Globalization, or the economic interdependence of states, has evolved.

The realists argue that the distribution of power determines patterns and levels of globalization. A global economy needs a hegemon to manage it; globalization proceeds when a hegemon is in power, while competitive, zero-sum economics rule when a hegemon is absent.  The liberal perspective argues that globalization is driven by interrelated changes in technology (like the agricultural and industrial revolutions), increases in interdependence (which came about when market mechanisms developed), and growing institutions (such as the Bretton Woods institutions of the twentieth century).  The identity perspective, finally, looks at changes in ideas as driving globalization forward.

In this chapter, you will be introduced to some basic economic concepts that are critical for undersanding world politics.  While much of this course focuses on why states fight military conflicts with one another, to understand international politics fully we also need to understand why some states get wealthy, while others remain poor.  This chapter explains the liberal perspective’s view on why international trade can increase the general welfare of all trading states.  It also explains why from the realist perspective, it is sometimes better to engage in protectionist policies that reduce international trade, in order to preserve the relative power of your state.  You will also learn about the important role of the General Agreement on Tarriffs and Trade (GATT), and the World Trade Organization which supervises the enforcement of the GATT.