The Era Of Globalization, Foreign Policy

Globalization is the buzzword in the 1990s. For most scholars, it describes not only the rapid changes in the past 20 years, but also the unpredictable future in the coming century. This book only focus on one facet of globalization, i.e. , the integration of world economy. Economic globalization includes the cross boundary movements of commodities, capitals and labors. In the first chapter, we documented the development of international trade, international capital movement, and international immigration. This chapter can serve as an introduction to the background of our main theme, the formation and evolution of foreign economic policies.Even a brief review of the history of globalization can shed lights on our understanding of world economy. We try to make two points:(1) Globalization is a gradual process. Many popular author advocate that globalization is a revolutionary and new phenomenon. But actually, globalization has a long history of more than 150 years. It developed rather slowly and witnessed ebbs and flows. The development of globalization has a "U" shape pattern. In the late nineteenth century, globalization reached a high level, because controls on international financial transactions and international immigrations were absent, and the free trade policy prevailed among main European countries. The outbreak of the two World Wars and the interwar period saw the collapse of globalization. After the World War Two, globalization gradually recovered. But most economists agreed that the level of world economy integration became higher than that of 1910s only until the late 1970s. From then on, globalization has developed rapidly.(2) Globalization is also a political process. A country's open policy, like other economic reforms, will create both gainers and losers. International trade and international immigration will likely exert pressures that widen income and wealth disparities within countries. International financial liberalization also has to face the fundamental trade off of stability of the exchange rate, capital mobility, andeffectiveness of domestic monetary policies. The government can only choose two of these three goals at the price of the third one. Which goals will be chosen may reflect the domestic political bargaining.To have a better understanding of the impacts of globalization on the international relations, we need a new theory of international politics. Realism, which has long been the mainstream theory of international politics, is based on two key assumptions. The first one is the "personalized statist assumption", which says that the state is the basic unit of international political analysis. States have their own interest in the way just like people have individual interests. The second one is "rational man assumption", which says that all the states are trying to maximize their own interests.We argue that the first assumption is not appropriate for international political analysis because it neglects the influence of domestic politics on the formation of foreign policies. There are many different actors in the political arena. These actors have different preferences and any outcome will have to reflect these differences. We believe that a systematic theory on which and how domestic factors affect international politics can provide a better explanation on the formation of foreign policies.we examined three different actors in the domestic political system, i.e., the political leader, the bureaucrat and the citizens. Our approach falls naturally into the tradition of public choice. But we try to emphasis the critical role of political leader on policy making. The objective function of the political leader is to maximize her legitimacy. She has two main ways to approach this goal. One is to provide public goods according to the needs of the general public. The other way is to form coalition with different interest groups and get their support.We also try to extend the realism's rational assumption by introducing the game theory into international politics. Th...