Introducing International Political Economy

This article discusses the current crisis in the World Trade Organization and the causes of economic cooperation. It covers the implementation of rules proposed by the WTO, ups and downs of the process of trade liberalization, and the pros and cons of economic cooperation. The article also highlights the relationship between economic cooperation and peace and the role of the International Monetary Fund in fostering economic cooperation and dialogue between nations.

Running head: INTRODUCING INTERNATIONAL POLITICAL ECONOMY
Introducing international political economy
Name of the Student
Name of the University
Author Note

1Inroduction of intenational political economy
What is the principle cause of the current crisis in the World Trade
Organization?
WTO stands for World Trade Organization. It is a global organization which deals with
the manner in which trading activities should be carried out between nations. The main aim of
this is organization is to provide benefits to the producers of services, importers and exporters to
manage their business. (Altbach, 2015). WTO establishes the international rules of trade with
nations. Its general duties include overseeing global trade rules between nations, fuelling the
process of globalization and its primary concern is to provide open lines of communication for
trade between its members. The current financial crises prevailing around the world is of prime
concern for the WTO. The world encircles itself around WTO. Without it, the base of the trade
system would have fallen apart. Factors like globalization, international trade, international
finance, finance crises, microeconomics, macroeconomics, development economics, global
markets, political risks, all stand on the base structure of WTO (Dutt et al., 2013).
Crisis being faced by the WTO
At present the World Trade Organization is facing a great threat, the greatest possible
threat in its twenty three years of existence. As claimed by America’s President, Donald Trump
WTO cannot deal with the issues created by China’s sudden economic growth and China is to
some extent challenging the rules and regulations that govern the World Trade Organization.
Probably, this can turn out to be one of the biggest problems that the World Trade Organization
is facing today. China since the last decade has been a country which is fast progressing be it
concerning population, technologies, and literacy or be it trade (Lu & Yu, 2015). It is the success
of the country China that is detrimentally affecting the World Trade Organization. The World

2Inroduction of intenational political economy
Trade Organization is in essence, a negotiating forum. It’s the place that governments of nation
go to in order to solve their trade problems and work for the betterment of the world by settling
their disputes. WTO’s current work has included negotiations during the Uruguay Round, and
then GATT (General Agreement on Tariffs and Trade) (Cooper, 2014). Moreover, in recent
times it has hosted the negotiations of “Doha Development Agenda”.
Implementation of the rules being proposed by the WTO
In total the WTO is a set of rules. The system’s overriding agenda has been to let the
trade system flow as smoothly as possible so long as it does not suffer from any adverse impact.
The agreements that violate WTO norms are sorted out with interpretation (Constantinescu et al.,
2015). The crises of the organization arises with the successive problems in the fields of a huge
range of activities such as sanitation, food, textiles, banking, clothing, government purchases,
product safety, and telecommunications among others. These form the foundation of the
multilateral trade system. WTO members are compelled to adhere to commitments made by
them if they intend on being allowed to engage in the continued exchange of goods as well as
services on a global level (Wrobel, 2013). Nations can make changes to unalterable policies only
by negotiating with other partner nations. Bindings can be changed by a country only when it
negotiates with its partner nations. Liberal trade policies provide the unrestricted flow of goods
and services which automatically increases competition, motivates innovates and breeds success.
Despite the many advantages and disadvantages of liberalization as the critical feature of modern
society, the current crisis has led to the nations all around the world to come forward and
implement protectionist measures, strengthening in turn, their regional ties more and more. The
noticeable effects of the crisis in the World Trade Organization were visible only when there

3Inroduction of intenational political economy
were a gradual and irrational demotion and conditional demand drop. This subsequently led to
fall in the production and employment at a large scale across the world (Teichmann, 2016).
Along with the ongoing crises, the barriers which invade the smoothness of the entire
trade system include tariffs like surcharges and duties and also nom-tariffs like licensing rules
and quotas. Similarly, the implications of trade liberalizations are also visible (Hoekman &
Mattoo, 2013). According to critics trade liberalization can provide more benefits to jobs because
less cost products flood the domestic market. The proponents, however, claim that it ultimately
lowers consumer costs, increases incentive efficiency and promotes economic growth. Thus it
eventually engages in the promotion of free trade that enables countries to deals with goods sans
restrictions or any types of fixed costs (Robertson, 2018).
Ups and Downs of the Process of trade liberalization
Finally along with crises of various sorts, comes the pros and cons of trade liberalization
implications. The pros are that the increased competition creates incentive efficiency and cheaper
production by domestic firms (Irshad, 2017). This in a way can spur a country to shift resources
to industries where they have computational advantages. Likewise, with the pros, come the cons.
Here, it is the prime concern for threat or the current crises which have shaken the trading entity
nationwide. It can eventually cause developing nations to ruin their economics and market. The
remarkable incident of the North American Free Trade Agreement (NAFTA), is also a reason
behind the entire scenario (Villareal & Fergusson, 2017). Its commendable agreement eliminated
the tariffs on products which were traded in three countries. Most economists claim that it was
very beneficial yet as they say that every trading activity in this world has a good phase and a
dangerous phase. These all finally brings us to the conclusion of protecting the WTO and
working for the betterment of the nations across the world.

4Inroduction of intenational political economy
What does your diagnosis imply for how we understand the causes of
economic cooperation?
The Global Financial Crisis has had an enormous influence in the global trade flows
primarily in the WTO because of the range of disorder related to continuous and active trade
flows compared to the dynamic and controlled trade flow rate, and this crisis in the global trade
flow can be divided into two subcategories (De Hass & Van Lelyveld, 2014). The first
subcategory consists of the direct effects caused by the crisis itself. The second category
subcategory consists of the indirect effects caused by the measures taken to overcome the direct
effects (Gao, 2016). The most apparent effect of this crisis is the general loss in the overall
confidence, growth of pessimism in business and the restraint of long term and short term capital
investments. In such a situation the banks restrict the credit limit, and conditions and the
countries borrow less and very less from their multilateral alliances (Dimitriou et al., 2013).
Now coming to the causes of Economic Cooperation
The most relevant reminder is that global business and trade are interconnected with-the
political, economic, and social state of countries (Cohn, 2016). This concept has led to the
growth of trade agreements and country blocks all based on the basic principle that peace,
stability, and trade are all dependent on each other (Hoekman & Mattoo, 2013). The government
and privately owned sectors both have imbibed this thinking. Despite the crisis in various
European countries, business still see opportunity, and that is not all. Many companies in Asia
and in the USA have also ensured the advancement of the business so that the world could be
eradicated from this present situation of financial crisis (Hernandez & Kriesi, 2016). Hence the
growth of business has allowed economic cooperation to take place all around the world.

5Inroduction of intenational political economy
International Economic cooperation is essential for the strong growth of the world
economy. In the past few decades, nationalization has introduced benefits but also an element of
dependent behavior among the nations. The more interdependence there is, the more it is
necessary for international cooperation to take place among nations. Another major cause of
Economic Cooperation is peace (Hernandez & Kriesi, 2016). There is a vital relationship
between Economic Cooperation and Peace which is very much necessary for the proper
functioning of society (Deuss, 2014). Peace is the prosperity which is hugely shared- inside and
in between nations and can promote peace at large (Cooper, 2014). If peace is to prevail at all,
then economic cooperation is needed. If a nation is stable and prosperous economically, it will
lack the hunger and the desire to take on other nations of the world, it will not be at odds with
richer nations and it will not be faced with social unrest and civil disturbances, something that is
likely to happen when the economy of a country is in a state of fluctuation.. Also, if there is no
economic cooperation, then there would be no boost in employment (Cohn, 2016). The main
reason for boosting the employment rate for all the countries is that it would help to improve the
trade at large by increasing productivity and effectiveness of the role of trade especially with
regard to global trade which is very important in this terrible moment of crisis.
Economic cooperation
Economic Cooperation is very much crucial for Political Cooperation as well (Baland et
al., 2018). To maintain a peaceful environment throughout the world political cooperation among
nations is very much required which in turn, is dependent on the level of economic cooperation
among the nations. When economic cooperation takes place on a national level, it makes it
possible for a particular country to focus on reforms and measures that need to be taken at its

6Inroduction of intenational political economy
own domestic level, to benefit its people (Cecchetti & Kharroubi, 2015). A country can learn a
lot from the practices of other countries taken to attend to their economic issues and problems.
International trade is beneficial for all participating parties and generally plays a vital role in
determining a country’s GDP and economic growth (Cecchetti & Kharroubi, 2015). While the
existing trend supports that trade promotes peace, it is necessary to examine the relevance for an
intermediate political mechanism for peace by looking at trade’s influence on political action.
The ongoing economic crisis is being addressed by all the countries all over the world
(Amirbekova et al, 2017). A ruthless cycle of conflict and inactiveness is something that can
definitely be avoided when nations come together to talk about cooperation, economically and
otherwise (Hardouvelis et al., 2018). The role of the International Monetary Fund or IMF is
worth talking about in this respect. The IMF has had an active role to play in fostering economic
cooperation and dialogue between nations, and in doing so, it has done much to preserve peace
and stability in the world (Liburd & Christensen, 2013).
Conclusion
Global leaders in today’s day and age are interested in creating a new nation based on
economic and political integrity. Their strategies take on many dimensions. European leaders in
particular are undertaking the responsibility of trying and achieving economic and political
stability together. These leaders are determined to remove the stigma of war from their nations
for good and to work together in a way that would ensure lasting peace for the countries and their
people. Thus, in the current generation, economic cooperation appears to be much needed for the
overall wellbeing of society and for the world to function right. To conclude, in times of global
financial crisis, economic cooperation comes as a blessing for the world and brings along with it
peace, prosperity, political cooperation and overall durable growth of the economy at large.

7Inroduction of intenational political economy
References
Altbach, P. (2015). Higher education and the WTO: Globalization run amok. International
Higher Education, (23).
Amirbekova, A., Madiyarova, D., & Andronova, I. (2017). What are the pros and cons for
Kazakhstan of joining the WTO from an export potential point of view?. Journal of
Business and Retail Management Research, 11(3).
Baland, J. M., Bardhan, P., & Bowles, S. (Eds.). (2018). Inequality, cooperation, and
environmental sustainability. Princeton University Press.
Cecchetti, S. G., & Kharroubi, E. (2015). Why does financial sector growth crowd out real
economic growth?.
Cohn, T. H. (2016). Global political economy: Theory and practice. Routledge.
Constantinescu, C., Mattoo, A., & Ruta, M. (2015). The global trade slowdown: cyclical or
structural?. The World Bank.
Cooper, W. H. (2014). Free trade agreements: Impact on US trade and implications for US trade
policy.
De Haas, R., & Van Lelyveld, I. (2014). Multinational banks and the global financial crisis:
Weathering the perfect storm?. Journal of Money, Credit and Banking, 46(s1), 333-364.
Deuss, A. (2014). Review of stockholding policies. Tech. rep., Organization for Economic
Coopertion and Development (OECD), Paris.
Dimitriou, D., Kenourgios, D., & Simos, T. (2013). Global financial crisis and emerging stock
market contagion: A multivariate FIAPARCH–DCC approach. International Review of
Financial Analysis, 30, 46-56.

8Inroduction of intenational political economy
Dutt, P., Mihov, I., & Van Zandt, T. (2013). The effect of WTO on the extensive and the
intensive margins of trade. Journal of international Economics, 91(2), 204-219.
Gao, H. (2016). TPP, regulatory coherence and China’s Free Trade Strategy from A to Z.
In European Yearbook of International Economic Law 2016 (pp. 507-514). Springer,
Cham.
Hardouvelis, G. A., Karalas, G., Karanastasis, D., & Samartzis, P. (2018). Economic Policy
Uncertainty, Political Uncertainty and the Greek Economic Crisis.
Hernández, E., & Kriesi, H. (2016). The electoral consequences of the financial and economic
crisis in Europe. European Journal of Political Research, 55(2), 203-224.
Hoekman, B., & Mattoo, A. (2013). Liberalizing trade in services: lessons from regional and
WTO negotiations. International Negotiation, 18(1), 131-151.
Irshad, M. S. (2017). SWOT analysis of Pakistan-China free trade agreement: Pros and
Cons. International Journal of Asian Social Science, 7(1), 45-53.
Liburd, J. J., & Christensen, I. M. F. (2013). Using web 2.0 in higher tourism education. Journal
of Hospitality, Leisure, Sport & Tourism Education, 12(1), 99-108.
Lu, Y., & Yu, L. (2015). Trade liberalization and markup dispersion: evidence from China's
WTO accession. American Economic Journal: Applied Economics, 7(4), 221-
Robertson, R. (2018). Effects of regulating international trade on firms and workers. IZA World
of Labor, (439).
Teichmann, I. (2016). CGE-based methods to measure the impact of trade liberalization on
poverty (No. 100). DIW Roundup: Politik im Fokus.
Villareal, M., & Fergusson, I. F. (2017). The North American Free Trade Agreement (NAFTA).

9Inroduction of intenational political economy
Wróbel, A. (2013). Multilateralism or bilateralism: The EU trade policy in an age of the WTO
crisis. Ekonomika, 92.