INTERNATIONAL POLITICAL ECONOMY

Interrelationship of World Trade System and International Monetary System

in shaping Global Economic Exchange

We all live in a global economy. Were government shared a broad agreement on a core
principle that set a specific rules which established by the international institution like World
Trade Organization. It facilitates a political process through which governments reduce trade
barriers to global exchange and create rules to regulate other elements of global economy. It
enables businesses to construct the network of international economic linkages that constitute
globalization.
Trade plays a vital role in our lives. And because trading is made possible by the political
institution that structures trade relationship. National economies are becoming deeply connected.
We probably notice these connections most as a consumer, since many of the goods we buy are
produced, either in whole or in part, in a foreign country.
International trade is the exchange of capital, goods and services across international
borders or territories. A country can transact goods and services from non-resident to residents.
Purchasing and exchanging of ownership from outside the economic territory of a country is
considered importation and selling of these goods and services produced in the home country to
other market is exportation.
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INTERNATIONAL POLITICAL ECONOMY

Exchanging of these goods and services requires money before it can transact business.
Money that will determine how many well spend and how many well earn. It will fall to the
hands of the International Monetary System, which facilitate international economic exchange.
Because of the different currencies, the actual price of goods and services from one state to
another are diverse. International Monetary System facilitates the economic exchange through
the use of currency. They are the ones who determine the certain value of a states currency in
exchange for anothers. When the system functions smoothly, international trade and investment
can flourish. Any imbalances will cause a currency to gain or lose its value in terms of foreign
currency.
Global economy revolves around the continuing competition between the winners and the
losers generated by global economic exchange. The winners and losers compete to influence
government policy. Those who profit from global exchange encourage governments to adopt
policies that facilitate such exchange. Those who harmed by globalization encourage the
governments to adopt policies that restricts it. This competition is played throughout
international politics.

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