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International political economy (IPE) is the study of how politics shapes the
global economy The world economy or global economy is the economy of all humans in the world, referring to the global economic system, which includes all economic activities conducted both within and between nations, including production, consumption, econ ...
and how the global economy shapes
politics Politics () is the set of activities that are associated with decision-making, making decisions in social group, groups, or other forms of power (social and political), power relations among individuals, such as the distribution of Social sta ...
. A key focus in IPE is on the power of different actors such as
nation states A nation state, or nation-state, is a political entity in which the State (polity), state (a centralized political organization ruling over a population within a territory) and the nation (a community based on a common identity) are (broadly ...
,
international organizations An international organization, also known as an intergovernmental organization or an international institution, is an organization that is established by a treaty or other type of instrument governed by international law and possesses its own leg ...
and
multinational corporations A multinational corporation (MNC; also called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation, is a corporate organization that owns and cont ...
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." 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. 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. 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. Key actors of study may include
international organization An international organization, also known as an intergovernmental organization or an international institution, is an organization that is established by a treaty or other type of instrument governed by international law and possesses its own le ...
s,
multinational corporation A multinational corporation (MNC; also called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation, is a corporate organization that owns and cont ...
s, and
sovereign state A sovereign state is a State (polity), state that has the highest authority over a territory. It is commonly understood that Sovereignty#Sovereignty and independence, a sovereign state is independent. When referring to a specific polity, the ter ...
s. International political economy is a major subdiscipline of
international relations International relations (IR, and also referred to as international studies, international politics, or international affairs) is an academic discipline. In a broader sense, the study of IR, in addition to multilateral relations, concerns al ...
where it emerged in the 1960s and 1970s, prompted by the growth of international economic institutions such as the
World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
,
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
, and the
General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its p ...
, alongside economic turmoils such as the fall of the gold standard,
1973 oil crisis In October 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) announced that it was implementing a total oil embargo against countries that had supported Israel at any point during the 1973 Yom Kippur War, which began after Eg ...
, and 1970s recession. IPE is also a major field of study within history, especially economic history, where scholars study the historical dynamics of the international political economy.


History and emergence

International political economy has its historic roots in the discipline of
political economy Political or comparative economy is a branch of political science and economics studying economic systems (e.g. Marketplace, markets and national economies) and their governance by political systems (e.g. law, institutions, and government). Wi ...
; the study of the national economy and its interactions with governance and politics.
Adam Smith Adam Smith (baptised 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the field of political economy and key figure during the Scottish Enlightenment. Seen by some as the "father of economics"——— or ...
's publication of ''
The Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', usually referred to by its shortened title ''The Wealth of Nations'', is a book by the Scottish people, Scottish economist and moral philosophy, moral philosopher Adam Smith; ...
'' profoundly influenced the development of the field of political economy. While the newly founded discipline of
economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...
; 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. While notable works from
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes ( ; 5 June 1883 – 21 April 1946), was an English economist and philosopher whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originall ...
' '' 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. 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 The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
,
World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
, and
General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its p ...
, 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 In October 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) announced that it was implementing a total oil embargo against countries that had supported Israel at any point during the 1973 Yom Kippur War, which began after Eg ...
, 1973-1975 recession and calls for greater trade protection. Influential figures in the emergence of the discipline were international relations scholars
Robert Keohane Robert Owen Keohane (born October 3, 1941) is an American political scientist working in the fields of international relations and international political economy. Following the publication of his influential book '' After Hegemony'' (1984), he h ...
, Joseph Nye and Robert Gilpin in the United States, as well as Susan Strange in the United Kingdom. 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.


Topics of enquiry


International Finance

International finance and monetary relations is one of the core areas of study in IPE. 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. The IPE of international finance is characterized by political network effects and international externalities, such as beggar-thy-neighbour effects and contagions. A key concept in IPE literature on international finance is the impossible trinity, derived from the
Mundell–Fleming model The Mundell–Fleming model, also known as the IS-LM-BoP model (or IS-LM-BP model), is an economic model first set forth (independently) by Robert Mundell and Marcus Fleming. Reprinted in Reprinted in The model is an extension of the IS–LM ...
, which holds that it is impossible to simultaneously pursue all of the following three economic policies: * a fixed foreign exchange rate * free capital movement; absence of
capital control Capital controls are residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation's government can use to regulate flows from capital markets into and out of the country's capital account. These meas ...
s * an independent
monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...
Another key dilemma in monetary policy is that governments have to balance the
inflation rate In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...
(the price of money at home) and the
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
(the price of money outside the home market). There is no agreement in the economics literature on the optimal national exchange rate policy. Rather, national exchange rate regimes reflect political considerations. National exchange rate policies can be 1. fixed, floating, or a hybrid of the two, and 2. entail a strong or weak currency. Different groups benefit disproportionately depending on the national exchange rate policies that is chosen. The liberal view point generally has been strong in Western academia since it was first articulated by Smith in the eighteenth century. Only during the 1940s to early 1970s did an alternative system,
Keynesianism Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomics, macroeconomic theories and Economic model, models of how aggregate demand (total spending in the economy) strongl ...
, command wide support in universities. Keynes was concerned chiefly with domestic macroeconomic policy. The Keynesian consensus was challenged by
Friedrich Hayek Friedrich August von Hayek (8 May 1899 – 23 March 1992) was an Austrian-born British academic and philosopher. He is known for his contributions to political economy, political philosophy and intellectual history. Hayek shared the 1974 Nobe ...
and later
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and ...
and other scholars out of Chicago as early as the 1950s, and by the 1970s, Keynes' influence on public discourse and economic policy making had somewhat faded. After World War II, the
Bretton Woods system The Bretton Woods system of monetary management established the rules for commercial relations among 44 countries, including the United States, Canada, Western European countries, and Australia, after the 1944 Bretton Woods Agreement until the ...
was established, reflecting the political orientation described as embedded liberalism. In 1971 President Richard Nixon ended the convertibility of gold that had been established under the IMF in the Bretton Woods system. Interim agreements followed. Nonetheless, until 2008 the trend has been for increasing liberalization of both international trade and finance. From later 2008 world leaders have also been increasingly calling for a New Bretton Woods System. Topics such as the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
,
Financial Crises A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with Bank run#Systemic banki ...
(see
2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
and
1997 Asian financial crisis The 1997 Asian financial crisis gripped much of East Asia, East and Southeast Asia during the late 1990s. The crisis began in Thailand in July 1997 before spreading to several other countries with a ripple effect, raising fears of a worldwide eco ...
),
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
s,
Foreign Direct Investment A foreign direct investment (FDI) is an ownership stake in a company, made by a foreign investor, company, or government from another country. More specifically, it describes a controlling ownership an asset in one country by an entity based i ...
,
Multinational Corporations A multinational corporation (MNC; also called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation, is a corporate organization that owns and cont ...
receive much attention in IPE.


International Trade

There are multiple approaches to trade within IPE. These approaches seek to explain international bargaining between states, as well as the foreign economic policies that states adopt. In terms of domestic explanations for the foreign economic policies of states, the two dominant approaches are the factor model and sector model, both of which build on David Ricardo's theory of
comparative advantage Comparative advantage in an economic model is the advantage over others in producing a particular Goods (economics), good. A good can be produced at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior t ...
. The factor model (which has been called the H-O-S-S model) is shaped by the Heckscher-Ohlin model and the Stolper-Samuelsson theorem. According to the Heckscher-Ohlin model of trade, the
comparative advantage Comparative advantage in an economic model is the advantage over others in producing a particular Goods (economics), good. A good can be produced at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior t ...
of countries in trade stems from their endowments of particular factors of trade (
land Land, also known as dry land, ground, or earth, is the solid terrestrial surface of Earth not submerged by the ocean or another body of water. It makes up 29.2% of Earth's surface and includes all continents and islands. Earth's land sur ...
,
labor Labour or labor may refer to: * Childbirth, the delivery of a baby * Labour (human activity), or work ** Manual labour, physical work ** Wage labour, a socioeconomic relationship between a worker and an employer ** Organized labour and the labour ...
, capital). This means that a country abundant in land will primarily export land-intensive products (such as agriculture), whereas a country abundant in capital will export capital-intensive products (such as high-technology manufacturing) and a country abundant in labor will export labor-intensive products (such as textiles). Building on this model, the Stolper-Samuelsson theorem holds that groups that possess the factors will support or oppose trade depending on the abundance or scarcity of the factors. This means that in a country which is abundant in land and scarce in capital, farmers will support free trade whereas producers in capital-intensive manufacturing will oppose free trade. The factor model predicts that labor in developed countries will oppose trade liberalization (because it is relatively scarce), whereas labor in developing countries will support free trade (because it is relatively abundant). Building on these insights, influential research by Ronald Rogowski argued that factor endowments predicted whether countries were characterized by class-conflict (capital vs. labor) or urban-rural conflict. Similarly, an influential study by Helen Milner and Keiko Kubota argues that factor endowments explain why developing countries liberalize their trade after they democratize (the abundant factor, labor, supports trade liberalization). A 2023 study by Milner and Lindsay R. Dolan found that factor endowments help explain trade preferences in Africa. Research has substantiated the predictions of the Stolper-Samuelsson theorem, showing that trade openness tends to reduce inequality in developing countries, but exacerbate it in advanced economies. The sectors model of trade, the Ricardo–Viner model (named after David Ricardo and
Jacob Viner Jacob Viner (3 May 1892 – 12 September 1970) was a Canadian economist and is considered with Frank Knight and Henry Simons to be one of the "inspiring" mentors of the early Chicago school of economics in the 1930s: he was one of the leading fi ...
), challenges the notion that factors are key to understanding trade preferences. Factors can be highly immobile, which means that capital-owners and labor who work in a particular sector may have similar interests. As a consequence, trade preferences are better understood by examining which economic sectors win or lose on trade liberalization. Whereas the factor model assumes that capital-owners in different sectors have similar trade preferences and that labor across different sector have similar trade preferences, the Ricardo-Viner model holds that in sectors where factors are immobile, labor and capital-owners in one sector may have the same trade preferences. As a result, the Ricardo-Viner model predicts that class conflict over trade is more likely when factors are highly mobile, but that industry-based conflict is more likely when factors are immobile. Adam Dean has challenged the economic assumptions in both models, arguing that workers' wages do not consistently correspond to increases in productivity in a given industry (contradicting Ricardo-Viner) nor do workers consistently benefit from import restrictions when labor is the scarce factor of endowment (contradicting Heckscher-Ohlin). The degree to which Ricardo-Viner and Heckscher-Ohlin are correct is conditioned by whether workers have profit-sharing institutions or are unionized (which helps them to bargain for higher wages amid productivity increases). He has also challenged Milner and Kubota's study on trade liberalization in developing countries, as he shows that democratic developing countries frequently repressed labor unions amid trade liberalization. Studies by
Dani Rodrik Dani Rodrik (born August 14, 1957) is a Turkish economist and Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University. He was formerly the Albert O. Hirschman Professor of ...
and Anna Mayda, as well as Kenneth Scheve and Matthew J. Slaughter have found support for the factor models, as they show that there is greater support for trade openness in developing countries (where labor is abundant and thus benefits from trade openness). Other studies find no support for either model, and argue that the models have limited explanatory value. A 2022 study in the ''Journal of Politics'' found that comparative advantage predicts attitudes on free trade among individuals and legislators. According to a 2017 assessment by Thomas Oatley, there are "no strong conclusions" in IPE scholarship as to which of these models better characterizes the sources of individual trade policies. Aside from the sector and factor models, there are firm-specific models of trade preferences (some times described as "New new" trade theory) which predict that those who work for large, productive and globally oriented firms support trade liberalization (as well as free movement of capital and labor), whereas employees in smaller firms are less supportive of free trade.
Economic geography Economic geography is the subfield of human geography that studies economic activity and factors affecting it. It can also be considered a subfield or method in economics. Economic geography takes a variety of approaches to many different topi ...
approaches explain trade policies by looking at the regions that benefit and lose on globalization; it predicts that large cities support trade liberalization and that left-behind regions push back on liberalization. Other alternative models to the factor and sector models may explain individual preferences through demographic data (age, class, skills, education, gender), as well as ideology and culture. Some studies have raised questions about whether individuals understand the effects of trade protectionism, which puts doubt on theories that assume that trade policy preferences are rooted in economic self-interest. Trade may in and of itself alter domestic politics, including the trade preferences of the public. A 1988 study by Helen Milner found that trade openness substantially increased support for free trade by strengthening the position of firms that stand to lose from trade protectionism. Influential studies by David Cameron,
Dani Rodrik Dani Rodrik (born August 14, 1957) is a Turkish economist and Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University. He was formerly the Albert O. Hirschman Professor of ...
and
Peter Katzenstein Peter Joachim Katzenstein FBA (born February 17, 1945) is a German-American political scientist. He is the Walter S. Carpenter, Jr. Professor of International Studies at Cornell University. Katzenstein has made influential contributions to the ...
have affirmed the insights of the Double Movement, as they show that greater trade openness has been associated with increases in government social spending. In terms of how preferences get aggregated and reconciled into foreign economic policies, IPE scholars have pointed to collective action problems, electoral systems, regime types, veto points, the nature of the legislative trade policy process, the interaction between domestic and international bargaining, and the interactions between political elites and epistemic communities. Some IPE scholarship de-emphasizes the role of domestic politics and points to international processes as shapers of trade policy. Some scholars have argued for a "new interdependence" approach, which restores insights from the complex interdependence of the 1970s, but emphasizes network effects, control over central nodes, and path dependence.


Economic development

IPE is also concerned with
development economics Development economics is a branch of economics that deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural c ...
and explaining how and why countries develop.


Historical IPE approaches

Historically, three prominent approaches to IPE were the liberal, economic nationalist (mercantilist), and marxist perspectives. Political economist Thomas Oatley traces the development of these economic ideologies, from mercantilism in the 1600s, which emphasizes competition among states for economic dominance, through liberalism in the 1700s, which emphasizes maximizing productivity through comparative advantage, to Marxism in the 1800s, which emphasizes competition among groups for economic dominance. This approach privileges the standard (or orthodox) economic theory of individual-centered liberalism as uniquely demonstrating positive-sum societal outcomes. Economic liberals tend to oppose
government intervention A market intervention is a policy or measure that modifies or interferes with a market, typically done in the form of state action, but also by philanthropic and political-action groups. Market interventions can be done for a number of reas ...
in the market when it inhibits
free trade Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...
and open competition, but support government intervention to protect
property rights The right to property, or the right to own property (cf. ownership), is often classified as a human right for natural persons regarding their Possession (law), possessions. A general recognition of a right to private property is found more rarely ...
and resolve
market failure In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value.Paul Krugman and Robin Wells Krugman, Robin Wells (2006 ...
s. Economic liberals commonly adhere to a
political Politics () is the set of activities that are associated with decision-making, making decisions in social group, groups, or other forms of power (social and political), power relations among individuals, such as the distribution of Social sta ...
and
economic philosophy An economic ideology is a set of views forming the basis of an ideology on how the economy should run. It differentiates itself from economic theory in being normative rather than just explanatory in its approach, whereas the aim of economic the ...
which advocates a restrained
fiscal policy In economics and political science, fiscal policy is the use of government revenue collection ( taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variab ...
and the balancing of budgets, through measures such as low taxes, reduced government spending, and minimized government debt. 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 Mercantilism is a economic nationalism, nationalist economic policy that is designed to maximize the exports and minimize the imports of an economy. It seeks to maximize the accumulation of resources within the country and use those resources ...
is a prominent variant of economic nationalism. Economic nationalists tend to see international trade as zero-sum, where the goal is to derive relative gains (as opposed to mutual gains). Economic nationalism tends to emphasize
industrialization Industrialisation (British English, UK) American and British English spelling differences, or industrialization (American English, US) is the period of social and economic change that transforms a human group from an agrarian society into an i ...
(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. This conceptual and theoretical approach has been incorporated into the study of public opinion, generally, and fiscal policy preferences, specifically, to conceptualize Americans' policy preferences and political ideology in the context of the United States. In popular culture, the book '' Trekonomics'' by Manu Saadia examines the science fiction multiverse of ''Star Trek'' through the lens of individual-centered liberalism that arises in the American context, commercial republicanism. Both academic and popular perspectives converge on
universal basic income Universal basic income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive a minimum income in the form of an unconditional transfer payment, i.e., without a means test or need to perform Work (hu ...
as an important focus for future research in international political economy that integrates, synthesizes, and extends the mercantilist, liberal, and Marxist perspectives.


Modern IPE approaches

There are several prominent approaches to IPE. The dominant paradigm is Open Economy Politics. Other influential approaches include dependency theory, hegemonic stability theory, and domestic political theories of IPE. Early modern IPE scholarship employed a diversity of methods and did both grand theory and middle range theory, but over time, the scholarship has become more quantitative and focused on middle-range theories. Robert Jervis wrote in 1998, "the IPE subfield, after a marvelous period of development in the 1970s and 1980s seems to be stagnating." The first wave of IPE scholarship focused on complex interdependence and the evolution of global systems of economic exchange. This scholarship focused on hegemonic stability theory, complex interdependence, and regimes. The second wave sought to explain the domestic sources of global economic cooperation or explain how global processes influence domestic policy-making. The third wave increasingly focused on explaining the micro-foundations of policy. According to Benjamin Cohen, "in terms of theory, consensus is often lacking on even the most basic causal relationships" in IPE scholarship.


Open Economy Politics

Open Economy Politics (OEP) can be traced to domestic political theories of IPE; OEP emerged in the late 1990s. OEP adopts the assumptions of neoclassical economics and international trade theory. It strongly emphasizes
microfoundations Microfoundations are an effort to understand macroeconomic phenomena in terms of individual agents' economic behavior and interactions.Maarten Janssen (2008),Microfoundations, in ''The New Palgrave Dictionary of Economics'', 2nd ed. Research in mi ...
. It has been characterized as employing rationalism, materialism and liberalism. According to David Lake, # Interests: "OEP begins with individuals, sectors, or factors of production as the units of analysis and derives their interests over economic policy from each unit's position within the international economy." # Domestic institutions: "It conceives of domestic political institutions as mechanisms that aggregate interests (with more or less bias) and structure the bargaining of competing societal groups." # International bargaining: "It introduces, when necessary, bargaining between states with different interests. Analysis within OEP proceeds from the most micro- to the most macro-level in a linear and orderly fashion, reflecting an implicit uni-directional conception of politics as flowing up from individuals to interstate bargaining." Thomas Oatley has criticized OEP for an overemphasis on domestic political processes and for failing to consider the interplay between processes at the domestic level and macro processes at the global level: in essence, OEP scholarship suffers from omitted variable bias. According to Peter Katzenstein, Robert Keohane and Stephen Krasner, scholarship in this vein assumes that actors' preferences and behavior are derived from their material position, which leads to a neglect of the ways in which variation in information may shape actor preferences and behaviors. Mark Blyth and Matthias Matthijs argue that OEP scholarship essentially black boxes the global economy. Stephanie Rickard has defended the OEP approach, writing in 2021:
OEP has matured and developed over the past decade. As a framework, it has proven to be enormously productive and adaptable—integrating diverse economic phenomena under a common theoretical umbrella and providing a framework flexible enough to react to significant events in the global economy... The accumulating body of scholarship in the OEP tradition has moved our understanding of world politics decisively forward. Critics of OEP have yet to offer an alternative, more empirically powerful theory and as a result, OEP continues to progress as the dominant paradigm in IPE research.
Scholars have questioned the empirical validity of the models derived from OEP scholarship on money and trade, as well as questioned the ability of OEP scholarship to explain momentous events in global political economy. Challengers to the OEP framework include behavioral approaches (which do not necessarily accept that individual interests stem from material incentives), and economic geography approaches. According to Stephanie Rickard, OEP scholars have modified their models to incorporate incomplete information (which affects how individual preferences are formed) and
economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of Productivity, output produced per unit of cost (production cost). A decrease in ...
(which affects the distribution of gains and losses). Erica Owen and Stephanie Walter similarly argue that "second-generation" OEP frameworks incorporate both material and ideational preferences.


Dependency theory

Dependency theory Dependency theory is the idea that resources flow from a " periphery" of poor and exploited states to a " core" of wealthy states, enriching the latter at the expense of the former. A central contention of dependency theory is that poor states ...
is the notion that resources flow from a " periphery" of poor and underdeveloped states to a " core" of wealthy states, enriching the latter at the expense of the former. It is a central contention of dependency theory that poor states are impoverished and rich ones enriched by the way poor states are integrated into the " world system". This theory was officially developed in the late 1960s following World War II, as scholars searched for the root issue in the lack of development in
Latin America Latin America is the cultural region of the Americas where Romance languages are predominantly spoken, primarily Spanish language, Spanish and Portuguese language, Portuguese. Latin America is defined according to cultural identity, not geogr ...
. Dependency theory and world systems theory are not mainstream economic theory.


Hegemonic stability theory

Early IPE scholarship was focused on the implications of hegemony on international economic affairs. In the 1970s, US hegemony appeared to be on the fall, which prompted scholars to consider the likely effects of this falling. Robert Keohane coined the term Hegemonic stability theory in a 1980 article for the notion that the international system is more likely to remain stable when a single
nation-state A nation state, or nation-state, is a political entity in which the state (a centralized political organization ruling over a population within a territory) and the nation (a community based on a common identity) are (broadly or ideally) con ...
is the dominant world power, or
hegemon Hegemony (, , ) is the political, economic, and military predominance of one state over other states, either regional or global. In Ancient Greece (ca. 8th BC – AD 6th c.), hegemony denoted the politico-military dominance of the ''hegemon'' ...
. Keohane's 1984 book '' After Hegemony'', used insights from the
new institutional economics New Institutional Economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions (that is to say the social and legal norms and rules) that underlie economic activity and with analysis beyond earlier ...
, to argue that the international system could remain stable in the absence of a hegemon.


American vs. British IPE

Benjamin Cohen provides a detailed intellectual history of IPE identifying American and
British British may refer to: Peoples, culture, and language * British people, nationals or natives of the United Kingdom, British Overseas Territories and Crown Dependencies. * British national identity, the characteristics of British people and culture ...
camps. The Americans are positivist and attempt to develop intermediate level theories that are supported by some form of quantitative evidence. British IPE is more "interpretivist" and looks for "grand theories". They use very different standards of empirical work. Cohen sees benefits in both approaches. A special edition of '' New Political Economy'' has been issued on The 'British School' of IPE and a special edition of the ''
Review of International Political Economy A review is an evaluation of a publication, product, service, or company or a critical take on current affairs in literature, politics or culture. In addition to a critical evaluation, the review's author may assign the work a rating to indi ...
'' (RIPE) on American IPE.


Journals

The leading journal for IPE scholarship is the generalist international relations journal ''
International Organization An international organization, also known as an intergovernmental organization or an international institution, is an organization that is established by a treaty or other type of instrument governed by international law and possesses its own le ...
''. ''International Organization'' played an instrumental role in making IPE one of the prominent subfields in IR. The leading IPE-specific journals are the ''
Review of International Political Economy A review is an evaluation of a publication, product, service, or company or a critical take on current affairs in literature, politics or culture. In addition to a critical evaluation, the review's author may assign the work a rating to indi ...
'' and '' New Political Economy''. Examples of journals within the historical study of IPE are
Economic History Review ''The Economic History Review'' is a Peer review, peer-reviewed history journal published quarterly by Wiley-Blackwell on behalf of the Economic History Society. It was established in 1927 by Eileen Power and is currently Editor-in-chief, edited by ...
and History of Political Economy.


Professional associations


British International Studies Association - International Political Economy Group
(BISA-IPEG)
International Studies Association - International Political Economy Section
(ISA-IPE)
ISA-IPE Mailing List


Notes and references


Further reading

*Broome, André (2014)
Issues and Actors in the Global Political Economy
', Basingstoke: Palgrave Macmillan. . * * * *Paquin, Stephane (2016)
''Theories of International Political Economy''
''Don Mill, Oxford University Press''. * * * {{DEFAULTSORT:International Political Economy Economic systems International relations theory Political economy International economics