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What is Mercantilist Theory of International Political Economy?

  Mercantilists slogan was "export more, import less." During the 16th and 17th centuries, states were the main players of global economies and they encouraged exports over imports to finance their huge armies. Similar to realists, mercantilists argued that economic policies should advance state power.  They believed accumulation of metals (gold and silver) was more important than trade as it increased the national wealth. So national economies that time were measured on how much gold one country had not how much trade they had. Spain's conquest of Latin American countries: Panama, West Indies, Venezuela and Peru, provided abundance of gold mines and Spaniards became extensively rich. Spain also put restriction on the colonial trades. colonies couldn't trade with other countries. Mercantilism thrived in Europe from the exploitation of colonies. Soon other European countries joined the loot of colonies in Africa, Asia and elsewhere.  Mercantilists as with realists arg...
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A short note on US Sub-Prime Lending Crisis 2007-8

 The “Great Recession” in 2008 showed the weaknesses in Western economic models. The crisis highlighted the differences in political and economic paths adopted by Western and Asian countries. It all started in late 1990s, when American real estate prices were soaring and banks provided mortgages to anyone without income guarantee until 2007 when the real estate prices fell and borrowers defaulted on their repayments. But before we analyze the crisis, it’s necessary to understand the western economic liberal policies which led to it. After decades of government intervention, the US President Ronald Reagan and the UK PM Margret Thatcher started to “roll back the state” from national economies. They demanded a return to Adam Smith’s liberal policies which were encourage individual realization and reducing the social welfare spending. The renewed belief in ‘market’ and ‘invisible hand’ led them to believe that market itself would provide welfare for all. Western Liberal Economy Lib...
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What is Dependency Theory of International Political Economy?

Wikipedia Commons   Like Wallerstein, Dependency Theory emerged in Latin America which argued that world trading system benefited only advanced capitalists' economies. Often the Terms of Trade favored these countries over the least developing countries (LDCs).  Terms of Trade = Export Prices / Import Prices LDC economies depend upon export of raw materials and agricultural commodities. And they import finished products from developed countries.  As the commodity prices rise slowly but manufactured product prices rise sharply, the terms of trade would deteriorate for LDCs unless their exports rise faster than the imports. The global trade is done mostly by corporate subsidiaries thus commodity prices are not exposed to market. These giant corporations often secure the deal with long term agreements, thus even though commodity prices might have rose but they would pay what was agreed in the agreement. They also have sophisticated accounting devices which enable them to avoi...
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