Freidan and Rogowski discuss the idea that while there is no one state that can set international economic policy, the largest and most powerful do have the ability to many economic factors because of the strength of their influence. As the United States has continued to recover from the economic crash of 2008, the financial might of this state has continued to climb. Over the last few weeks, it has begun to appear that the United States might begin to climb past the Euro, something that has not happened in about 13 years.[1]
With this kind of news, one might wonder how large economic non-state players will react. With the dollar and Euro now approaching parity, many are expecting the Federal Reserve to remove the "patience" from its approach in the market and raise interest rates for the first time in nine years. [2]. As we have been discussing in class, these non-state players in most ways have very little responsibility to the citizens of their own states, and certainly even less to those elsewhere. Yet their actions and decisions have huge ramifications on the international financial stage. I am curious to see how this possible decision from the Federal Reserve affects foreign markets and if there is any consideration of these ramifications in the coming weeks, assuming the dollar continues to rise.
The market in China has risen incredibly quickly over the last two weeks. In Tokyo, the Nikkei closed at over 19,000 points for the first time in 15 years. Sydney dipped slightly, while Seoul saw modest gains. [3] So the question now is has the US recovered enough to be the economic hegemon? Will something like a rise in interest rates in the US and the removal of a patient financial policy from the Federal Reserve have long-reaching effects? If the rates are raised, what will happen to the near 1:1 trade with the Euro? I am very interested to see this play out in real life as we discuss these types of financial players and their ability to make or break hegemons
1. http://www.businessinsider.com/goldman-sachs-euro-parity-forecast-2015-3
2. http://www.cnbc.com/id/102504131
3. http://economictimes.indiatimes.com/markets/forex/dollar-hits-12-year-euro-high-before-us-federal-meet-shanghai-jumps/articleshow/46583048.cms
Chelsey - Great post! As I read the Freidan and Rogowski article and a few of the others, a consistent theme seemed to be present. The concept of international liberalization policies affecting the domestic policies of certain countries seems very similar to me to the broader theory of globalization. As the world becomes more and more interconnected with each decade that goes by, cultural norms are spread from country to country. Outside influences have greater impact on domestic issues. And so why would economic issues be immune to the trend of international influence? This article, in my opinion, reinforces the broader notion that the world is becoming a smaller place, with domestic policies beginning to mirror international standards. It's happening, whether we like it or not.
ReplyDeleteHi Chelsey - You raise some very interesting questions here. My first thought is that we need to more closely define the term "economic hegemon" before deciding if it might apply to the US or not. The US is well-integrated in the international market, but the nature of that market is changing. As you mentioned, the Federal Reserve is not bound to the interests of the American or any other state, and many of the largest businesses/companies are not bound to any one state either. That changes what it means for a country to be an economic hegemon.
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