Theories Of International political economy (IPE)

Theories of IPE

-Economic Liberalism

shares with liberal internationalism a belief in the possibility of cooperation to realize common gains

holds that by

-interational organizations

institutions

norms

states can mutually benefit from economic exchanges

Liberals believe that companies compete economically, but states do not.

The key to national wealth and therefore national power is economic growth.

The key to economic growth is free trade

Liberals want the marketplace to make the economic decisions, not the government.

all economic decisions should be made by the marketplace – the free market.

Overall success is due to substantial gains that can be realized though trade. This gains result from comparative advantage

Currently, the US is the leading liberal state in the world.

- Economic nationalism

Use of economics to influence international power and relative standing in the international system

Form of mercantilism

States compete economically

Nationalists see companies as elements of a state’s power.

Free trade only benefits the wealthiest, most advanced nations.

nly the advanced or “mature” industries will defeat less advanced or “infant” industries. Therefore free trade helps the rich get richer and the less advanced stay less advanced.

For the less advanced nations there needs to be an alternative way of getting rich. Free trade won’t lead to riches.

- Economic structuralism

both are concerned with the international division of labor created by capitalism. Both theories see that division of labor as unfair, creating categories of rich and poor people and rich and poor nations.

Marxism

Reject capitalism completely

Karl marx and Friedrich Engels

Dependency

Reform capitalism

- Globalization

Liberal and Nationalist economies vs. Marxist economies / relatively free traders vs. economies closed off to trade

Nations were seen as either communists allied with the USSR and using command economies or allies of the US with capitalist economies.

The economic struggle was one over how best to organize economic life: should nations choose capitalism or communism.

method pursued by the Four Tigers (South Korea, Taiwan, Singapore, and Hong Kong – the only four economies to go from poor to rich since WW II

It is a strategy used by most nations in the world and has lead to huge wealth and job creation.

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