International Political Economy


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Introductory lecture on International Political Economy for a graduate course on the same subject that I taught in 2004.

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International Political Economy

  1. 1. International Political Economy
  2. 2. Overview • Understanding International Political Economy (IPE). • Conceptualizing IPE-related issue areas. • Examining dominant perspectives/frameworks in IPE.
  3. 3. IPE What is international political economy?
  4. 4. Understanding IPE • IPE examines the interdependence of politics and economics in the international system. • Like political economy, it views political and economic reality as two sides of the same coin. • Like international relations, it generally adopts a systemic perspective and views states as primary actors. • The study of IPE springs from an international economy that transcends place within which states, bound by territory, interact.
  5. 5. IPE Questions • How does the international economy affect domestic politics and/or domestic economic realities (and vice versa)? • Who benefits from activity/outcomes in the international economy? • Can order be attained in the international economic system? • Can collective action be achieved within the international economy?
  6. 6. Levels of Analysis in IPE IPE International National Economy Political Economy Where Where domestic international policymakers, institutions and interest groups sovereign states and institutions interact. interact.
  7. 7. Levels of Analysis in IPE IPE International National Economy Political Economy Where Where domestic international policymakers, institutions and interest groups sovereign states and institutions interact. interact. (Two-level bargaining games)
  8. 8. Classical Perspectives • Mercantilism • Parallel to the realist school of international relations. • Emphasizes that states participate in the international economy by pursuing their interests based on calculations of gains from economic decisions relative to other states. • Participation in the international system is viewed as a zero-sum game. • Foundations: Adam Smith (Absolute Advantage)
  9. 9. Classical Perspectives • Liberalism • Parallel to the idealist school of international relations. • Considers other agents in the international system and views these as acting on the basis of preferences. • Behavior is rooted in calculations of absolute gains from participation in the international economy (participation as a positive-sum game). • Foundations: David Ricardo (Comparative Advantage)
  10. 10. Additional Perspectives • Regime theory • Represents an area of convergence between realist and liberal thinking. • Regimes – institutions, rules and norms – exist to shape international activity and provide a semblance of order to the international system. • Cooperation and collaboration are furthered by regimes by reducing uncertainties in the international economy.
  11. 11. Additional Perspectives • World Systems Theory • Related to the Dependency school of thought in international relations. • Core-Periphery (Hub and Spoke) model of the international economy. • The world is divided into a core set of capitalist developed countries upon which less-developed periphery and semi- periphery countries are dependent. • Foundations: Karl Marx and Immanuel Wallerstein
  12. 12. Additional Perspectives • Hegemonic Stability Theory • Submits that international order and stability can be achieved only if there is a hegemonic power in the system. • Hegemons act as providers of (international) public goods. • They also serve to help overcome collective action problems in the international system. • Hegemons need not act benevolently; they may even act self-interestedly.
  13. 13. A Compendium of Perspectives IPE IR IPE IPE-RELATED ELEMENTS View of the state system as anarchic. Realism Mercantilism States pursue interests on the basis of relative gains (zero-sum orientation). Emphasis on state preferences. States act Idealism Liberalism on the basis of absolute gains; international activity is seen as a positive-sum game. Institutions/regimes are the strategic setting Institutionalism Regime Theory within which states operate, providing order and facilitating international Division of the world economy into a Dependency World Systems developed capitalist “core” upon which an Theory Theory underdeveloped “periphery” is dependent. Hegemons lend stability to the Hegemonic Stability Theory international system, overcoming collective action problems and providing “public
  14. 14. In Summary • The field of IPE seeks to examine the tensions that arise between an international economic system and a state system fundamentally rooted in territorial boundaries. • Like political economy, IPE concerns itself with: • The nexus between national and international political- economic activity. • The distribution of power in the international economy. • Equity in the international economy. • Questions of international economic order and cooperation.
  15. 15. In Summary • A prevailing concern of IPE at present (especially in the US) is the modeling of two-level games to explain bargaining in the international economy. • System-oriented IPE has focused on: • International trade, investment, and finance (and regime creation in these areas). • North-South relations. • Issue areas requiring collective action such as the environment or regional integration.
  16. 16. The End