International political economy
International political economy (IPE) is the study of how politics shapes the global economy and how the global economy shapes politics.[1] A key focus in IPE is on the power of different actors such as nation states, international organizations and multinational corporations to shape the international economic system and the distributive consequences of international economic activity. It has been described as the study of "the political battle between the winners and losers of global economic exchange."[1]
For the study of political economy on a national level, see Political economy.
A central assumption of IPE theory is that international economic phenomena do not exist in any meaningful sense separate from the actors who regulate and control them.[2][3] Alongside formal economic theories of international economics, trade, and finance, which are widely utilised within the discipline, IPE thus stresses the study of institutions, politics, and power relations in understanding the global economy.[4][5][6][7]
The substantive issue areas of IPE are frequently divided into the four broad subject areas of 1. international trade, 2. the international monetary and financial system, 3. multinational corporations, and 4. economic development and inequality.[8] Key actors of study may include international organizations, multinational corporations, and sovereign states.[9][10][11]
International political economy is a major subdiscipline of international relations where it emerged in the 1960s and 1970s, prompted by the growth of international economic institutions such as the World Bank, International Monetary Fund, and the General Agreement on Tariffs and Trade, alongside economic turmoils such as the fall of the gold standard, 1973 oil crisis, and 1970s recession.[12] IPE is also a major field of study within history, especially economic history, where scholars study the historical dynamics of the international political economy.[13][14]
History and emergence[edit]
International political economy has its historic roots in the discipline of political economy; the study of the national economy and its interactions with governance and politics.[15] Adam Smith's publication of The Wealth of Nations profoundly influenced the development of the field of political economy.[16]
While the newly founded discipline of economics; which studies economic phenomena absent political and social considerations; began to diverge from political economy studies in the late 19th century, political economy continued to live as an academic tradition within political science departments, as well as within modern economics as a pluralist approach.[17][18] While notable works from John Maynard Keynes' General Theory and Karl Polanyi's The Great Transformation published in the early 20th century are still written in the tradition of political economy, economics in its narrower form was dominating economics departments from the 1920s and onward.[19]
The emergence of international political economy can be traced to the late 1960s and early 1970s, when deepening economic interdependence prompted by the growth of post-war economic institutions such as the International Monetary Fund, World Bank, and General Agreement on Tariffs and Trade, drew increasing attention within international relations scholarship towards the study of these institutions, and more broadly, to the study of governance of the world economy. The need for a more comprehensive understanding on global economic governance within political science circles became increasingly apparent through the crises of the 1970s; with the end of the gold standard, the 1973 oil crisis, 1973-1975 recession and calls for greater trade protection.[20] Influential figures in the emergence of the discipline were international relations scholars Robert Keohane, Joseph Nye and Robert Gilpin in the United States, as well as Susan Strange in the United Kingdom.[21][22] IPE has since become a key pillar in political science departments as well as a major subdiscipline of international relations, alongside traditional international relations scholarship centred on material security.[20]
Topics of enquiry[edit]
International Finance[edit]
International finance and monetary relations is one of the core areas of study in IPE.[8] In IPE scholarship, the interrelation of economic and political interests in international finance assumes it impossible to separate the financial system from international politics in any meaningful sense.[23][24][25][26] The IPE of international finance is characterized by political network effects and international externalities,[27][28][29] such as beggar-thy-neighbour effects[30] and contagions.[31]
A key concept in IPE literature on international finance is the impossible trinity, derived from the Mundell–Fleming model, which holds that it is impossible to simultaneously pursue all of the following three economic policies:[32][33]
Historical IPE approaches[edit]
Historically, three prominent approaches to IPE were the liberal, economic nationalist (mercantilist),[105][106] and marxist perspectives.[107][108]
Economic liberals tend to oppose government intervention in the market when it inhibits free trade and open competition, but support government intervention to protect property rights and resolve market failures.[109] Economic liberals commonly adhere to a political and economic philosophy which advocates a restrained fiscal policy and the balancing of budgets, through measures such as low taxes, reduced government spending, and minimized government debt.[110]
To economic nationalists, markets are subordinate to the state, and should serve the interests of the state (such as providing national security and accumulating military power). The doctrine of mercantilism is a prominent variant of economic nationalism.[105] Economic nationalists tend to see international trade as zero-sum, where the goal is to derive relative gains (as opposed to mutual gains).[111] Economic nationalism tends to emphasize industrialization (and often aids industries with state support), due to beliefs that industry has positive spillover effects on the rest of the economy, enhances the self-sufficiency and political autonomy of the country, and is a crucial aspect in building military power.[111]
Journals[edit]
The leading journal for IPE scholarship is the generalist international relations journal International Organization.[135] International Organization played an instrumental role in making IPE one of the prominent subfields in IR.[136] The leading IPE-specific journals are the Review of International Political Economy and New Political Economy.[135][137] Examples of journals within the historical study of IPE are Economic History Review and History of Political Economy.