International Political Economy - Contemporary World

• International Political Economy (IPE)


  Subfield of political science that deals with the convergence of international political and economic forces
• IPE


  • Powerful nations having dominant multi-national corporations (MNCs)
  • MNCs control global markets and represent the interests of their home nations
• Globalization


  • Economic Globalization is the major basis of defining globalization
  • Globalization is associated with western liberalism
• Major parts of globalization

  • Free Trade
  • Privatization
  • Foreign direct investments
• Free Trade


  • Reduction of barriers to trade among nations
  • Removal of Tariffs (taxes levied on imported products)
• Open and liberal trading system

  • Created major problems - Domestic firms pushed out due to entry of cheaper imported products
  • Free Trade favors more developed nations and their multi-national corporations (MNCs)
• World Trade Organization


  • Product of the global world order
  • Sustains free trade by its protection against tariffs
  • Can pressure other countries to open their markets
• Global division during Cold War period

  • First World - Western nations under US-Euro leadership
  • Second World - Communist block under the control of the Soviet Union
  • Third World - Developing nations; subjected to super power conflict
• Economic turbulence in the 80s and political dissolution of the Soviet system


  Led to economic and political changes
• Global division after Cold War

  • Developed vs. Developing - conflicting dichotomy
  • Level of Development - main basis for global division
  • Socio-economic condition - basis for classification
  • Westernization - buzz word for development
  • Domination of the Rest by the West
• BRIC(S) - Regional Powers

  • Brazil - Largest economy in Latin America
  • Russia - Major Economy in Eastern Europe; controls vast energy resources
  • India - Largest economy in South Asia
  • China - Second largest economy in the world; controls global production chains
  • South Africa - Major regional economic power in Africa
• Crisis in the West in 2008


  Led to the rise of the Rest
• Tiger Economies


  • Fast and high growth nations mostly found in East Asia
  • Japan started the trend, followed by South Korea, Taiwan, Singapore, and Hong Kong
  • These economies started from the pits of poverty
  • These countries became major trading nations due to high economic growth for 2 decades
  • They rely on exports for their development - from agriculture products and textiles to machineries and high tech products
• China benefited from the 2008 crisis


  • Became the main creditor of the US due to increasing US debt
  • Consistent economic growth propelled China into an economic titan
• China's economic growth


  Fueling its military industry
• China's Sino-centric growth


  • Undermines other nations not geared towards a more China-based economic activity
  • Greater growth in China's military spending leads to security problems for other nations