International Political Economy

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International Political Economy (IPE) also known as Global Political Economy is an academic discipline within the social sciences that analyses international relations in combination with political economy. For example, changes in world oil prices, the global reach of transnational corporations, the impact of volatile currency movements are all demonstrate the interconnectedness of polities and economics in what is now an increasingly internationalised world system. In addiction, international political economy is based on a notion that the focus of politic conflict, at both the domestic and international levels, is the concern over who get what, when and how. There have traditionally been three broad categories of theoretical approach to the study of international political economy: Liberalism, Realism and Marxism.

Liberal approach

In IPE terms, Liberalism is an approach associated with classical economic or neoclassical economics. Liberal view believes in freedom, for private powers at the expense of public power (government). Neoclassical economists, who are generally Liberals, believe firmly in the superiority of the market as a mechanism for allocation scarce resources.

Liberals believe the economic role of government should be quite limited. Many forms of government intervention in the economy intentionally or unintentionally restrict the market and thereby prevent potentially rewarding trades from occurring.

Liberals generally support the provision by government of certain public goods or services that benefit society and that would not be provided by private markets. For example, the government plays an important role in supplying the conditions necessary for the maintenance of a free and competitive market. Governments must provide the defence of the country, protect property rights, and prevent any unfair collusion or concentration of power within the market. The government should also educate its citizens, build infrastructure, and provide and regulate a common currency. The proper role of government in other words, is to provide the necessary foundation for the market.

At the level of the international economy, Liberal emphasizes that both the market and politics are environments in which all parties can benefit by entering into voluntary exchanges with others. In other words, all countries are best off when goods and services move freely across national borders in mutually rewarding exchanges. Liberals also believe that governments should manage the international economy in much the same way as they manage their domestic economics. They should establish rules and regulations, often referred to as international regimes to govern exchanges between different national currencies and ensure that no country or domestic group is damaged by unfair international competition.

Realist view

Within IPE the Realist approach earliest called mercantilism then commonly labelled nationalism until the first decade of the 21st century. The Realist believes that nation states pursue power and shape the economy to this end. They are the dominant actors within the international political economy. According to Realists, the international system is anarchical, a condition under which nation states are sovereign, the sol judges of their own behaviour and subject to no higher authority. If no authority is higher than the nation state, then all actors must be subordinate to it, while private citizens can interact with their counterparts in other countries, Realist asset that the basis for this interaction is legislated by the nation state.

Realists argue that nation states are fundamentally concerned about international power relations. Because the international system is based on anarchy, the use of force or coercion by other nation states is always a possibility and no higher authority is obligated to come to the aid of a nation state under attack. Nation states are ultimately dependent on their own resources for...
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