Introduction

International political economy is the study of how state and markets affect the
distribution of power and wealth in the world. Analyzing the interactions of governments,
businesses and ordinary people,international political economy help us to understand
the cause of global problems and the consequences of global exchange and also
International institutions have their own role in IPE.Like International monetary
fund(IMF), World bank(WB) and World Trade Organization(WTO) in the governance of
international finance, investment and trade.

Objectives
● To understand clearly the meaning and the nature of international political economy(IPE)
● To distinguish the difference between influential and theoretical perspectives of IPE
● To understand the most common national political economic systems around the world
● To examine about the governing institutions and governance of IPE

International political economy (IPE)

IPE is one of the studies that focused on economic and political issues. IPE study
analyzes how the political forces affect the market dynamics and its implications on the
political process. It also examines the interaction between domestic political economy
and foreign economic policy of the country. As well as, the involved actors in IPE study
are states, markets, and societies. The field thus consists of two central dimensions
namely: the political and economic dimension.

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Political dimension: accounts for the use of power by a variety of actors, including
individuals, domestic groups, states, IOs, NGOs, and TNCs.

Economic dimension: deals with how scarce resources are distributed among
individuals, groups, and nation-states.

Minimalist view state only provides the legal-institutional framework for enforcing
contracts and protecting private property, this is a view with which most neoclassical
economists would agree.

Other views state plays an active and direct role in a much wider range of economic
activity.

Foundational theories of International Political economy

Mercantilism/nationalism

Defends a strong and pervasive role of the state in the economy – both in domestic and
international trade, investment and finance and promotes an extreme policy of autarky
to promote national economic self-sufficiency.

Defended even a much more sophisticated and interventionist role of the state in the
economy-

Liberalism

It defends the idea of a free market system and the foundational value and principle of
liberalism is: removing impediments (barriers) to the free flow of goods and services
among countries.

By removing barriers to the free movement of goods and services among countries, as
well as within them, countries would be encouraged to specialize in producing certain
goods, thereby contributing to the optimum utilization of resources.

Marxism

It is the youngest of the three perspectives and it was advanced by Karl Marx and the
collapse of the Soviet Union in the 1990‘s and the apparent embrace of the free-market
economy marks a clear failure and hence death of Marxism.

More and more countries are accepting liberal principles as they open their economies
to -imports and foreign investment, scale down the role of the state in the economy and
shift to export-led growth strategies.

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Contemporary theories of International political economy
Hegemonic Stability Theory (HST)

Hybrid theory contains elements of mercantilism, liberalism, and even Marxism and Its
closest association is with mercantilism.

Basic argument of HST is: The root cause of the economic troubles (Great Depression)
was the absence of a benevolent hegemon - that is, a dominant state willing and able to
take responsibility for the smooth operation of the International (economic) system as a
whole.

HST has influenced the establishment of the Bretton Woods institutions (IMF and
WB) - both being the products of American power and influence.

Structuralism

It is a variant of the Marxist perspective and its analysis a practical diagnosis of the
specific structural problems of the international liberal capitalist economic system whose
main feature is the Centre-periphery (dependency) relationship between the Global
North and the Global South which permanently resulted in an unequal (trade and
investment) exchange.

The perspective is also known as - Prebisch-Singer thesis

It advocates for a new pattern of development based on industrialization via import

substitution based on protectionist policies.

Developmental State Approach

Variant of mercantilism and it advocates for the robust role of the state in the process of
structural transformation and state intervenes and guides the direction and pace of
economic development. The features of developmental state are – strong
interventionism, existence of bureaucracy, existence of active participation and
response of the private sector to state intervention.

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Survey of the Most Influential National Political Economy
systems in the world

❖ The American System of Market-Oriented Capitalism

❖ The Japanese System of Developmental Capitalism
❖ The German System of Social Market Capitalism
❖ Varieties of National political economic system

Governing Institution and governance of international

political economy

International Trade: is the exchange of capital, goods, and services across international
borders or territories because there is a need or want of goods or services. In most countries,
such trade represents a significant share of gross domestic product.

WTO (World Trade Organization):is an international organization which sets the rules
for global trade. Set up in 1995 as the successor to the General Agreement on Trade
and Tariffs (GATT). Major economic powers such as the US, EU and Japan have
managed to use the WTO to frame rules of trade to advance their own interests.

Conclusion
The study of international political economy has made great advances in twenty - five
years. After a period of internecine paradigmatic conflict most scholars in the field have
accepted a general approach to investigating issues in the politics of international
economics . The study of IPE requires an understanding of how domestic and
international factors interact and solid building blocks on both the domestic and
international levels.We have identified both theoretical and empirical areas . In theory
we see the most important documents in IPE and in empirical we see our country's
politics.So we strongly advise applying the analytical tools of IPE more seriously to
institutions is likely to be both important and fundamental.