Key Terms
International political economy (IPE)
The study of how political processes and public policies shape economic outcomes — domestically and internationally. It
Political factors
The domestic and international forces that drive policy decisions. Can be electoral systems, globalization pressure, tra
Environmental regulations
Taxes, tariffs, quotas, subsidies, and rules governments use to promote environmental protection.
Constituents
The voters a politician serves — and whose support they need to keep power.
Context
End of WWII. US had a massive trade surplus.
Mercantilism
The dominant economic system of the absolutist era. Wealth = gold and silver.
Zero-sum game
Because wealth (gold/silver) was finite, one country gaining meant another losing. This justified aggressive expansion a
Protectionist policies
Trade barriers (tariffs, subsidies, import quotas) used to maintain a trade surplus and accumulate capital. Protectionis
Balance of trade
The difference between the value of exports and imports. Mercantilists wanted a surplus — always.
Enlightenment shift
Three ideas broke absolutism open:
Wealth redefined
Enlightenment thinkers rejected the idea that wealth is finite. Wealth = what the market values.
Laissez-faire
Free market; government doesn't intervene. Marshall Plan: $26 billion in US aid to Europe and Japan, 1946-1949.
Comparative advantage
Countries should produce what they're best at, then trade. Everyone gets better products at lower costs.
State
Countries should specialize in what they do best (comparative advantage). 3.
Liberalism
The dominant economic practice today. Rooted in Smith's work.