Neomercantilism

Neomercantilism

1. The strength of neomercantilism is that it is a doctrine that advocates for exports, discourages imports, and regulates movement of capital. Enabling a state to maintain a positive balance of trade and expanding exports. Economic benefits are achieved depending on the decisions and policies of the most powerful state. Mainstream scholars argue hegemonic theory can be used to explain distribution of power whereby a powerful state controls lesser states. For example, the U.S. government promoted economic development through government intervention, industrialization, and protections. Thus, neomercantilism encourages states to embrace hegemon knowing that when there is a hegemonic leader they can get help to create and maintain an open and stable monetary, and trade policies.

One of the weakness of neomercantilism is that a state may face a security dilemma if it does not cooperate with other states to yield relative gains (p.67). This means that a state can drag its feet on implementing effective economic policies while trying to bring on board economic views brought by other states. The focus on variable-sum game in which a group of states may gain or lose together has brought concerns in international relations as some states feel that rules shaped by powerful states may not suit the interests of other smaller states. Hence, neomercantilism can become ineffective incase most powerful states shape rules that do not merge with interests of smaller states.

2. Orthodox liberals have put limited attention to the North South trade relations because they believe that international economic relations are a positive sum game, and that interdependence will bring benefits to the states. However that has not happened because government involvement has brought barriers that contributed to the occurrence of the great depression. The authors explain that orthodox liberals believe that if LDCs are provided with efficient, market oriented policies then there is higher likelihood of achieving economic growth. The further explain LDCs cannot prosper working alone but they need support from the North to accomplish

In this regard the South and North can work together if only the North can implement legislations that would take into consideration the special needs of the South, and also being ready to implement any changes that would promote trade. For example, after World War II the United States being a hegemony played a critical role to establish liberal economic regimes that advocated for more transfer of power from the North to the South. Also, in the past the South exported raw materials in exchanged for finished goods from North creating a dependency theory. In this regard orthodox view North-South relations being exploitative is not an appropriate approach to explore in the long run.

3.According to the neomercantilists they view the international system as “anarchic” since there is no dominant authority over the state. The state has powers to solve issues such as economic, conflict, and war. Also, each state has an interest to look after its own national issues. In contrast both individuals and societal groups view the state as an appropriate object for addressing their needs. Additionally, liberals believe that political means can enable individuals and groups to achieve goals they have set.

A. According to neomercantilist, international economic relations see each state putting more focus on relative gains. In political context the relative gains enables a state to acquire relative power known as the hegemony. On the other hand, liberals view international economic relations as a variable sum game, in which people can gain or lose together.

B. For neomercantilist perspective, distribution of political power has effects on international economic relations. They also give priority to politics over economics and argue the economy is created by the state. In contrast, liberals view the economy being dependent on the state to prosper. They argue the state should play an active role to promote trade, and investment.

C. According to neomercantilist globalization is caused by states opening their markets to encourage trading activities so that they can improve their positions. Whereas liberals argue globalization was caused by interdependence among states. Liberals see globalization is putting pressure on states to implement a single model of capitalism whereas some neomercantilist see globalization brings some constraining effects on the states.