INTRODUCTION OF UNDERSTANDING ECONOMIC RELATIONS.
Welcome to the study of international economic nations. In the ongoing globalization process which is effecting all the nook and cronies of our globe, it has become obvious that no nation can successfully live in isolation. This is because nations of the world depend on each other for survival. There is no one nation that is absolutely self-sufficient in all aspects of life; therefore, the dependency of one nation on the other (or others) is a very vital element for the collective survival of our globe. In this site, we shall attempt a comprehensive and systemic explanation of this synergic relationship, or dependency of nations on each other for survival and continuance. Our emphasis is going to be particularly centered on the political, economic and sociocultural variables of this relationship. This approach would enable us demonstrate, explain, and examine the dynamism of the economic interactions of the nations of the world, or globalization, if you like. We learn from the physical sciences that matter and energy can neither be created nor annihilated on nature, they can only undergo changes or be transformed from one from to another. This is a basic law of nature. It is further corroborated in social sciences- particularly in the study of economics-where it is assumed that the value of wealth and scarce resources or goods and services in any given economy remains constant within a given period of time as value transpires between national income and expenditure. In a given economy within the global system, the volume of generated income is usually equal to the value or amount of accumulated expenditure, vice versa (jezisyoung , 1999:1).
In the same way, in international economic relations, we could equally postulate that the value of the wealth and resources of the world is constant over a given period of time. This follows from the fact that the goods we consume and the services that we use are produced from available materials and resources already there in nature. Thus, in international economy, any substantial increase in wealth or resources in one particular nation or region generally leads to a corresponding decrease or depletion of such wealth or resources or similar ones in another nation or region. It is therefore safe for us to say that wealth and prosperity in the leading core industrial nations of the western world is equal and opposite to the continued adversity, disparity, inequality and poverty in the large number of the less industrialized, developing and undeveloped nations of the southern world. We could also go further by saying that development (wich is central to our study and understanding of the dynamism of international economic relations) is equal and opposite to underdevelopment, and that growth is also equal and opposite to decline. The above scenario is true if and only we understand and appreciate that in international economy, income (understood as increasing wealth and resources) is equal to expenditure (understood as exploitation of resources, outflow of wealth and resources) (jezisyoung)
DEFINITION OF INTERNATIONAL ECONOMIC RELATIONS
There exists a certain degree of ambiguity in the study and understanding of international economic relations. This situation is created by the fact that the field of study is somewhat related to the politics of development economy, development economy and political economy.
In actual fact, there are some areas of convergence as well as those of divergence between international economic economic relations and other related social sciences disciplines. They all converge around the themes of development, economics, and politics. These themes constitute the defining elements, and they help in understanding the present structures and contents of international productive capabilities and participation in international division of labour and exchange relations”(Akpuru Aja,1998).
As the world is gradually gliding into a global village, the pregnant reality remains that the world economic system remains a mixture of rich and poor nations that are generally interdependent. This situation is reinforced by the unevenness in the availability of natural, technological, and economic resources. The implication of this scenario is that the strong and wealthy nations cannot do without the weak and poor nations of the world, vice-versa.
In fact there exists today what Akpuru-Aja (1997) calls “global economic village comprising of international producers and international consumers”. An example of such interdependence necessitating the actualization of international economic relations was evident during the oil crisis of the 1970s. During this period, the production of the industrialized world’s economies was significantly disrupted, hence, these powerful nations, to a consider extent depended on the developing and underdeveloped nations of the south that produce the bulk of their crude oil needs.
In international economic relations, the focal point is based on the exchange relations in the international division of labour, seeking wholly to understand how “free and equal ” economic actors compete and co-operate in the areas of trade, economics, finance, etc.within an “Open world economic system “. In view of the above explanations, we believe that you are progressively grasping what is international economic relations. Based on this assumption, we shall now attempt to give you a functional definition of international economic relations.
International economic relations (IER) studies the dynamic interplay between politics and economics and how this determines the interactions between nations, economic organizations, and private corporations in area of trade, finance, economics, science and technology. A critical examination and a profound understanding of international economic relations requires an appreciation of international politics (Knorr,1975). Just as economics, so political facts affect and shape economic outcomes. It is therefore important to emphasis that there is a symbiotic relationship between international economic relations and international politics. Many analysts who argue that a nation’s gross national product, the quantity and quantity of its human and natural resources reinforces this point, and its international trade and financial standing significantly determine its military capabilities.
According to spero (1981:4-5), there are three fundamental ways in wich political factors affect and shape economic factor. In the words of the author :
First, the political shapes the economic system, as well as the structure and operation of the international economic system. Second, political concerns often shape economic policy, as important economic policies are frequently dictated by overriding political interests. Third, international economic relations, in and of themselves, are political relations, and international economic interaction, like international political interaction, is a process by which state and non-state actors manage, or fail to manage, their conflicts and by which they co-operate, or fail to co-operate, to archive common goals.