International economic relations represent the connection between two parties, each belonging to a different political entity. This connection arises within the realm of international and global economic interaction and exchange in the form of agreements. The involved parties work to implement the obligations and conditions stipulated in these agreements.
These relations are governed by several interconnected forces and influences, some related to economic systems and policies, while others pertain to cultural, technological, and geographical factors. These forces can be classified as follows:
First: Economic Forces
These are manifested in several aspects, most notably capitalism, which is the globally dominant system characterized by free markets, competition, and profit as drivers of economic activity. Supply and demand forces determine the prices of goods and services and direct resources.
Another significant force is economic globalization, characterized by interconnected international markets, increased trade, and investments between nations. Global economic organizations such as the World Trade Organization (WTO) and the International Monetary Fund (IMF) play a significant role in controlling international economic relations.
Additionally, emerging economies like China, India, and Brazil are influential forces capable of shifting traditional power balances. Economic blocs such as the European Union and free trade agreements also enhance cooperation among nations and impact international economic relations.
Second: Political Forces
These are represented by major powers with significant political and economic influence, such as the United States, China, and Russia, which have the ability to shape global trade and investment policies. Geopolitical conflicts also affect the flow of resources and trade relations.
National policies are another political force, as governments establish taxes, tariffs, and monetary and fiscal policies that influence international trade. Economic sanctions are often used as political tools to influence other nations' policies, thereby affecting economic relations.
Third: Technological Forces
These are embodied in the digital revolution. Technological advancements and the emergence of the digital economy have made data and information among the most valuable economic resources. Artificial intelligence and automation have significantly altered the nature of work and production.
Innovation and industrial advancements in various fields, such as clean energy, space exploration, and communication technologies, drive transformations in the global economy.
Fourth: Social and Cultural Forces
These include consumer values, as consumption patterns are shaped by cultural and social factors, influencing production and trade. Migration, education, and changes in the nature of required skills also impact the global economy. The disparity between the Global North and South, evident since the 1940s, highlights a clear division: 20% of the world’s population resides in the North (industrialized nations), while 80% are in the South (developing nations).
The distribution of resources, however, is the opposite: 80% are in industrialized countries and 20% in developing ones. International trade in industrialized countries accounts for over 80%, while the South contributes less than 20%. Similarly, 85% of global production comes from the North, compared to 15% from the South. Multinational companies’ investment revenues are 90% from the North and 10% from the South. Global liquidity and its instruments are distributed at 96% in the North and 4% in the South. The natural population growth rate is 1% in industrial nations and 3.5% in developing countries, with this disparity carrying political implications. This division shapes trade flows, aid, and investment, underscoring the imbalance between the North and South.
Fifth: Environmental and Geographical Forces
Regarding natural resources, the distribution of resources such as oil, minerals, and water significantly impacts the structure of economic relations. Climate change also affects food and energy production, increasing the costs associated with natural disasters.
Sixth: Institutional and Regulatory Forces
These are represented by international organizations such as the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO), which set global economic rules. Multinational corporations also play a pivotal role in shaping cross-border trade, investment, and production.
Seventh: Financial Forces
The global banking system influences monetary policies and exchange rates through central banks, such as the U.S. Federal Reserve. Additionally, financial forces include capital and investments, as the flow of foreign direct investment (FDI) and portfolio investments play a crucial role in shaping economic relations between nations.
Thus, international economic relations are governed by the complex interplay of economic, political, technological, cultural, environmental, and financial forces.
Eighth: The Role of Self-Interest
On the other hand, we see that the logic of self-interest can dominate other forces. Self-interest has overshadowed the principles governing international economic relations and is considered one of the pivotal forces. Achieving self-interest in the capitalist system is regarded as a fundamental driver of economic behavior. Individuals and companies make decisions based on maximizing benefits at the lowest cost, whether in trade, production, or investment. Conversely, mutual interest is reflected in avenues of cooperation between countries and companies in trade or the utilization of shared resources.
Additionally, countries' economic policies are formulated to achieve national interests, such as protecting local industries or securing strategic resources. Trade disputes or economic sanctions often arise due to clashes of national interests.
Examples of the impact of self-interest on economic relations include trade agreements based on mutual benefit, such as exporting surplus goods. Conflicts over oil, gas, and minerals demonstrate how nations strive to secure their interests in controlling resources. Economic alliances are built on shared economic interests. Recently, competition between nations and companies to achieve technological superiority has emerged to serve their interests, whether in the digital economy or advanced industries.
Ninth: Norms Governing the International Sphere
These are social and behavioral rules or laws that regulate relations between nations according to the logic of power and interests. These principles are based on human nature and societal dynamics, significantly reflecting on the international system.
The Norm of Predominance
The concept of predominance refers to competition and conflict over dominance and control among international powers. It is also referred to as rivalry (the attempt to win by overpowering). It reflects an adaptation or application of a human societal principle ("the world belongs to the strongest"). Human nature tends toward the pursuit of power and superiority, making international relations often a battleground for competition over resources, influence, and status.
Examples of predominance include conflicts between great powers, such as the Cold War between the United States and the Soviet Union, and today’s economic and technological competition between China and the United States. The outcomes of these struggles include the balance of power, the dominance of one state or alliance on the international stage, and the emergence of alliances or armed conflicts.
The Norm of Resistance
This refers to positive or negative struggles among different powers to prevent the domination of one party and to maintain balance. Resistance ensures balance and prevents international tyranny or despotism. In politics, it is evident in alliances for representation and solidarity, while economically, it appears in blocs. When needed, societies ally with others to consolidate power, but parties may leave alliances if their interests dictate doing so.
Notable examples of resistance include the formation of defensive alliances like NATO to counter Soviet influence and the resistance of smaller states to major powers' interventions through diplomatic or popular means. The outcomes include continued conflicts, whether peaceful or violent, achieving a balance of power, and reducing the likelihood of one-party domination.
The Norm of Reciprocity
This norm reflects responding to a state's actions in a similar manner, whether positive or negative. It represents the highest and most refined level in international relations, contributing to justice and ensuring deterrence without exceeding boundaries.
Examples of reciprocity include economic sanctions between nations (such as mutual sanctions between Russia and the West) and mutual responses in trade or diplomatic relations (e.g., expulsion of diplomats). The outcomes may range from escalation or de-escalation, depending on the circumstances, to maintaining a level of ethical and political balance.
Interaction of Norms in the International Sphere
The interplay between the norms of predominance and resistance is evident. While predominance seeks control, resistance aims to counter this control. Similarly, reciprocity and predominance overlap, as reciprocity can serve as a tool for weaker nations to deter, thereby limiting absolute predominance.
Tenth: Reflection of Predominance, Resistance, and Reciprocity in Economic and Political Relations
Economic Relations:
- Predominance: Appears in the race to control natural resources or markets.
- Resistance: Manifested in protective policies or regulation of international trade.
- Reciprocity: Seen in tariffs and sanctions.
Political Relations:
- Predominance: Evident in regional conflicts or attempts to dominate international organizations.
- Resistance: Seen in forming defensive alliances or resisting foreign influence.
- Reciprocity: Reflected in diplomatic responses and mutual policies.
These three principles represent the foundational rules governing international relations, derived from human nature and societal dynamics. Understanding these principles helps explain international interactions and develop balanced policies to achieve stability and justice in the global order.
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-Head of the Department of Economics and Islamic Banking, Assistant Professor at the College of Economics and Business Administration at the Islamic University of Minnesota.
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