4. Understanding IPE
• IPE examines the interdependence of politics and
economics in the international system.
• Like political economy, it views political and economic
reality as two sides of the same coin.
• Like international relations, it generally adopts a systemic
perspective and views states as primary actors.
• The study of IPE springs from an international economy
that transcends place within which states, bound by
territory, interact.
5. IPE Questions
• How does the international economy affect domestic
politics and/or domestic economic realities (and vice
versa)?
• Who benefits from activity/outcomes in the international
economy?
• Can order be attained in the international economic
system?
• Can collective action be achieved within the international
economy?
6. Levels of Analysis in IPE
IPE
International National
Economy Political Economy
Where Where domestic
international policymakers,
institutions and interest groups
sovereign states and institutions
interact. interact.
7. Levels of Analysis in IPE
IPE
International National
Economy Political Economy
Where Where domestic
international policymakers,
institutions and interest groups
sovereign states and institutions
interact. interact.
(Two-level bargaining games)
8. Classical Perspectives
• Mercantilism
• Parallel to the realist school of international relations.
• Emphasizes that states participate in the international
economy by pursuing their interests based on
calculations of gains from economic decisions relative to
other states.
• Participation in the international system is viewed as a
zero-sum game.
• Foundations: Adam Smith (Absolute Advantage)
9. Classical Perspectives
• Liberalism
• Parallel to the idealist school of international relations.
• Considers other agents in the international system and
views these as acting on the basis of preferences.
• Behavior is rooted in calculations of absolute gains from
participation in the international economy (participation
as a positive-sum game).
• Foundations: David Ricardo (Comparative Advantage)
10. Additional Perspectives
• Regime theory
• Represents an area of convergence between realist and
liberal thinking.
• Regimes – institutions, rules and norms – exist to shape
international activity and provide a semblance of order
to the international system.
• Cooperation and collaboration are furthered by regimes
by reducing uncertainties in the international economy.
11. Additional Perspectives
• World Systems Theory
• Related to the Dependency school of thought in
international relations.
• Core-Periphery (Hub and Spoke) model of the
international economy.
• The world is divided into a core set of capitalist developed
countries upon which less-developed periphery and semi-
periphery countries are dependent.
• Foundations: Karl Marx and Immanuel Wallerstein
12. Additional Perspectives
• Hegemonic Stability Theory
• Submits that international order and stability can be
achieved only if there is a hegemonic power in the
system.
• Hegemons act as providers of (international) public goods.
• They also serve to help overcome collective action
problems in the international system.
• Hegemons need not act benevolently; they may even act
self-interestedly.
13. A Compendium of Perspectives
IPE
IR IPE IPE-RELATED ELEMENTS
View of the state system as anarchic.
Realism Mercantilism States pursue interests on the basis of
relative gains (zero-sum orientation).
Emphasis on state preferences. States act
Idealism Liberalism on the basis of absolute gains; international
activity is seen as a positive-sum game.
Institutions/regimes are the strategic setting
Institutionalism Regime Theory within which states operate, providing
order and facilitating international
Division of the world economy into a
Dependency World Systems
developed capitalist “core” upon which an
Theory Theory underdeveloped “periphery” is dependent.
Hegemons lend stability to the
Hegemonic Stability Theory international system, overcoming collective
action problems and providing “public
14. In Summary
• The field of IPE seeks to examine the tensions that arise
between an international economic system and a state
system fundamentally rooted in territorial boundaries.
• Like political economy, IPE concerns itself with:
• The nexus between national and international political-
economic activity.
• The distribution of power in the international economy.
• Equity in the international economy.
• Questions of international economic order and
cooperation.
15. In Summary
• A prevailing concern of IPE at present (especially in the US)
is the modeling of two-level games to explain bargaining in
the international economy.
• System-oriented IPE has focused on:
• International trade, investment, and finance (and regime
creation in these areas).
• North-South relations.
• Issue areas requiring collective action such as the
environment or regional integration.