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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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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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What is Stagflation and Hyperinflation?

 In simple terms, inflation is a measure of general increase in prices across the economy. Usually denoted in percentage (%), inflation keep fluctuating over the time. Contrary to common perception, a mild inflation is quite necessary for the growth of an economy. However, beyond a certain limit, the higher inflation rate could lead to hyper-inflation or stagflation. Inflation is a quantitative measure of the rate at which the average prices of a basket of goods and services in an economy.   What is Hyperinflation? When inflation rate keep rising at a faster rate, a period of hyperinflation can occur. Usually, when inflation rate keep rising at more than 50% continuously for months, the economy can grip under a period of hyperinflation.  For example, the German inflation rate reached 30000% per month during 1920s and people started to use currency notes as a fuel in winters.  What is Stagflation? When an economy starts to stagnate but a higher inflation persists...
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