International political economy throws light on economic governance, through analysis of international trade, globalization, international inequality, the monetary system, and development. And how these are shaped by, sovereign states, multinational corporations, and international organizations.
International political economy analyzes the issues that stem from various economic and social processes. These are international economics, the interplay of international politics, and different societal groups and social systems.
The societal groups can be groups of people living under the poverty line in different countries, groups of immigrants in the EU, women in developing countries, or groups of people affected by Human Rights issues. Whereas social systems are capitalism, communism, and socialism.
Let us define international political economy (and the acronym “IPE”). IPE refers to a particular study. This study refers to the analysis of involved actors in international and transnational problems. There is also a term global political economy, which is used sometimes in place of international political economy.
Global political economy studies problems that are global, e.g. sustainable development goals, increasing inflation, COVID-19 and its effects, hunger, climate change, illicit markets, and so forth. It covers issues that are widespread over the entire planet. More often than not, both these terms are used interchangeably.
Further to the areas of studies described above, the international political economy also signifies a multidisciplinary system of analysis. It interconnects various topics from economics, politics, and sociology.
It brings together and incorporates many processes, concepts, and insights evolved from sociology, political science, and economics. It now also includes areas like social sustainability and economic sustainability.
In the areas of philosophical concepts and history, it presents an irresistible and more all-inclusive commentary on global mechanisms. These mechanisms are managed by social forces, governments, and commerce in various geographical areas.
Systematic approaches to international political economy are likely to vary with actual issues to be analyzed. Issues can be looked at from various academic viewpoints - liberal, mercantilist, and structuralist.
Liberals believe positively in the capacity of states and humans to build world order and harmonious relations. Particularly, economic liberals, would restrict the state’s role in the economy and allow market forces to control social and political outcomes.
Mercantilists closely correlate to realists. They focus on the competitive strengths and interests of nation-states in a battle to achieve security and power.
Whereas structuralist philosophy is based on Marxist analysis. It throws light on how powerful economic structures of social influence exploit class relations and interests.
At the international level, it aims at the framework of the international systems wherein there is no single entity that can prevent war. For example, an analysis of the EU’s policy regarding migrants from Africa must pay attention to the areas like investments and trade between these two continents. It should also consider the domestic concerns and interests in both regions.
Similarly, as seen recently, in the case of the Ukraine – Russia war, the domestic as well as international interests are linked by various factors like security, trade, finance, and other concerned factors. In such scenarios, the differentiation between domestic and other countries' interests becomes confusing.
Similarly, the differentiation between politics and economics in the world also becomes confusing. Here critical economic situations in other country or countries can affect domestic economic and political interests. This is natural because of its linkages through trade and finance or other factors like security and migrant flows, between these countries.
Various preceding fields of study contribute to the evolution of the International Political economy. Let us visit the central elements of such studies and their roles in the development of the international political economy.
First, international political economy includes a political aspect covering the use of power. It can be by transnational corporations, NGOs, international organizations, a state as one unit, domestic groups, or even individuals.
All these players are involved in the decision-making about the distribution of tangible and intangible things. Tangible things include money and products and intangible are technology, innovation and security, and so forth.
Second, IPE also covers an economic element that applies to the distribution of scarce resources in the markets. Today, online markets are more dominant than physical marketplaces. Managing global supply chains have therefore become even more important. The market can also be a force that molds human behavior.
Consider processes like banks lending loans, investors buying stocks, or consumers purchasing things. These transactions although depersonalized; establish a large, mature, and refined network of relationships that implement worldwide economic activities.
Third, the international political economy needs to express the societal aspect of various international problems. Very often, there are different social groups within a country. Such groups share associations, norms, and identities based on religion, ethnicity, tribal ties, or gender.
Similarly, various transnational groups or global civil societies have interests that reach beyond national boundaries. A lot of NGOs have always tried to pressure national and international organizations on issues such as migrant workers, refugees, climate change, and gender-based exploitation.
Finally, after the end of the Cold War, the international political economy became focused on issues arising out of economic globalization. This includes the existence of the state in the globalized international economy, the role of multinational corporations in the “new global economy,” and various issues related to justice, fairness, and equity.
International Political Economy is the interplay between international economics and politics, and how they affect our social systems.
There are 3 primary academic viewpoints on IPE. These are the liberal, mercantilist, and structuralist.
IPE studies the impact of political and economic elements and oversees the use of power and the distribution of resources. It includes efforts such as sustainability goals for the judicious use of scarce resources.
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