Global Political Economy: Key Periods and Development Models

Posted on Mar 11, 2025 in Economy

Rise and Fall of Liberalism

  • International trade
  • The gold standard
  • Technological and industrial advances
  • Emergence of USA after British hegemony

Setbacks to Liberalism

  • The effect of WWI and WWII
  • The Big Crash (1929): 1st crisis

Growth and Expansion

  • Keynesianism and expansion of EU, USA, and Japan
  • Bretton Woods international monetary system: Fixed exchange rates with dollar-gold standard
  • Trade expansion (GATT)

Crisis and Neo-Liberalism

  • Oil crisis (2nd)
  • External Debt crisis
  • Neo-liberalism: solution to ‘Stagflation’ and driving force for global capitalism

The Third Major Crisis

  • Financial and economic crisis
  • Banking bailouts and adjustment policies in advanced economies

Cold War (1945-1989)

US-Led Western Political Economy

  • New international economic system (Bretton-Woods)
  • Change in economic policies (New Deal/Welfare State):
    • State companies in strategic sectors
    • State intervention for full employment
    • Increasing power for trade unions (Labour rights)
    • Progressive taxation system and redistributive transfers
    • Universal public services
  • 70/80s: Profitability + Oil Crisis: Stagflation

Communist Political Economy

  • Eastern Europe (USSR+) + Third World Economies (China+)
  • Private property abolition + Resources allocation through planning
  • One-party states (authoritarian)
  • Early industrial technology advance, But inability of intense application
  • Collectivization and industrialization of rural economy, But “price scissors” (agricultural vs industrial prices)
  • Success in heavy industry and public goods, But inability to develop consumer goods industry
  • Progress in literacy, healthcare and gender equality, but destructive economic distortions
  • 80/90s: Econ. reform (China+) vs. Political collapse (USSR+)

Southern Political Economy

  • Decolonization: Struggle for economic development
  • Japan: Success in economy rebuilding + Intense tech. innovation
  • Asian Tigers (South Korea, Hong Kong, Taiwan, and Singapore): High growth, industrialization, and population education
  • Oil Producers: Increasing influence and financial power
  • Latin America: Import substitution industrialization, but still specialized in the exploitation of natural resources
  • Sub-Saharan Africa: Single crop farming and worsening of trade terms
  • 80/90s: Increasing interest rate + External Debt Crisis + Adjustment policies

Post-Cold War Era (1990-2020?)

  • Competition between differing models of capitalism:
    • Anglo-American: Stock markets funding + Minimal Welfare State
    • Continental European: Banking funding + Extensive Welfare State
    • Asian model: Gov.-Industry-Finance ties + WS in key corporations
  • From welfare to competition in the North: Change in state’s role from providing welfare to “Competition state”. Goals: Low inflation + Investment attraction
  • Liberal and authoritarian competition in the South: From a national develop. project . Goal: Fitting into global econ. External openness (trade+FDI) + Internal liberalization
  • The rise of offshore: Tax havens + Export Processing and Free trade zones

The Human Development Index (HDI)

The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable, and having a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions. The scores for the three HDI dimension indices are then aggregated into a composite index using geometric mean. The HDI simplifies and captures only part of what human development entails. It does not reflect on inequalities, poverty, human security, empowerment, etc. The Human Development Report offers the other composite indices as broader proxy on some of the key issues of human development, inequality, gender disparity, and poverty.

Structural Adjustment Programs (SAPs)

Measures

  • Fiscal adjustment: taxes increase + public expenditure cuts
  • Public companies and services privatizations
  • Financial liberalization: (external) capital controls removal and foreign direct investment attraction
  • Internal and external trade liberalization: price controls removal and tariffs reduction
  • Labour market deregulation: dismissal easing, temporary contracts expansion, reduction of minimum wages, weakening of collective bargaining

Consequences

  • Slow growth recovery
  • Inability to pay back the external debt
  • Enlargement of external financial vulnerability
  • Lower productive investment
  • Maintenance of primary exports pattern
  • Increasing external trade dependence
  • Employment creation in informal labour markets
  • Rising of inequality and poverty figures