The Theory Of Hegemonic Stability

4097 Words17 Pages
In 2013, the total production of goods and services globally was worth more than $74 trillion at current prices. Among these products, more than 30 per cent was sold across national borders through exporting and importing. This is the volume of the contemporary global economy. The study of international political economy has never been as important as it is now. In the past several years, nations are more closely linked than ever before through trade in goods and services, flow of money, distribution of wealth, and investment in each other's economies. The contemporary global economy was created by these linkages.
The economic crisis that began in 2007 threw up new challenges for the global economy. Therefore, both policy makers and business
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The theory of hegemonic stability was started in the 1970s with the works of Charles Kindleberger. He focused on the reasons for Great Depression, a severe worldwide economic recession that took place during 1930s. He argued that the root cause of economic problems, which caused great trouble to Europe and many parts of the world in the 1920s and 1930s, was the absence of a benevolent hegemon.
The term ‘hegemon’ refers to a dominant state, which is willing and has the ability to take responsibility for smooth functioning of international economic system. It can be defined as, “A state that has the capacity and the will to lead and overpower other states in the international system.” For example, the USA has acted as a hegemon after the Second World War. By 1980s, its hegemonic power has declined.
Stephen Krasner defined two states to be the hegemons, especially when looked from the perspective of international political economy:
• The British Empire until the beginning of 20th
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In the case of European Union, the primary purpose was to establish a single market for the member states. But in many areas, the member states need to take certain measures to deal with some of the undesirable consequences of market liberalisation.
For economic prosperity, all European Union member states agreed to eliminate trade barriers and reorganised some of their domestic regulations. The union has also tried to minimise the effects of an open market system by enforcing health and safety standards, environmental targets and guarantee for equal opportunities. The scope of the European Union has also revealed some of the difficulties of regional agreements and co-operations.
Sometimes, the member states wished to ‘opt out’ of certain areas, when they are not in agreement with their regional plans. For example, an instance of this can be seen in the adoption of euro currency by some member states, which later opted out of the agreement. The British voted to leave the European Union in the 2016 ‘Brexit’
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