Welcome !

Hello Guys!

We are students from 02PC3 , International Relations Faculty in Bina Nusantara University. If you want to know us more just click on the squad section.

This blog is made because one of the reason is for our assignment in Introductory in Trade and International Business' subject. But, this blog also help us to express our ideas about Political Economy.

We think that writing is the main ability which us as a International Relations' student so this blog is very useful to practice our writing skill. These topics in here is based on our subject in class. We share our opinion about some issues so it will be different from each of us because it is according to our self point of view.

Enjoy reading . :D

p.s : At the end of this course we have a task to make a documentary film about a subject. And we got ACFTA, simply click on the Final Project an you'll find the journey of us in the making of the film. :3

The Bretton Woods System

Great Depression which occurred after the collapse of Wall Street in U.S. made every country suffered because of the decline in the economy, thus poor people increase and the society become broke down. This bad situation encouraged United Nations (UN) to do a thing that could bring back a welfare society. So, a conference in Bretton Woods was held in 1944 after World War II. U.S and her 44 alliances, Britain and Argentina were agreed to establish an international cooperation that could ensure a peaceful welfare world. They will provide global institutions which will regulate the free flow of the capital and to stabilize the economic in the world.

There are 3 institutions was formed. Firstly, International Monetary Fund (IMF) who will help a country to pay his debt by giving loans. IMF also regulates the monetary system. In 1971, U.S dollar became a based in the international monetary system, whereby 35 U.S. dollar equal with one ounce of gold. Although IMF was made to regulate the monetary system but each country can made their policies by themselves as long as they restrict the short-term movement of capital across borders.

Secondly, General Agreement on Tariffs and Trade (GATT) a forum which is known as World Trade Organization (WTO) nowadays who will manage the free trade among countries. GATT reduce tariff and they also promised not to treat differently among stated which is also signed the agreement. This forum discussed about the bilateral agreement and the decrement of trade barriers. GATT success made the increment of export and the production of export goods.

Lastly, International Bank for Reconstruction and Development (IBRD) or World Bank which is better known now who will help the economy reconstruction and the establishment of the infrastructure in a country. It would made foreign investor become interest to invest in other country. A foreign direct investment which is done by built factories in foreign country especially in the developing countries. Rather than trade they prefer to invest because it enlarge their market and more profitable. Unfortunately, the developed country industries which have better technology and management close local company indirectly because they could produce a cheaper and better quality product and the local market will prefer the products from the foreign firms.

Those three institutions had made a better economic in the world. But, this system also could make a threat to national security because the over-dependently could occur and made a country easier to be attacked by others. These institutions also were accused because of their regulations only fulfill the minority developed countries which is profitable for them. So, I think that a country should try to build up their economy not just borrow the money from IMF to pay his debts. But, use that money to develop his infrastructure and help protect their local company, so it could increase national income and pay the debts. It’s better than to rob Peter to pay Paul.

Source: Frieden, J. A. (2006). The Bretton Woods System in Action. In Global  Capitalism: Its Fall and Rise in the Twentieth Century (pp. 278-300). New York: W. W. Norton & Company.

Gisela Bianca - 1701306070

Could we still trade?

Adam Smith said that, because of the absolute advantage, a country trade with the other to fulfill their necessity with a cheaper cost. Suppose that Indonesia could produce twice in rice than the Thailand but Indonesia only a half times in wheat than the Thailand could produce. So, Indonesia will trade with Thailand in wheat because they spend less cost to buy the goods that has to produce it. But, what if Indonesia could produce rice and wheat with less cost than to trade with Thailand? Could trade still exist?

Yes, of course we could still trade. David Ricardo said that comparative advantage could make a trade possible between two countries although one of them is more productive of both goods.

	Rice	Wheat
Indonesia	50	40
Thailand	20	30

Imagine that Indonesia could produce more both in rice and wheat than Thailand. Based on Smith’s theory, it is impossible to do the trade. But, Ricardo argued that even if Indonesia could produce more but Indonesia will have greater advantage in rice than the wheat. Same with Thailand that she will have fewer disadvantages in producing wheat than rice.

This case made up a conclusion that the country that have an absolute advantage in both product should specialize in one of the most productive goods - in this case rice in Indonesia - and trade with the other who specialize in one of the fewest loss goods – wheat in Thailand.

Source: http://internationalecon.com/Trade/Tch40/T40-0.php

Gisela Bianca - 1701306070

Understanding Capitalism

According to Merriam Webster, the definition of capitalism is a way of organizing an economy so that the things that are used to make and transport products (such as land, oil, factories, ships, etc.) are owned by individual people and companies rather than by the government. It clearly shows us that capitalism is the opposite of marxism a.k.a communism. In the capitalism system, individual role is really important. The government doesn’t control every aspect of the state's affair, they're observing the interests of each classes and how they work, they create a stable system of law that applies to all capitalists, a national currency and customs system. 

Capitalism nowadays is the social system that is used by almost all countries in the world. There are classes in capitalism in which the majority of them have to work to earn the wage, we called it working class. They have to produce stuff and the capitalist class is going to sell them to make profit. Capitalist class is living off profit the working class made.  We can say that those two classes are exists and mutual, it’s a reflection of the society we live in nowadays.

The main interest of capitalist class is to make profit. They intend to make themselves as rich as they could, because it’s all about individual wealth. But we couldn’t mistake it as slavery because the working class is getting a proper wage and after all, capitalism makes man become virtuous, appreciates their rights as a man, and it could bring many people out of poverty.

Irena Natasya-1701299185

Credit: http://www.worldsocialism.org/articles/what_is_capitalism.php

           : http://capitalismis.com/

        

Capitalism and Crisis

Capitalism created to help companies promote the company. In addition, this system also provides the opportunity for the public to take part in the company, joined the company, and take profit from it. That opportunity can be accomplished by purchasing shares of company. Capitalism is a system of production and distribution of goods and services in return for what is paid by the consumer.

Initially, this system is running smoothly. But over time, the capitalism is the way for the rich to add his wealth. Since then the country could be used as a business instrument.

Capitalism can eventually lead to a global crisis, the existence of unstable financial and monetary. Economic development sustained by the growth of the real sector. Worse than that, this can affect a deeper crisis, which is the fall in wages and more unemployment. So in the end, lead to chaos as banks collapse, the government uses public funds to bailout banks, people lose jobs, social services budget get cut, the rising prices of food and groceries. Because of this, the capitalist system does not make the world economy safe and puts the world in a dangerous position and guard against crises that may occur anytime. 

Susi Wansaga - 1701315251

Are we really "FREE" ?

In 1945, Bung Karno said that we have our independent. But, is that a real independence now? I don’t think so. As a peripheral state like Immanuel Wallerstein stated in his Modern World System Theory, we are dominated by the core states. They buy our raw material as cheap as possible and then process it into commodities that we need and sell to us in an expensive price.(Balaam & Dillman, 2014) Do you realize that, that is the actual colonization.

But maybe, we couldn’t run away from the reality that we need them because we don’t have any sufficient technology to process all that raw material. Why we as the peripheral states feel being exploited by them while we still need help from the superpower states? Yes, we still need them but I think, there are many people out there who enrich themselves so we are exploited not just by the core states but also buy our people too.

There is also another reason, why we couldn’t avoid them. We live in liberalism world now which we need to depend in others because we can’t fulfill our needs by ourselves. Besides, core states are fewer than the peripheral. So, we don’t have any flexibility in choosing because when we don’t want to give our resources, they could choose other states.

Besides our raw material, do you realize that our culture also being exploited now? Tell me, how many of your friends know the name of traditional house or clothes? All we know is LV, Guess, Esprit and others branded things. Do you know that Nike’s shoes are made in Indonesian with cheap budget and how much do you spend your money just to buy those shoes. Many of Indonesian products also have high quality why don’t we try to buy that? Do you still wanna be a prisoner ?  

Source : Balaam, D. N., & Dillman, B. (2014). Wealth and Power: The Mercantilist Perspective. In Introduction to International Political Economy (pp. 120-122). Harlow: Pearson Education Limited.

Gisela Bianca - 1701306070

OELs or HILs ?

The International Political Economic is influenced by those groups of people. Orthodox Economic Liberals (OELs) group emphasize that market doesn’t need states and Heterodox Interventionist Liberals (HILs) group prefer state intervention in the market. These two groups have their own proposal which have the advantages and also the flaws. Indonesia as a developing country, I think that HILs policy will fit best with our situation today.

As Balaam said, OELs is a group of people who cling to economic liberal ideas, values, and policy prescription. They support that an open and free market could determine socio-political outcomes. OELs suggest that the government support on banks, infrastructure project and social welfare programs should be limited. They wish that state doesn’t regulate of many parts of the economy. They also offer an idea to stimulate the economic growth, the government should cut taxes.

Increasing government spending as long as it creates more jobs is better than just worrying about the inflation. Developing countries need new technology and many kind of way to higher their standard of living. Therefore, the government should invest more in, such as infrastructure, education, healthcare, etc. Banks also need government help to regulate about the derivatives, deposit requirement, pay and bonuses. HILs agree with the globalization but they prefer to manage it than foster it without purposes. (Ballam & Dillman, 2014)

Because of those proposoal from each group, I think Indonesia will prefer the HILs because HILs give more advantages to us. Such as, they suggest that developed country should help developing country. Even Indonesia has been one of the developing country that has a good economic condition but we still need help from HILs to assist us in adopting free market because in here there are many domestic company which is defeated by the international product. So, what do you think? Do you prefer HILs also like I do?

Gisela Bianca - 1701306070

Source : Ballam, D. N., & Dillman, B. (2014). "Laissez-Faire": The Economic Liberal Perspective. In D. N. Ballam, & B. Dillman, Introduction to International Political Economy (pp. 73-76). Harlow: Pearson Education Limited.

The Birthplace of Industrial Revolution

We live in a modern world today, when the technology is developed well and make our life easier. We can make everything in a short time, thanks to technology. But do you know when exactly the technology was invented? It was invented around 18^th to 19^th century in Britain. We called it, the Golden Age.

Golden age in Britain means a great revolution began here, an industrial revolution that change the world. Before the golden age came, people lives in rural communities. They did almost everything with hand tools or traditional machine. Then, there were iron and coal ore which start it all. When the Britain start their revolution by built many factories with special-purpose machinery, mss production, industrialization, and it surely brought many goods to all the people. Standard of living for some people was improved and it marks Britain as the pioneer where the great revolution began.

There are some things that were born from the revolution. First is from the textile industry was in 1764, James Hargreaves, an Englishman, invented the Spinning Jenny. It was a machine that could produce more with less human energy. Then, the spinning jenny was improved upon by British inventor Samuel Compton. The second is the steaming machine which was invented on 1792 by an Englishman, Thoman Newcomen.

That were only two example but if I could add more, there were improvement in transportation, building, banking, and communication. There’s so much things invented in Golden Age that change the world which we live today. 

Credit: http://www.history.com/topics/industrial-revolution

           : http://www.bbc.co.uk/history/0/20979973

           : http://industryandchange.files.wordpress.com/2009/01/industrial-revolution-1.gif

Irena Natasya-1701299185

The Impacts of Golden Age to The World Economy

The golden age is a time of great prosperity, learning, advances in thought, technology, art, literature, science and research. It is also usually a time of peace, though victorious wars are often part and parcel of a Golden Age. During the Golden Age, there is a gold standard which is a monetary system that defines the dollar as a fixed weight of gold. In practice, that means you may present dollars at the bank for gold coins and vice versa. 

 That time, the Great Britain has the power to control the world’s economy. Since the days of Golden Age era, many changes occurred in the world. Per capita growth has started to decreased rapidly. There also a big difference in some countries. In Western Europe and Japan, growth of per capita fell away in the appeal at the time of the Golden Age. But at the Asian countries that began to develop, the per capita growth faster than during the Golden Age period. 

The impact on Asian countries are beginning to rise significantly because of they were managed to mobilize and allocate resources efficiently and improve human resources to develop the technology and knowledge. However, on the other hand, there was a significant decrease occurred in Africa. There has been no progress in their per capita income. In Latin America, their income also only be a small fraction compared to the Golden Age era. 

The countries which the economy still dependent and based on Golden Age era, began to experience some difficulties since most of these countries still haven’t been able to adapt well to the condition of international economy that exist today that has changed from the days of Golden Age. 

Susi Wansaga - 1701315251

Understanding The Mercantilism

What is mercantilism? Mercantilism is an economic system where government take controls of foreign trade. It was close to realism system. It is very concerned with the aim to increase the assets and capital of a nation because the nation’s well-being was depend on import and export. It is important to note that they are trying to maximizing the net export.

It began on 16^th to 18^th century in Europe countries, Britain, Spain, and France.  On that time, the welfare of the nation was measure by how much the gold that it had.  And after that, the gold was used to build armies and navies, of course to protect the nation. The more gold they had, the more powerful they become. During the mercantilist period, it was not a surprise that conflict between two or more militaries of nation-state were happened more frequent.

Furthermore, mercantilist period was growing rapidly, especially in England. England applying free trade policies, prohibiting imports, and more of industrial revolution that happened there. Many things are invented there (Golden Age) making England became the dominant power in Europe. 

Credit: http://www.econlib.org/library/Enc/Mercantilism.html

             : http://www.economist.com/blogs/freeexchange/2013/08/economic-   history 

Irena Natasya-1701299185

The Relevancy of Mercantilism in Political Economy Nowadays

Political and economic system of mercantilism be highly involved in international trade which aims to increase the assets and capital of a nation. Prosperity of a country is measured by the ratio of export-import of capital by the amount of metals, precious minerals, and others. Mercantilism see that the state should increase exports and reduce imports.

Here, we will talk about the relevance of mercantilism with the current economic. In the economic field, especially in Indonesia, the rising prices of basic needs or goods is often happens. Supposedly, this price increase should make the producers to increase production or import goods from abroad.

However, the logic of mercantilism still happens, in which mercantilism always sees that local products are always competing with foreign products. Thus, import is bad. As a result of this view, then import foodstuffs such as soybeans, potatoes, and carrots are considered not profitable for state. In fact, importing goods actually reasonable for consumption needs, especially for developing country like Indonesia. In the end, if imports remain restricted, the scarcity of local resources may occur and the result is price increases. In fact, its hard for Indonesia, a country with huge population, to just rely on their own resources.

State intervention of food and economy , should be aiming for increasing food production and goods. State must be smart in consumption process and organize public demand as well. It can be an advantage for the country itself and for the prosperity of the people.

Susi Wansaga - 1701315251

Is Mercantilism Still Relevant Today?

Mercantilism is an economic politic system which is adopted in 16-18^th centuries. This system focuses in increasing a state’s assets and capitals. When the country getting wealth, their richness will be transferred to their military power and they use their army to find another resource in other country and sell it to increase their economic power and so on. With this system the government also wants to protect their societies (Balaam & Dillman, 2014). Classical mercantilism stressed the minimization of the import and improvement of the export and government play a big role in here.

But, in 19^th century, occurred critics to mercantilism from Adam Smith and David Ricardo who said that government should not took part in the economic sector which we know as “invisible hands”. This led to the Great Depression because of the greed of the people who tried to enrich themselves. Keynes finally proposed that there must be a government intervention in economy to regulate and his thought about economic stability become the pioneer of the emergence of Bretton Woods system. Keynes’ idea had to be ruled out when the oil price increase crazily in 1973. Neomercantilism emerged as the savior. A state made a policy which is still commit with free trade under GATT but it also didn’t make their national industry unsafe such as, subsidies (Balaam & Dillman, 2014).

We live in interdependence world now and without importing goods from other country we can’t suffice our needs. But, the idea of enrich our self is still relevant because we want to live prosperously, don’t we? And a state will always protect anything inside and we are all already know that to maintain our security it takes a lot of money. However, the market has not could rule the world yet. Because without a state there would be no market and economic liberal idea until now just provide the needs of few country (Balaam & Dillman, 2014).

But, mercantilism also could make a bad impact when it is adopted unwisely. For example, U.S. is one of the countries which is try to use mercantilism in 2010. They made a policy which is admitted to slow the rate of consumption growth but the reality is it makes other country have difficulty to sell their product to U.S. This policy can give bad impact when the Americans against each other because there are some people who support the government and there are some people who care about the cheapest price. 

Source : Balaam, D. N., & Dillman, B. (2014). Wealth and Power: The Mercantilist Perspective. In Introduction to International Political Economy (pp. 27-50). Harlow: Pearson Education Limited. ; http://blog.heritage.org/2010/03/03/obama%E2%80%99s-mercantilist-approach-to-trade/

Gisela Bianca - 1701306070

What is the meaning of globalization for us?

Do you now the definition of globalization? Briefly, globalization is worldwide integration and development or globalization can be interpreted as the process of international integration arising from the interchange of world views, products, idea, and other aspects of culture. Advances in transportation and telecommunication  infrastructure, including the rise of communication such as from telegraph into short message service. And there is internet that very influential in this modern life.

I think globalization has brought many change for our life because if there is no globalization then this world has no progress and humans will not evolve. But globalization also has many effects, there are good and some are bad. I will discuss briefly the positive and negative  impact of globalization.

This is the positive impact of globalization:

•  The Values ​​and Attitude Change Modernization and globalization  led to a shift in cultural values ​​and attitudes of society are all irrational becomes rational.

•   Development of science and technology with the development of science and technology in society becomes easier to move and push more forward thinking.

•  Levels Better Life, The opening of the industry that produces the means of communication and transportation is one of the sophisticated efforts to reduce unemployment and improve people's lives.

And now, the negative impact of globalization:

• Consumer Lifestyle

Rapid industrial development makes abundant provision of public goods. That way people are easily attracted to consume goods with many options available.

• Individualistic attitude

Society was facilitated by advanced technology makes them feel no longer need anyone else in acting. Sometimes they forget that they are social creatures.

• Social Inequality

If in a community, there are very few individuals who can follow the flow of modernization and globalization will deepen the gap between the individual and other individuals who stagnate. This gives rise to social inequalities.

That’s the impact of globalization, and now as a smart person, we have to find what is the real meaning of globalization for our life. And we have to choose which ones are good and which are bad from this globalization era so that our lives may be progressing well in line with the increasingly rampant globalization. Now, what option would you choose for your life??


credit : http://www.economic-geography.org/index.php?option=com_content&view=article&id=98:effects-of-globalization&catid=98:inf&Itemid=85

Annisa Syapitri-1701298200

Economic Globalization in Indonesia

Globalization nowadays is inevitable. It brings advantage and disadvantage, especially for Indonesia’s economy. One of the advantages is that it could increase people’s prosperity because we know that one country couldn't fulfill their own needs, they need other countries to import the things they need. Globalization open the gate for Indonesia to import many things from countries all over the world because as one of the most consumptive consumer in the world, we are easily affected by what things are popular in the world nowadays, that's how globalization works too. 

The second is, free trade could bring advantage to Indonesia because it gives us chance to market our products (like batik and other handicrafts) to the world. It could increase foreign exchange rate in one country, that's we should be thankful with the presence of globalization. We could get investment and stock from foreign investor. Indonesia itself is really rich, in culture, in natural resources, and human resources. We can easily get many investors because they can see our country's potential, it’s just how we manage and control them to bring profit to Indonesia. 

But we can't ignore the disadvantage from globalization. Because it's 'FREE' TRADE, anything could enter Indonesia's market above our ability to sort it out. We should be aware of it because if we let this thing goes on, national trade will be in danger. The blame is actually on Indonesian people themselves, they have opinion that foreign stuff is better than national stuff, both in quality and quantity. Even though the price is more expensive than national stuff, they still prefer foreign stuff. 

But overall, we can't blame it all on Indonesian people because indeed, developed countries are having the latest technology to create many new and sophisticated things and thus become the new trends in the world. Indonesia still has many things to catch up in order to become a developed country.   

Irena Natasya-1701299185