This paper will focus on the roles, approach, trade, and theories of the International Political Economy (IPE). IPE is an academic discipline within political sciences, therefore it can be found in many courses. For example, sociology, history, political science, cultural studies, and economics (Jones 25). The majority of the scholars feel that IPE should not be a discipline on its own, but a combination of many disciplines (Veseth 2). Among the main subjects that are found within IPE include international trade, global markets, and international finance. IPE also explains the way power can be used on political and economic factors in the broader field of international relations.
Roles of IPE
The main role of IPE is to understand the global problems and the measures that can be used to solve them. In addition, IPE is classified as a social science because it analyzes the political economy by combining it with international relations. For example, the global reach of international corporations, changes in commodity prices, and the effect of unstable currency movement (Veseth 4). It also explains the global problems that are interrelated by the use of theoretical perspective and analytical tools. For example, analyzing international finance, international trade economy, and environmental aspects that have an impact on nations (Veseth 4). International politics and international economics are inseparable because they are used to explain issues found in the same discipline.
Political scientists concentrate on issues affecting their countries, unlike economists who are always interested in issues affecting other countries. The main developments in the IPE field include the 1970 oil embargoes, and the Bretton Woods breakdown, which illustrates the important dimensions of IPE. For example, after the oil scandal, not a single nation wanted to come up with political policies without considering the reactions of foreign economies. (Veseth 8). In addition, the oil embargo raised concerns about the role of multinational corporations on issues relating to international politics and economics. More to this, the 1970 Bretton woods also led to the growth of IPE as a separate field of study, which focused on the issue of political conflict at the local and international levels.
Liberalism is the main approach used in the study of IPE because of its many advantages, and its association with neoclassical economics. Liberals believe that, the role of government economic should be limited to enable growth in all sectors of the economy. (Veseth 10). They also believe that the role of the government is to provide the public with goods and services, which on many occasions are supplied by the private sector. In addition, governments should ensure that it provides and maintains a competitive and a free market for the benefits of all stakeholders involved. For example, protecting the rights of properties and ensuring there is fair distribution of power within the market (Cohen 57). The main problem of this approach is that it has influenced countries to view trade in terms of population and geography.
Trade is important, especially when dealing with issues affecting IPE because for a long time, it has been reflecting on market tensions. For example, during the Cold War, the United States used trade as a tool to merge East-West strategy (Veseth 11). With advancement in information technology, trade has become a contentious IPE issue. The main problem that IPE faces as a discipline is its relations with international trade, which includes analyzing the policies that govern the exchange rates. In addition, it is also concerned with international capital movement. For example capital and the flow of debts (Veseth 11). Due to the rapid progress of globalization, the international finance has become significant because of its role in solving problems that affect IPE.
Liberalism theory was developed by Charles Kindleberger, and its main focus was on behavior and motives of a hegemonic country (Guirao 18). The theory maintains that the world can only be prosperous if a hegemon occurs in order to organize an international economic system and political system, to manage the supply of international goods and services (Veseth 12). In addition, the theory states that hegemony is a temporary condition that is self-limiting, and an epitome of IPE discipline. According to the theory, security is an important component because it will enable IPE to expand, and move past the international relations and traditional borders (Guirao 20). Analysis of the international economy is based on factor proportional theory because it is a political aspect, and it also focuses on the role of political policies on the international trade.
International Political Economy is also referred to as global political economy because it has always been categorized as an academic discipline for a long time. The main role of IPE as a discipline has been to make economic factors part of international relations by taking into account economic security issues together with foreign policies. The decisions that a nation makes in any political matters has an impact on its international trade and monetary flow. IPE should be used in a positive way that benefits everybody, but not to cause tensions among countries.
Cohen, Benjamin J. International Political Economy: An Intellectual History. Princeton: Princeton University Press, 2008. Print.
Guirao, Fernando. Alan S. Milward and a Century of European Change. New York: Routledge, 2011. Print.
Jones, Barry. Routledge Encyclopedia of International Political. Routledge, 2001. Print.
Veseth, Michael. “What is International Political Economy?” Redirecting Your Request. 2013. Web.