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All 11 Flashcards — Economic interdependence
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Question
What is economic interdependence?
Answer
Economies relying on one another through trade, investment, supply chains and finance, so one economy affects the others.
Question
What are the main economic links between states?
Answer
Trade, supply chains, cross-border investment and linked banks and financial markets.
Question
What is a supply chain?
Answer
The chain of countries and firms that together make and move a product across borders.
Question
Why is economic interdependence the deepest form?
Answer
Economic ties are hard to cut without hurting yourself, so they bind states tightly and make walking away costly.
Question
Why is the 2008 crisis a good example?
Answer
A crisis that began in the US housing market spread worldwide through linked banks and markets, tipping distant economies into recession.
Question
What did the 2008 crisis force states to do?
Answer
Cooperate through the G20 and central banks to stop a global collapse — showing interdependence drives cooperation.
Question
What is the upside of economic interdependence?
Answer
Trade and investment make goods cheaper and countries richer, and may make war less likely between trading partners.
Question
What is the downside of economic interdependence?
Answer
Contagion (one crash spreads), vulnerability if a supplier cuts off, and stronger economies exploiting weaker ones.
Question
How does economic interdependence link to power?
Answer
Controlling a key export or supply gives leverage — the reliance of others can be turned into power over them.
Question
How does it link to liberal theory?
Answer
Liberals argue trade makes war less likely, because fighting a partner you depend on is too costly.
Question
Does economic interdependence remove economic sovereignty?
Answer
No — but it limits it: a state cannot fully insulate its economy from global booms and busts.
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Topic 1.6 hub
Interdependence
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