International Political Economy: History, Theory, and Practice

International Political Economy
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International Political Economy
International Political Economy (IPE) refers to the study of the interrelation of international politics with the international economy and how they both shape each other in the context of the economic policies of individual states. Politics and economics approach global trade from varying perspectives and diverse analytical frameworks. The borders of markets are porous and dynamic while those of states are rigid, and international trade between states is, therefore, an object of political scrutiny. IPE treats global trade as necessarily different from domestic economic activity. It, therefore, examines the same from the viewpoint of national interest, particularly economic and military security (Schirm, 2020). International finance is a major IPE topic because of the challenge in disentangling economics from politics. International finance has political implications and is characterized by externalities and network effects. Therefore, IPE studies revolve around foreign exchange rates, inflation rates, free trade, and monetary policy issues.
Economic development is a central facet of IPE studies: IPE is focused on explaining how and why countries grow, especially the policies and practices that encourage economic development at the domestic and international levels. Common areas of interest include structural transformation, social and political institutions, human capital, and economic nationalism. Economic development is closely tied to production, and therefore, IPE studies also investigate how it creates wealth and power and helps further national interests and sovereignty. This essay will focus on three areas of interest: how countries reach an economic agreement, the causes of economic crises, and the consequences of economic agreements and crises. The thesis of this paper is: Economic integration and globalization have facilitated world stability and prosperity and heightened the vulnerability of individual states to financial crises.
IPE is a relatively new interdisciplinary field of social science that arose from the collapse of the disciplinary boundaries that divide International Relations and International Economics. The first scholarly interest in IPE as a new sub-discipline within political science started in the mid-1970s, but courses were not customarily offered until the mid-1980s. The rise of IPE as a helpful subject in global relations was partly the result of the decline in US economic dominance and the challenge to traditional notions of hegemony and security as demonstrated by US market crises and failure in Vietnam. IPE's prominence is also related to the economic challenges at the end of the Cold War and increased globalization, which saw developing nations pushing for a New International Economic Order (NIEO) to end economic dependency and colonialism. IPE studies typically focus on international finance, international trade, international organizations, North-South relations, hegemony, and globalization (Leiteritz, 2005). However, the domain of IPE studies has expanded beyond these traditional concerns over the years to include an ...