Cooperation or Hegemony
There is a close relationship between economics and politics. Their policies and practices affect each other in the global business perspectives. The study of International Political Economy (IPE) helps understand the issues, forces, and challenges facing the international businesses. For example, IPE helps understand why some governments are using tariffs to protect their domestic markets. On the other hand, a wider focus on IPE takes the assumption that the economic and political policies of states are determined by the governing political elite. This means that the pressures of the country that occupies a dominant position play a significant role in creating systems of political economy. On this note, there are arguments that without the domination of the United States within the international political economy, there cannot be a stable international trade regime. However, this paper aims at supporting the argument that it is the cooperation and not domination by a single country that creates stability in trade regimes.
The activities of trade on the international scale are supposed to be free in order to ensure a fair competition and economic parity in all countries. This means that all countries involved in this trade should cooperate with each other in efforts to benefit from the growth in the global economies. However, this has not always been the case. The United States has taken a center stage in influencing the directions, in which the international trade will follow (Lake & Frieden 25). For one, in the United States, the businesses frameworks are more structured and sophiscated than in other countries. As a result, the US holds more power to pass, eliminate or delay any trade agreements that may affect its position in the international trade. On the other hand, due to such domination, less developed countries are at a disadvantaged position (Ravenhill 15). For instance, with the influencing power of the United States, there is the tendency to impose trade barriers on third world countries as a means of shutting them out from making significant profit margins. Such domination undermines the objectives of the free trade. Therefore, cooperation of countries rather than the domination by a single country is recommendable. In this way, some countries will not be affected adversely due to issues such a severe financial strains, currency fluctuations, and the imposed trade barriers (Ravenhill 18).
International trade regimes play a significant role in enhancing the creation of global villages. It has enhanced the utilization of market activities that are crucial in improving the living standards in a particular country. For instance, due to globalization, many companies can now show a far improved performance, with reduction in the overhead costs (Lake & Frieden 28). In addition, global-minded entrepreneurs are investing in the attractive opportunities available in the less developed countries. Therefore, it means that the position of each country in global businesses should be strong. However, when the international trade is dominated by a single country, the economic stability in other countries may be jeopardized (Ravenhill 33). For instance, there are concerns that the status of the US may influence other countries to adapt to some of their strategies that may not be economically viable. In most cases, the less-developed countries are forced to adopt the undesirable strategies thereby undermining their opportunity to negotiate fairly in international political economy. The non-major countries will have power to initiate or block formal ideas that will protect their interest. As such, cooperation will reduce the risk of undue pressures in making agreements with the dominant trading partner (Ravenhill 49).
On a further note, the United States has been taking a lead position in efforts to eliminate political unrest and instability in countries with economic resources. The American government brings forth the idea that it aims at helping such countries to become stable both economically and politically (Lake & Frieden 45). However, the truth of the matter is that there is a hidden agenda to establish control over that country. In this way, the US undermines the self-sufficiency of that country to negotiate in the international political economy. On the contrary, if all countries cooperated, it means that more countries would be involved in helping the unstable nation to manage its resources (Ravenhill 76). The affected country will be equipped with the ability to formulate and implement its strategies, which would enhance the active participation in international trade regimes. Secondly, it will reduce the chances for the United States to impose trade restrictions and policies on this nation. For instance, this country may not be forced to adopt the employment standards that are practiced in America (Ravenhill 82).
There is a major concern among many governments and economics about the position the United States occupies in the international political economy. There are skepticisms that the US is influencing the balance of power and interests in the domestic markets. In particular, due to its leading position in the international trade, the US has a higher number of investors in foreign countries (Lake & Frieden 67). Although foreign investors play a significant role in enhancing the economic growth, the economists are concerned that this is a disguised foreign aid. It has created dependence of the domestic market on the US to promote the economic development. On the contrary, when there is cooperation between countries, each of them enjoys diversity in maximizing their benefits in global business environments (Ravenhill 103). Fundamentally, all countries will have the opportunity for trade negotiations as an effective way to coordinate policies at the international level. As a result, there will be a long-term commitment of each country, without the fear of facing restrictions that are usually imposed by the American government. Secondly, with effective cooperation, even the small countries will be able to benefit from the international trade regimes. In the essence, the success of the first world nations in international markets also depends on the participation of less developed ones. Therefore, there is the need for countries to cooperate in order to achieve common interests, without the influence from the dominating country (Ravenhill 131).
The formation of trade regimes is important in helping countries achieve their interests. This depicts a notion that international trade should be beneficial to every country that is involved. However, the domination of a single country makes it possible for that nation to get more benefits than others. It is a method of ensuring that there is no way that all costs and benefits will be shared equally (Ravenhill 138). For example, imposing tariffs on some countries is a way to reduce their participation in international flows. It is also applied to reduce the competitive advantage of a specific country thereby reducing its legitimacy in global business activities. On the contrary, when countries are provided with the opportunity to cooperate with each other, it becomes easier to identify clear benefits and costs, and attempt to balance them effectively. Consequently, there will be no chance for having a dominant party that will create policies that will be challenged by other members (Ravenhill 154).
International trade regimes that are based on non-protectionist actions are important in enhancing the political and economic status throughout the world. This is particularly so with international trade influences activities such as employment and the fight against poverty (Ravenhill 162). It serves as a measure to respond to major economic problems meaning that trade is paradoxical in bringing countries together for their mutual benefit. However, these objectives cannot be achieved when there is a single country taking a dominant position in influencing the trading activities. In this case, the international trade will be doing little to encourage sustainable development, especially in the developing countries (Ravenhill 169). For instance, being the dominant player, the United States may require that commodities used in trade should be environmentally friendly. This will require countries to invest in green technologies to reduce carbon emissions. In addition, due to the fact that only few countries have the scientific and financial means to develop such technologies, the participation of poor countries will be hindered significantly (Ravenhill 187). However, when countries are cooperating, it becomes easier to challenge and change the influential power of the dominant country. It also provides the poor countries with the opportunity to trade with the commodities that are more readily available to enhance sustainable economic growth.
Although the emergence of other large economies is threatening the dominance of the US in international political economy, its position is still influential (Lake & Frieden 85). This means that in case of negative forces in its domestic market, the effects are likely to be spilled over to other countries, with direct trading ties with the US. For instance, the US dollar remains the dominant unit for clearing payments in the international markets. Therefore, any instability in the dollar will affect the exchange rates in many economic processes (Lake & Frieden 98). On the other hand, when the international economies are driven by the objectives of cooperation, it becomes necessary to make changes on the financial flow. Projects and programs will be designed to reduce the over-reliance on the dollar as the medium for clearing payments internationally (Ravenhill 210).
On the other hand, it is the cooperation and not domination by a single country that creates stability in trade regimes. For one, the economic policies of individual countries and the relations to international economy are crucial in supporting external economic environment (Ravenhill 273). Therefore, it can be frustrating to have a dominant player such as the US to determine the nature of trading activities. The influential power of the United States creates uncertainties, especially for third world countries that are faced with financial inadequacies. Most importantly, the governments in these countries will gain entry into international trade in compliance with the terms of trade as set by the US (Ravenhill 275). For instance, these countries should agree to accept trade restrictions for failure to comply with these terms. On a wider scope, the domination of a single country may hinder the progress towards achieving a sustainable development. On the contrary, a cooperative mechanism in the international economy is supportive in achieving developmental goals and enhancing mutually beneficial trade relations among different countries (Ravenhill 278).
In conclusion, the domination of a single country such as the US in the international political economy has many undesirable effects in maintaining stability in trade regimes. The position occupied by the United States enhances its power in influencing economic strategies in other countries. It also used a method of reducing the direct participation and competitive advantage of a particular country. Usually, such goals are achieved through imposing trade restrictions and tariffs. On the other hand, in case of cooperation of all members involved in the trading activities, it becomes easier to enhance the economic development. A cooperative international trade is important in supporting financial decisions that are effective in boosting sustainable economic growth, particularly in the developing country. Therefore, as more countries are increasing their direct participation in the international political economy, it is recommendable for the United States to stop determining the course to be followed in international environments.