Compare and contrast the ways in which realist and liberal models analyse the scope for international co-operation in pursuit of economic gains.

Waltz believes that earlier theories of international relations, including classical realism, have defects that can be cured applying a more scientific approach. The approach he took became known as Neorealism. Waltz's objective is to explain why the anarchic international system tends to reproduce itself. He believes that international system has a precisely defined three dimensional structure: (i) Ordering principle of the system: The ordering principle of the system is anarchical not hierarchical. The absence of a central authority leads to a self-help system where the quest for survival requires to states to seek security through the accretion of military power. The ordering principle of the system forces states to perform exactly the same primary function regardless of their relations capacity to do so. (ii) The functional differentiation of units: In this anarchic system each state is a separate, autonomous and formally equal unit, and to realize its interests it must count only on its own resources because "no one else can be counted on to do so". Then, all the important functions must be performed by each and every state. (iii) The distribution of the capabilities of the units of the international system: States cannot be differentiated by its functions but they differ vastly in their relations capabilities. This distribution of capabilities, which is unequal and shifting, defines the relative power of the states and predicts variations in states’ balance of power behaviour. This means that one international system can be distinguished from another by the distribution of capabilities between states, in other words international orders vary according to the number of great powers.

Waltz argues that states in anarchy have two choices balance and bandwagon, and always prefer balance to bandwagon. The power of others is always a threat not a lure. Weak states may be have no alternative than an early alignment with a

leading candidate or a recent victor...but when the system grows calm it is the time when they start to move the international relations pieces to balance the power of the more powerful states.

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leading candidate or a recent victor...but when the system grows calm it is the time when they start to move the international relations pieces to balance the power of the more powerful states.

Liberalism's optimistic view of international politics is based on three core beliefs, which are common to almost all of the theories in the paradigm. First, liberals consider states to be the main actors in international politics. Second, they emphasize that the internal characteristics of states vary considerably, and that these differences have profound effects on state behavior. Furthermore, liberal theorists often believe that some internal arrangements (e.g., democracy) are inherently preferable to others (e.g., dictatorship). For liberals, therefore, there are "good" and "bad" states in the international system. Good states pursue cooperative policies and hardly ever start wars on their own, whereas bad states cause conflicts with other states and are prone to use force to get their way. Thus, the key to peace is to populate the world with good states.

Third, liberals believe that calculations about power matter little for explaining the behavior of good states. Other kinds of political and economic calculations matter more, although the form of those calculations varies from theory to theory. Bad states might be motivated by the desire to gain power at the expense of other states, but that is only because they are misguided. In an ideal world, where there are only good states, power would be largely irrelevant.

In contrast to liberals, realists are pessimists when it comes to international politics. Realists agree that creating a peaceful world would be desirable, but they see no easy way to escape the harsh world of security competition and war.

This view of international relations is based on three core beliefs. First, realists, like liberals, treat states as the principal actors in world politics. Realists focus mainly on great powers, however, because these states dominate and shape international politics and they also cause the deadliest wars. Second, realists believe that the behavior of great powers is influenced mainly by their external environment, not by their internal characteristics. The structure of the international system, which all states must deal with, largely shapes their foreign policies. Realists tend not to draw sharp distinctions between "good" and "bad" states, because all great powers act according to the same logic regardless of their culture, political system, or who runs the government. It is therefore difficult to discriminate among states, save for differences in relative power

Third, realists hold that calculations about power dominate states thinking, and that states compete for power among themselves. That competition sometimes necessitates going to war, which is considered an acceptable instrument of statecraft. States may cooperate with each other on occasion, but at root they have conflicting interests.

I looked at India as an example of a country that had been liberalized. India decided to invest in Industry – industrialization, rather than agriculture.

India used an import substitution strategy of development, using tariffs to encourage and protect domestic industrial development. The use of tariffs and the restriction of imported capital goods protected domestic development as many producers bought domestically rather than pay tariffs.

The domestic market in India was more important to domestic producers than the foreign market, because trade in India was a small part of the national income. India wanted to protect their domestic market for domestic producers.

There was opposition to India’s planned industrialisation. The thought was that too much regulation was slowing down growth. Also numerous reports questioned who the regulations were facilitating. Many large businesses were buying future licensing in particular sectors to prevent other domestic firms entering that particular sector.

During the 1960’s and 1970’s industrial growth began to slow down. Also there was not enough technological growth in industry due to the high tariffs and lack of competition in particular industries. This was because India was not an open economy.

Policy makers decided to take steps after these findings. They liberalized imports, but as a result, imports were more than exports and the Indian economy ran out of foreign currency to pay for its imports. Technological policies were reformed. Imports of technology and capital goods were more freely allowed. In the early 1980’s liberalization of technology incentive foreign investments was encouraged.

Therefore starting in the early 1980’s a retreat from import substitution started and India started to integrate. Tariffs were still relatively high but capital goods and technological imports were liberalized.

Import liberalization in the 1980’s allowed certain sectors such as software, electronics and telecom to grow without any restrictions. The affect on economic growth was enormous. Although the policies made were not a full liberalization, they did show that limited liberalization in the right areas could assist economic growth.

Technological change had been limited in India, as a result of tariffs and restrictions. When India discovered the importance of technological growth, they also realised that several domestic sectors had outdated technology. India imported large amounts of new technologies to help these sectors. Such large imports with not enough exports resulted in the foreign exchange crisis of the early 1990’s, and India turning to the IMF for a loan.

In order to receive new loans, the government had no choice but to agree to further measures of economic liberalization. In 1990 after the price of oil doubled as a result of Iraq invaded Kuwait, India’s government fell and was succeeded by a minority government. That and various other events shook international confidence in India’s economic viability and as a result India made various agreements with the IMF to speed up liberalisation. The IMF wanted integration into the world economy which would allow for growth and a sustained economy. In the 1980’s India use import liberalization in the 1980’s, with import substitution working towards changing comparative advantage ain the long term. The two different policies wanted more openness to the international market, for different reasons.

In the early 1990s considerable progress was made in loosening government regulations, especially in the area of foreign trade. Many restrictions on private companies were lifted, and new areas were opened to private capital. However India remains one of the world’s most tightly regulated major economies. Many powerful vested interests, including private firms that have benefited from protectionism, labour unions, oppose liberalization.

The greatest disappointment of economic growth in India is the failure to reduce more substantially India’s widespread poverty.

References:

Bromley, S; (2004); ‘ International politics: states, anarchy and governance ’, In: Bromley, S, Mackintosh, M, Brown, W and Wuyts, M (eds) Making the International: economic independence and political order;