Liberals

• Smith and Ricardo concerning trade came as a reaction to the policies of the early
mercantilist period.
• The law of comparative advantage - the basis of liberal ideas about trade: a nation should
produce those goods that have a lower opportunity cost than the same goods produced in
other countries.
• Mutually advantageous international trade is based on differences in the relative cost of
producing a good in different countries
• A nation should import goods if the price of the import (terms of trade) is less than the
opportunity cost of home production.
• Late 1800, (free) trade guided by the “invisible hand” of the market.
• Today, lightly regulated trade is also an integral part of other policies associated with the
Washington Consensus promoted by the United States and other members of the WTO.
• Many economic liberals emphasize the need for international rules to maximize the gains
from trade.

Mercantilists
 Although trade itself makes all nations better off,
changes in the terms of trade can make one nation
better off and another worse off. Thus, exports were
encouraged, and imports were discouraged.

Alexander Hamilton and Friedrich List: liberalism

and free-trade policies were merely a rationale for
England to maintain its dominant advantage over its
trading partners on the Continent and in the New World.

For Hamilton, supporting U.S. infant industries and

achieving national independence and security required
the use of protectionist trade measures.

List argued that in a climate of rising economic

nationalism, protectionist trade policies such as import
tariffs and export subsidies were necessary if Europe’s
infant industries were to compete on an equal footing
with England’s more efficient enterprises.

For free trade to work for all, it must be preceded

by greater equality between states, or at least a
willingness on their part to share the benefits and costs
associated with it.

Neo-mercantilists
 Neo-mercantilists challenge the
assumption that comparative advantage
unconditionally benefits both or all of the
parties engaged in trade.
States can intentionally create
comparative advantages almost overnight
in the production of new goods and
services simply by adopting strategic trade
policies that invest heavily in those
projects.
New technology, skills, and other
resources such as cheap labor can easily
help one state’s new industries gain a
comparative (competitive) advantage over
the industries of another state.
It is the state’s duty to protect society
and its businesses from the negative
effects of trade.
Trade protection is also associated with
a fear of becoming too dependent on other
nations for certain goods, especially food
and items related to defense

Structuralists
Structuralists view mercantilist colonial
practices as essentially another version of classical
imperialism
Trade helped mother countries dominate and
subjugate undeveloped colonial territories.
Modern structuralists emphasize the extent to
which international trade reflects the exploitative
relationship that exists amongst core, semi-
peripheral, and peripheral nations.

All three IPE perspectives on trade account for

various values and policy outlooks.
Today, a majority of academics and policy
officials still favor an economic liberal international
trade system within an order that is supposed to be
gradually liberalizing or opening up.
 In cases such as the recent global financial
crisis, most nations tend to behave in a mercantilist
fashion and adopt protectionist measures when
their national interests are threatened -- concern:
trade may be more exploitative than mutually
advantageous.

GATT AND THE LIBERAL POSTWAR TRADE

STRUCTURE

Before World War II trade rules largely reflected the

interests of the dominant states, especially Great Britain –
Colonies took the toll.

During the Great Depression of the 1930s,

protectionism spiraled upward while international trade
decreased significantly due to the Smooth-Hawley tariff in
the United States.

---WE NEED TO HAVE A MULTILATERAL

INSTRUMENT/AGREEMENT---
In 1947 the GATT: based on the two basic principles
of reciprocity and nondiscrimination, commonly referred
to as the most favored nation (MFN) principle.
 Eight GATT negotiating “rounds” were fairly
successful in lowering trade barriers on manufactured
goods, but not on some goods that were attached to
security considerations such as agriculture commodities.

The GATT rules were not enforced by the trade

organization by but depended on the members to fulfill
multilateral trade obligations with one another.

GATT: RULES - Definitions

Reciprocity and Nondiscrimination Principle:

Reciprocity: the practice of countries granting similar
trade concessions or benefits to each other.*
The nondiscrimination principle: as per the most
favored nation (MFN) and national treatment principles,
means that countries should not discriminate between
their trading partners and should treat them equally,
offering the same trade terms to all.
The MFN treatment obligation prohibits a country
from discriminating between other countries.
The national treatment obligation prohibits a
country from discriminating against other countries.
Most Favored Nation (MFN): MFN is a fundamental
principle in international trade where a country extends
its best trade terms, such as low tariffs, to all its trading
partners without discrimination. It ensures that any trade
advantage granted to one country is extended to all
others.

“Any advantage, favor, privilege or immunity

granted by any contracting party to any
product originating in or destined for any other
country shall be accorded immediately and
unconditionally to the like product originating
in or destined for the territories of all other
contracting parties”.
National Treatment: National treatment is another
principle of the World Trade Organization (WTO) that
requires countries to treat foreign and domestic products
and services equally once foreign goods or services have
entered their markets. It ensures that foreign products
are not subjected to discriminatory treatment.

Mercantilism on the Rebound 1960-1970

Protectionism increased among industrial nations in the

1960s and 1970s due in part to declining U.S. hegemony, the rise
of Europe and Japan, and changing patterns of global production.
The Oil Embargo: The Arab-Israeli war: oil was used as an
economic tool to (negotiate political) solutions to

The Tokyo GATT Round attempted to deal with a growing

number of non-tariff barriers (NTBs) and other discriminatory
practices such as dumping.
 In the 1980s trade accounted for an increasingly higher
percentage of GDP in the industrialized states, generating demand
for new protectionist policies.

Strategic trade policies grew in importance, especially in the

1980s and 1990s.

The idea of “strategic trade policy” is that comparative

advantage is not fixed, but is dynamic. The United States employed
a host of measures to support and punish trade partners. Likewise,
Tokyo’s Ministry of International Trade and Industry (MITI)
adopted numerous trade support measures.

Measures creating comparative advantages further politicize

international trade policy.

Gradually the notion of fair trade gained prominence, where

states counteracted the protectionism of trading partners by
creating rules that attempted to level the playing field when it
came to acceptable amounts and types of protection amongst
trade partners, anti-dumping, countervailing duties

GATT: The Uruguay Round

The Uruguay GATT Round (1986–1994) attempted to deal

with a number of newer trade issues including services and
intellectual property rights (IPRs).
 The new General Agreement on Trade and Services
(GATS) liberalized trade on banking, insurance, transport, and
telecommunication services.

Domestic support for agriculture and LDCs was also an

issue dealt with in the Uruguay Round that had not been dealt
with effectively (or at all) in previous GATT Rounds.

Trade Related Intellectual Property Rights (TRIPs) and

Trade Related Investment Measures (TRIMs) were also on the
negotiating table.

Agriculture remained an especially sticky issue throughout

the negotiations and held up the talks several times. In 1993 an
agreement on agriculture was reached, opening the door to
agreements on services, IPRs, and other issues.

While the Uruguay Round did make progress on these and

other issues, many of them remain for the WTO to either deal
with or solve.

Concepts -
Definitions
1. Strategic Trade Policies: Strategic trade policies refer to
government interventions in international trade aimed at
achieving specific economic or strategic objectives. These
policies can include subsidies to domestic industries,
 export incentives, or protectionist measures to gain a
competitive advantage in global markets.
2. Tariffs: Tariffs are taxes or duties imposed on imports or
exports, usually at a specific percentage of the product's
value. Governments use tariffs to regulate trade, protect
domestic industries, generate revenue, or address trade
imbalances.
3. Nontariff Barriers (NTBs): Nontariff barriers are trade
restrictions other than tariffs. They include various
measures such as quotas, licensing requirements,
technical standards, and sanitary regulations that can limit
or hinder the flow of goods and services across borders.
4. Export Subsidies: Export subsidies are financial
incentives provided by governments to domestic
producers or exporters to encourage the sale of their
goods and services in international markets. These
subsidies can distort trade by giving domestic exporters an
unfair advantage.
5. Dumping: Dumping occurs when a company exports
goods to another country at a price lower than its domestic
market price or the cost of production. It can harm
domestic industries in the importing country and may lead
to anti-dumping measures.
6. Countervailing Trade Practices: Countervailing trade
practices refer to government actions taken to counteract
the impact of subsidies provided by foreign governments
to their own industries. These measures are intended to
level the playing field in international trade and prevent
unfair competition.

GATT & WTO

[Link]

GATT & WTO (2 mins)

[Link]
 WTO & GATT Explain (5 mins)

WTO – 1995 – Geneva

The Roles of the

WTO
A global international organization primarily serves as a
forum for negotiating and enforcing trade agreements among
its member countries. Its key tasks include:
Trade Negotiations: The WTO conducts rounds of
negotiations to reduce trade barriers, such as tariffs and
quotas, and establish rules for international trade. Notable
rounds include the Uruguay Round, which created the WTO,
and the Doha Development Agenda.
Dispute Settlement: The WTO provides a mechanism for
member countries to resolve trade disputes. It has a dispute
settlement body that adjudicates disputes and issues rulings on
trade-related conflicts.
Trade Policy Review: The WTO regularly reviews member
countries' trade policies and practices to promote transparency
and provide a platform for discussions and recommendations.
Trade Facilitation: It simplifies and harmonizes customs and
trade procedures to reduce trade costs and improve efficiency
in international trade.
 Technical Assistance and Capacity Building: The WTO
assists developing countries in building their trade capacity and
understanding international trade rules.

The WTO's mechanisms are designed to promote open

and fair trade, resolve disputes, and facilitate negotiations to
promote global economic growth and development through
international trade.

The WTO
[Link]
c

The WTO took over the GATT’s role in 1995.

Theoretically, decisions are still arrived at by
consensus of the membership.

Unlike the GATT, the WTO has enforcement

power through its Dispute Settlement Panel, which
is empowered to interpret WTO agreements and
authorize sanctions on member-states that violate
trade rules.

Criticism by NGOs and other interest groups: its

(lack of) rules related to child labor, low wages
(especially in Third World countries) and supposed
lack of interest in the environment.

Structuralism = allowing the MNCs exploitation of

the 3rd world.
Many experts suggest that trade issues in the
WTO have become increasingly complex and
politicized given the importance of trade to states.

WTO
WTO Dispute Settlement Panel: The WTO
Dispute Settlement Panel is a body
established by the WTO to resolve trade
disputes between member countries. It
consists of experts who review complaints
brought by one member against another
regarding violations of WTO agreements. The
panel's decisions are binding and enforceable.
 Regional Trade Blocs: Regional trade blocs
are groups of countries in a specific
geographic region that form economic
agreements to promote trade and economic
cooperation among themselves. Examples
include the European Union (EU), the North
American Free Trade Agreement (NAFTA),
and the Association of Southeast Asian
Nations (ASEAN). These blocs often reduce
trade barriers and encourage trade within
their member states.

The Doha Trade

Negotiation Round
Known as the Doha Development Agenda
(DDA), is often referred to as a "development
round" because its primary focus was on
addressing the development needs and
concerns of developing countries.
The round was launched in Doha, Qatar, in
2001 as a part of the World Trade
Organization's (WTO) efforts to promote
global trade liberalization while recognizing
that the benefits of trade should be more
evenly distributed, especially to benefit less-
developed nations.
The objectives: Reducing trade barriers,
Addressing agricultural subsidies, Special and
differential treatment, Public health and
access to essential medicines.
The Doha Round had not been
successfully concluded. Nevertheless, it
remains a symbol of efforts to make trade
policies more equitable and development-
oriented.
The Doha
“Development
Round”2001
LDCs - many promises made during the Uruguay Round
went unfulfilled. – push for another round of talks
The Cancun Ministerial talks in 2003 broke down in
large part because developed countries refused to
sufficiently reduce the agricultural subsidies paid to their
farmers.

To restart trade talks, the United States offered to cut

agricultural subsidies if the EU followed suit.
However the renewal of the U.S. Farm Bill and the EU’s
decision to leave the Common Agricultural Policy (CAP)
unchanged raised questions about the commitment of the
United States and EU to agricultural reform. Both the EU
and United States face tremendous domestic political
pressure to leave agricultural protections in place to
safeguard local farmers.
Also contentious were efforts by the United States, EU,
and Japan to promote the “Washington Consensus” model
of opening up developing countries’ markets and the TRIPS
agreement, which many developing nations fear will
compromise their access to generic medicines.
 A G-20 trade group in the WTO has emerged headed
by China, India, Brazil, and South Africa that is critical of
U.S. and EU agriculture subsidies.

Many states are putting new energy into bilateral and

regional trade agreements to advance the objective of
trade promotion.

TRIPS and
International Trade

The Trade-Related Aspects on

Intellectual Property Rights (TRIPS)
has significantly impacted
international trade by establishing
global standards for protecting
intellectual property rights, including
patents, copyrights, trademarks, and
trade secrets.
 It has encouraged innovation and
facilitated trade in intellectual
property-intensive goods and
services, but it has also raised
challenges related to access to
essential medicines and technology
transfer, particularly for developing
countries.

TRIPS
Increased Trade in Intellectual Property-Intensive Goods: TRIPS has
facilitated the growth of trade in intellectual property-intensive goods and
services, such as pharmaceuticals, software, and entertainment products. It
has provided a framework for companies to protect their intellectual
property rights in international markets.

Balancing Access to Medicines: TRIPS includes provisions that allow

for flexibility in protecting public health. This is particularly important in the
context of pharmaceuticals, where TRIPS permits governments to issue
compulsory licenses to ensure access to affordable medicines, especially in
cases of public health emergencies like HIV/AIDS.

Promotion of Innovation: By providing stronger protection for

intellectual property rights, TRIPS encourages innovation and technology
transfer. This can benefit both developed and developing countries by
fostering research and development and the transfer of advanced
technologies.

Challenges for Developing Countries: TRIPS has been criticized for

potentially limiting access to essential medicines in developing countries
due to the high costs of patented pharmaceuticals. Some argue that it can
create barriers to technology transfer and hinder the development of
domestic industries in less developed nations.

Trade Disputes: TRIPS has led to trade disputes between countries,

particularly in cases where one country believes that another is not
adequately protecting its intellectual property rights or is imposing unfair
restrictions on trade.

REGIONAL TRADE
BLOCS
Intraregional trade blocs like the Asian Economic
Community ASEAN, EU, CAFTA - integrate state in
different regions of the world.

RTAs - easier to form, fewer states are involved,

hence fewer interests to reconcile.
 The US has signed more than 300 bilateral
agreements and belongs to a number of Regional
Trade Agreements (RTAs) like NAFTA and APEC.

Many economists theorize that RTAs are a

stepping-stone to global free trade, by strengthening
economic integration between the bloc’s members.

However, other economists oppose RTAs as

obstacles to world free trade, because they increase
tariffs and preferences between the bloc’s members
that become durably institutionalized.

Views on Trade
Block – Liberalist
Perspectives
Liberalist View on Trade Block
Free Trade: Liberalism emphasizes the importance of free
trade and the removal of trade barriers. From a liberalist
viewpoint, regional trade blocs can be seen as a stepping stone
toward greater global economic integration. These blocs can
help reduce tariffs and non-tariff barriers, promoting the efficient
allocation of resources and fostering economic growth.

Comparative Advantage: Liberals argue that regional trade

blocs can encourage countries to specialize in producing goods
and services in which they have a comparative advantage. This
specialization leads to increased efficiency and higher overall
welfare for member states.

Global Economic Integration: Liberals view regional trade

blocs as building blocks for a more interconnected global
economy. These blocs can serve as laboratories for trade
liberalization and can set precedents for broader trade
agreements at the global level, such as those under the World
Trade Organization (WTO).

Peace and Cooperation: Liberal theorists often contend that

increased economic interdependence through trade can
promote peace and cooperation among nations. By engaging in
economic exchanges within a regional bloc, countries may be
less inclined to resort to conflict, as it could disrupt their
economic interests.

Views on Trade Block -

Mercantilist Perspective:
Mercantilist Views on Trade Block:
 Emphasizes protectionist policies, where states aim to
maximize their trade surpluses and protect their domestic
industries.
Regional trade blocs can be used to shield domestic
industries from foreign competition and secure preferential access
to markets.
Economic Nationalism: Mercantilists prioritize national
interests and view regional trade blocs as tools for advancing their
own countries' economic power and self-sufficiency. They may
seek to use these blocs to accumulate wealth and resources at the
expense of other nations.
Trade Balances: Mercantilists are often concerned with trade
balances and view exports as a source of national strength.
Regional trade blocs can be used strategically to bolster exports
and limit imports, potentially leading to trade surpluses.
Geopolitical Influence: Mercantilists may see regional trade
blocs as a means to exert influence over neighboring countries or
regions. Economic dominance within a bloc can translate into
political leverage on issues beyond trade.
Protection of Infant Industries: Mercantilists often support
policies that protect emerging or "infant" industries from foreign
competition. Regional trade blocs can be used to shield these
industries until they become competitive on a global scale.
It's important to note that real-world trade policies and the
goals of regional trade blocs often incorporate elements from both
liberalist and mercantilist perspectives.

North-South issues
 In the 1970s, a coalition of developing nations in the
UN called the Group of 77 (1964) led the call for a new
international economic order (NIEO) with conditions more
favorable to LDC trade— including greater access for their
primary commodities into developed countries’ markets,
and a code of conduct for MNCs.

Many LDCs also view the WTO as a body whose role is

to pressure LDCs into bringing down their tariff barriers,
thereby exposing LDC infant industries to the more
competitive imports of industrialized countries.

Criticism of structural adjustment measures by

IMF/World Bank – the Washington Consensus -forced LDC
to liberalize the economy

Many structuralists point out that while trade has

generated economic growth, the benefits to developing
countries have been distributed very unevenly, promoting
greater inequality.

The most successful developing economies and nearly

industrialized country insulated themselves from the
international market during their early economic
development, which calls into question the Washington
Consensus’s demand that developing countries completely
abandon protectionist measures.
Structuralist and Neo-mercantilist
Versions of Trade and Globalization

Structuralists are critical that:

the gains from trade do not reflect a clear

understanding of the consequences of economic liberal
trade policies.

the WTO has perpetuated the exploitative relationship

of the North to the South and recommend that developing
countries insulate themselves from the Northern developed
countries.

Robert Wade - trade has raised per capita incomes in

many states, especially China and India, it has also
generated significant inequality between and especially
within the developing nations.

The vast majority of developing nations still account

for only about one-fifth of the world’s trade in
manufactured goods. Some 40 percent of those exports
came from emerging economies (especially the Asian
Tigers) in the last quarter-century. Many African and Latin
America states suffer chronic trade deficits and have large
international debt.
Globalization

The recent financial crisis -

contributed to increased LDC deficits and
increased dependency on external
financing of the debt of poorer states in
particular Likewise, demands for trade
protection have increased in most
developing nations as they have in
developed states.

Countries that are highly trade-reliant

commodities are more likely to be
affected by volatility in the prices of
exports and imports due to protectionist
measures and changes in global
[Link], rubber, rice

Trade liberalization and globalization

have served the interests of the U.S.
agricultural “dumping lobby” and a “small
elite of Asian agro-exporters

Structuralist and Neo-mercantilist

Versions of Trade and Globalization

Dani Rodrik (a supporter of managed

globalization)

Many of the world’s faster growing

economies, such as China, Vietnam, and
Malaysia, insulated themselves from the
international economy during the recent Asian
crisis and now in response to the global
financial crisis (see Chapter 8).

In the past, high-tariff countries grew faster

than those without tariffs. The developed states
want to take away protection from the
developing nations.
 Rodrik, Chang and Bello - protection serves
a variety of “socially worthy objectives such as
promoting food security for society’s low
income people, protecting small farmers and
biodiversity, guaranteeing food security, and
promoting rural social development

Critics of Globalization and Outsourcing

In the 1990s, a growing number of NGOs, many

with structuralist views and closely connected to the
anti-globalization movement, have focused
attention on the connection between trade and
issues such as the environment, global labor
conditions, drugs, and even terrorism.

Polls in the United States indicate that support

for free trade has gradually decreased without a
consensus about its benefit to the U.S. economy.
Outsourcing and the loss of jobs by middle-age
people have contributed the most to this trend.

Why outsourcing?
Outsourcing was more efficient than paying high
wages for labor in the industrialized nations, which
would result in cheaper goods and services for
consumers in developed and developing nations.

Many realists and mercantilists question the

benefit of outsourcing to the United States and
other nations, as well as the risk of losing some of
the intellectual property.
A new development (Trump’s America First) is
insourcing or the return of corporations to their
home countries.

CONCLUSION: THE INTERNATIONAL PRODUCTION

AND TRADE STRUCTURE IN REPOSE

Many economic liberals applaud the

GATT and WTO for further opening up
the international production and trade
system.
 But, a number of counter trends co-
exist with this objective, especially in
developing nations which are
increasingly more critical.

Difficulties in multilateral
negotiations reflect tensions between
the North and the South but also the
developing nations argument that
trade regulations reflect predominantly
the interests of the Northern
industrialized nations.

CONCLUSION: THE INTERNATIONAL

PRODUCTION AND TRADE STRUCTURE IN
REPOSE

Developing countries now have increasing influence in

multilateral negotiations, based on their importance to
developed states as markets and sources of labor for TNCs.
 Anti-globalization groups and NGOs have challenged the
assumed benefits of free trade and other policies associated with
globalization.

Many RTAs simultaneously support both economic liberal

and mercantilist trade policies.

The liberal trade structure appears to be giving way to a

managed trade system that mixes liberal, mercantilist, and
structuralist practices.

Paradoxically, globalization has been undermined by

economic forces and policies that have generated more demand
for protection in the developed and developing nations. Ex. the
US

Without more reforms, the current system could easily

return to one of strong demand for more trade protection.

Do you agree with the above prediction?

• International Political Economy – POL 343
• Dr. Ornanong Husna Benbourenane
• Professor of Practice, CHSS
• Chapter 10. The Knowledge and
Technology Structure
• An Overview: The Knowledge and Technology
Structure
• States and markets are linked by relationships
involving knowledge, ideas, and technology.
• Who has access to knowledge and technology, and on
what terms, are questions of growing importance in
the study of IPE today.
• This chapter examines in some detail several issues
surrounding intellectual property rights (IPRs), which
indicate that more and more, knowledge and
technology represent the ability to “do things” that
dramatically affect the balance of power between and
among actors in the finance, production, and security
spheres of life.
• Knowledge is power, it is said, but who has this power,
and how will it be used?
• Overview:
• In today’s world, wealth and power often flow from
access to and control of knowledge and technology.
This chapter examines the creation and diffusion of
knowledge and technology. Who controls these
processes, and how?
• What is the knowledge structure? Who are the main
actors in it? What is the nature of technological
innovation? We first look at the political economy of
information. We then consider the notion of dynamic
comparative advantage—the idea that countries can
create comparative advantage given sufficient access
to knowledge and technology. We examine how
developed countries foster innovation through various
policies affecting technology, research, and skilled
workers. We also explain how aspiring states try to
close the knowledge gap with developed countries,
often by moving up the “value chain” to capture more
profit in the global economy.
• Discuss four types of intellectual property rights
(copyrights, patents, trademarks, and geographic
indications) and their role in controlling access to
knowledge.
• Do these rights further the development of the world
market, thereby enhancing the benefits of
specialization and trade?
• Do these rights provide a basis for national
advantage in nations’ struggle for wealth and power?
• Or do these rights limit technology transfer to
developing countries, thereby deepening their
dependency?
• Overview
• The efforts of the United States and Europe to control
the flow of technology beyond their borders using
trade laws and the WTO.
• These efforts include enhancing the international
protection of intellectual property rights (IPRS).
• Efforts to harmonize the treatment of intellectual
property rights across national boundaries and
conflicts between developed and developing
countries regarding this process are also considered.
 • The chapter analyzes different perspectives on IPRS
among economic liberals, mercantilists, and
structuralists. It also contrasts views on IPRs among
constructivists, “balancers,” and “abolitionists.”
•
• INTRODUCTION
Four important trends regarding knowledge and technology
have emerged in the past twenty years.
1. Wealth and power increasingly depend upon knowledge and
technology, shaping the future of competition, freedom, and
security.
2. The pace of technological change has increased.
3. Knowledge is harder for any one country to control or
monopolize.
4. There are growing struggles between owners and users of
intellectual property.
• THE INTERNATIONAL KNOWLEDGE STRUCTURE:
ACTORS AND RULES
• The international knowledge structure is the set of
relationships that govern access to knowledge and
technology worldwide.
• The knowledge structure impacts trade, security, and
finance because each IPE structure is increasingly
influenced by or dependent upon technological
factors.
• The rules affecting knowledge include:
• national laws
• international agreements
• business practices
• shared norms.
• Main actors affecting the knowledge structure include
individuals, companies, states, and international
organizations.
• THE IPE OF INFORMATION, INNOVATION, AND TECHNOLOGY
ADVANCEMENT
Information: A Double-Edged Sword
• The proliferation of social media has opened up new
forms of national and cross-border communication
• Regimes have fought back through control and
information suppression using technological
advances.
• Democratic and authoritarian regimes also use
technology to collect and manipulate information.
• The digital revolution also allows private corporations
to gather unprecedented amounts of consumer
information that can be used contrary to the public
interest.
• New information technologies allow international
organizations (IOs) to monitor states’ compliance with
their international obligations to protect the
environment, public health, and human rights more
easily.
• Control of information has important implications for
the protection of commercial interests overseas.
• BOX: Wikileaks
• Wikileaks documents give an unvarnished, behind-
the-scenes look at the conduct of war, diplomacy, and
foreign policy.
• The WikiLeaks saga has demonstrated the ability of a
small group of cyber activists and whistleblowers to
use digital technology to easily spread unprecedented
amounts of sensitive information that threaten a
country’s national security, undermine a TNC’s
reputation, or potentially endanger the lives of
individuals.
• Government Innovation Policies in
Developed Countries
• Technological growth is a key determinant of
economic growth.
• States have a large role in fostering and controlling
research and development.
• States foster innovation and knowledge-intensive
industries through public spending and subsidies,
regulation, controls on technology exports, and
intellectual property rights enforcement.
• The United States and the European Union have
aggressively tried to build knowledge-based,
competitive economies.
•
Knowledge is a double-edged sword:
• states want to gain by spreading it and its products
but also prevent rivals from gaining too many
advantages, especially with military and high-tech
knowledge.
• Geopolitical and economic changes since 1990 have
weakened the West’s technological oligopoly.
•
• Closing the Knowledge and Technology Gap
• High-tech (knowledge) industries are termed
“Schumpeterian” to indicate that only firms with
monopoly power have the incentive and ability to
invest in risky, expensive, and long-term research.
• Product innovation involves the creation of new goods
and services. Process innovation involves the
development of more efficient ways to produce
existing items.
• The product life cycle and global value chains
illustrate how innovations arise, spread, and
eventually are transferred abroad. The production
structure is strongly impacted by the changing trade
patterns that result.
• Japan, Taiwan, and Korea set the example for how to
move up the value chain to capture more profit.
• Struggles over Education and Skilled Workers
• Innovative societies need well-educated, skilled
professionals who can create innovative businesses
and generate valuable intellectual property.
• The United States has harnessed foreign knowledge
by attracting able students to its higher education
institutions.
• A changing global economy forces the United States
to compete with India, China, and others more than
ever for the best foreign students and skilled workers.
• U.S. ethnic scientific communities are important to
the innovation and commercialization of products in
high-tech and professional fields.
• THE IPE OF INTELLECTUAL PROPERTY RIGHTS
(IPRS)
• The Trade-Related Aspects of Intellectual Property Rights
(TRIPS) agreement of the WTO requires countries to provide a
minimum level of IPR protection and enforcement.
• IPRs are government-granted rights, often for a limited amount
of time, to control the use of an invention, a creative output, or
the name of a product or company.
•
• A government issues patents and confers the exclusive right to
make, use, or sell an invention for a period usually of twenty
years (counted from the filing date).
• Copyrights generally allow the owner to prevent the
unauthorized reproduction, distribution, and sale of original
work.
• Trademarks are signs or symbols (including logos and names)
registered by a manufacturer or merchant to identify goods and
services.
• The Politics of IPRs in Developed Countries
• Firms have played a major role in elevating the protection of IPRs
to a major foreign policy issue, especially a network of
individuals and companies mostly in the software, video, music,
agricultural chemicals, and pharmaceutical industries.
• IPR issues have been important in the GATT Uruguay Round
negotiations, the TRIPs agreement, and WIPO (World
Intellectual Property Organization)
• Under U.S. trade law, the government can act unilaterally against
countries that fail to protect IPRs adequately.
• There has been a concerted effort among developed nations to
reach agreements to “harmonize” IPR laws across national
boundaries.
• Geographical Indications (GIs) have emerged as a new bone of
contention between the Old World and the New World. Europe
especially wants strong GI protections.
• North–South Conflicts over Intellectual
Property Rights
• Many LDCs disagree with current practices regarding trade-
related IPRs. They argue that current TRIP provisions strengthen
the monopoly power of large firms.
•
Copyright abuses are another important North–South issue.
• Developing countries have vocalized an alternative
understanding of the goal of IPRs as a promotion of
development. Along with many development agencies and
NGOs, they assert that TRIPS provisions that hamper
development should be resisted and that new development-
enhancing policies should be incorporated into IP laws.
• Debates over Patented Medicines
• Some of the most successful efforts to challenge the
TRIPS agreement have been in compulsory licensing
and access to medicines.
• There is hope that a combination of more generics,
more compulsory licensing, more voluntary
cooperation by Big Pharma, more foreign funding, and
more flexibility in IPR laws can make essential
medicines more accessible throughout the world.
• Box: Patient Rights versus Patent Rights
• Many South African AIDS victims cannot afford high-
priced patented drugs.
• South African laws permit access to cheaper AIDS
drugs.
• US pharmaceutical firms threatened legal action
against South Africa.
• The WTO resolved that poor countries can import
generic versions of patented medicines from countries
like India and Brazil.
• Struggles over Traditional Knowledge
• An IPR struggle between South and North is over
Traditional Knowledge (TK), which is the accumulated
knowledge and practices of indigenous or local
communities relating to such things as plants, plant
uses, agriculture, land use, folklore, and spiritual
matters.
• Just as developing countries seek to valorize their
control over biodiversity and medicinal plant uses,
many countries are also trying to protect TK from
appropriation and misuse by non-indigenous groups.
• Question: Yoga practices and IPR
• Perspectives on Intellectual Property Rights
• Liberals view strictly enforced IPRs as necessary to create a
mutually beneficial market for intellectual property, thus
encouraging firms to invest in innovations that give people
access to new products.
• Mercantilists view IPRs as a way to try to gain an advantage for
domestic firms over foreign competitors and sometimes as a way
to limit the spread of military-based technology that can be
important to national defense.
• Structuralists view IPRs as another means of exploiting the
periphery by the core. Strictly enforced IPRs produce
underdevelopment and dependency.
• Alternative Perspectives on Intellectual
Property Rights
• There are complex and overlapping points of view on IPRs from the
constructivists, “balancers,” and “abolitionists.”
• Constructivists trace over time how we define IPRs and talk about them; by
so doing, we better understand whose interests in society are being served
by this discourse.
• “Balancers” want to strike an appropriate balance between individual,
communal, and national rights. Balancers want to prevent IPR holders from
stifling competition, misusing monopoly rights, or excessively suing
individuals or companies for alleged infringement.
• “Abolitionists” want to see the elimination or radical reduction of IPRs.
• CONCLUSION
• There is greater recognition by some economic liberals that too many IPRs
can have negative consequences for competition, innovation, and a vibrant
public domain.
• Key questions concerning the knowledge structure include:
• How will the forces of globalization affect the creation,
control, and dissemination of knowledge?
• Will stricter enforcement of IPRs enhance or hinder
development among the world’s poorest nations?
• Will competition among nations for innovation lead to
conflict?
• Key Terms:
• Intellectual property rights (IPRs)
• Research and development (R&D)
• Schumpeterian industries
• Global value chains
• Trade-Related Aspects of Intellectual Property Rights
(TRIPS)
• Patents
• Copyrights
• Trademarks
• Geographical indications (GIs)
• Publicity rights
• Claw back
• Compulsory license
• Traditional Knowledge