International Political Economy: Overview and Conceptualization

The concept of international political economy (IPE) encompasses the intersection of politics and economics as goods, services, money, people, and ideas move across borders. The term “international political economy” began to draw the attention of scholars in the mid-1960s amid problems of the world economy and lagging development in the third world. IPE was later replaced by the term “global political economy” (GPE) in recognition of the fact that what happens in the world is not only about interactions between states, and that the global political economy includes many different kinds of actors. In general, GPE better suits the reality of a globalizing world. Early works that explored the relationship between economic activities and state interests originated long before the term “political economy” was coined. Examples are those by Aristotle, Kautilya, Ibn Khaldun, and Niccolò Machiavelli. Adam Smith used the word “mercantilism” to describe the various theories and policies on how states should intervene in markets in order to increase wealth and power. “Mercantilism” was supplanted by “economic nationalism” in the twentieth century, followed by classical liberalism, neoliberal institutionalism, and neoclassical liberalism. Whereas both mercantilism and economic nationalism emphasize state power and state interests, liberal writers such as John Locke and Immanuel Kant argue that possessive individualism and the individual are the bearer of rights. Other major schools of thought that have conceptualized important concepts, relationships, and causal understandings in IPE include Marxism and its variants, feminist approaches, and communitarianism.