Page 115 - Global Political Economy_Understanding The International Economic Order

CHA PTER F OUR
and by the 1930s Britain had retreated to a system of imperial prefer-
ences applied to the colonial empire and Commonwealth members.
As early as the mid-1970s, American political leaders, business inter-
ests, and scholars expressed strong concerns over the relative decline
and deindustrialization of the American economy caused by foreign
competition, principally from the Japanese. Such worries produced
the New Protectionism. As formal tariffs were reduced through trade
negotiations, the United States erected such nontariff barriers as those
embedded in the Multi-Fiber Agreement (1973), in which many
nations were assigned quotas; the United States also imposed “volun-
tary” export restraints on Japanese products. Responding to the bal-
looning American trade deficit, intensifying fears of deindustrializa-
tion, and rising protectionist pressures, the Reagan Administration in
the mid-1980s significantly modified America’s commitment to multi-
lateralism. It began to pursue a multitrack trade policy that has not
only deemphasized multilateral negotiations but also increased unilat-
eralism and bilateralism (especially “managed trade” with Japan)
along with economic regionalism through the North American Free
Trade Agreement with Canada and Mexico.

Conclusion

Although the science of economics is a necessary foundation for com-
prehension of international political economy, this book focuses at-
tention on the interaction of markets and political actors. Economics
alone is an inaccurate and insufficient tool for analysis of such vital
issues as the international distribution of wealth and economic activi-
ties, the effects of the world economy on national interests, and the
effectiveness of international regimes. This writer rejects the popular
idea that universal economic laws and powerful economic forces now
rule the global economy. Despite increasing economic globalization
and integration among national economies, it is still necessary to dis-
tinguish between national and international economies. Political
boundaries do and will divide the economies and economic policies
of one nation from those of another; political considerations also sig-
nificantly influence and distinguish economic activities in one country
from the next. States, and other powerful actors as well, use their
power to influence economic activities to maximize their own eco-
nomic and political interests.

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