International Political economy

INTERNATIONAL POLITICAL ECONOMY AND GLOBALISATION

Author: Ramzi Bendebka

LEARNING OUTCOMES

• Understanding what is International Political Economy (IPE) and its significance in global dynamics.

• Understanding State Functionality concerning economic policies and political decisions.

• Understanding Globalisation and its multifaceted impact on International Relations, including economic, political, and social aspects.

WHAT IS IPE?

International Political Economy (IPE) synthesizes concepts from various interdisciplinary fields:

• Economics: Examines the production, distribution, and consumption of goods and services.

• Political Science: Studies the theory and practice of politics and governance.

• Sociology: Explores society, social relationships, and institutions.

• Philosophy: Draws on historical and philosophical ideas to understand power dynamics and ethical considerations.

IPE provides a comprehensive explanation of global processes driven by:

• Governments: Engage in policy-making and regulation that affects global trade and diplomacy.

• Businesses: Multinational corporations expand operations across borders, influencing economics and culture.

• Social Forces: The role of civil society, public opinion, and movements in shaping policy and governance across different geographical regions.(Source: Balaam & Bradford, 2019)

DEFINITION OF IPE

International Political Economy is the study of the interplay between economics and politics on a global scale, focusing on how political interests influence economic policies and vice versa.

• Economy Definition: A system of producing, distributing, and using wealth which includes mechanisms of market formation and regulation.

• Politics Definition: The struggle between actors with divergent interests aiming for collective decisions, which can occur both inside formal governments and through informal networks of influence.(Source: Jeffry & Lake & Broz, 2017)

WHAT DO WE STUDY?

Analytical exploration of real-world scenarios and their implications, including but not limited to

• Living conditions affected by geopolitical events, such as the ongoing situation in Ukraine, highlighting the significance of the Dnieper and Donetsk regions.

• Examination of the impact of Russian military control in Crimea and adjacent areas since its annexation in 2014, revealing the complexities of sovereignty and international law.(Source: Institute for the Study of War)

PERSPECTIVES IN IPE

Different theoretical frameworks provide varied lenses through which to understand IPE, including:

• Realism: States pursue their interests based on calculated gains and the quest for power in an anarchic international system.

• Idealism and Liberalism: Emphasizes cooperation and the role of non-state actors, recognizing different agents acting on their preferences in the international system.

• Institutionalism and Regime Theory: Bridges realist and liberal thoughts, focusing on the importance of international institutions in facilitating cooperation.

• Dependency Theory: Examines the economic relationships between core-periphery countries and the implications of neocolonial practices.

• World System Theory: Analyzes global economic systems and hegemonic stability, emphasizing how a single power maintains order.

GOVERNMENT'S FUNCTIONS

Essential functions of government include:

• Protecting National Borders: Defense against external threats.

• Enforcing Civil Laws: Establishing legal frameworks that govern the behavior of citizens.

• Engaging in Public Works: Initiatives such as education, healthcare, and infrastructure development.

FREE TRADE AND RICARDO'S THEORY

David Ricardo was a pivotal figure in economic theory advocating for free trade:

• Argued against tariffs, viewing them as impediments to economic growth and efficiency.

• Suggested that free trade promotes global wealth and reduces the likelihood of conflict through specialization and the benefits of comparative advantage among nations. This allows countries to focus on producing goods where they have a relative efficiency, ultimately leading to increased productivity and innovation.

STATE MODERN FUNCTIONS

The modern state's responsibilities extend beyond basic definitions to include:

• Regulating Labor Markets and Economies: Creating policies that affect employment and economic stability.

• Fighting Corruption and Supporting Democracy: Establishing transparency measures and promoting civic engagement.

• Owning Businesses and Creating Legal Frameworks: Involvement in critical industries and maintaining legal structures that govern economic activities.

• Oversight of Welfare Programs: Addressing social inequalities and providing safety nets for citizens.

• Collecting Taxes: Taxation represents a significant portion of GDP, essential for funding public services and national initiatives.

TRANSFORMATION OF A STATE

Factors affecting state transformation include:

• Financial Resources and Taxation Control: How states manage their financial systems impacts their governance capacity.

• Changes Led by Globalization: The influence of global markets and international relations.

• The Westphalia Peace Treaty: Led to the modern conception of state sovereignty and non-intervention principles.

• Emergence of a Welfare State: Prioritizing citizens' welfare and a focus on social equity.

• Transnational Governance: The rise of entities that operate beyond national boundaries, influencing national policies.(Cited: Leibfried and Zurn, Transformation of the State, Cambridge University Press).

CENTRAL ELEMENTS OF IPE

Key dimensions of IPE involve:

• Political Dimension: Power utilization by diverse actors, including individuals, groups, and transnational corporations (TNCs).

• Economic Dimension: Distribution of scarce resources in markets and its effects on human behavior and societal norms.

• Societal Dimension: Interactions of various social groups sharing identities based on factors such as ethnicity and religion.

• Historical Dimension: Contextualizing state-market relationships over time and their evolution due to historical events.

FOUR ESSENTIAL ECONOMIC ACTIVITIES

1. Resource Management: Efficient allocation and sustainability of resources.

2. Distribution of Goods and Services: Mechanisms through which goods and services are delivered to consumers.

3. Consumption of Goods and Services: Examination of consumer behavior and decision-making processes.

4. Production of Goods and Services: Understanding production processes and industrial organization.

ACTORS IN INTERNATIONAL POLITICAL ECONOMY

Key actors in IPE include:

• Governments: National authorities that implement policies influencing international relations.

• Multinational Corporations (MNCs): Companies that operate in multiple countries, impacting economic conditions and employment.

• Civil Society Organizations: Non-governmental entities that advocate for social change and influence public policy.

• Individuals: Citizens whose behaviors, choices, and activism shape the political landscape.

IMPACT OF GLOBALISATION ON INTERNATIONAL RELATIONS

Globalisation is perceived as a multifaceted process with deep implications for wealth distribution, political relationships, and social structures in international dynamics, emphasizing interdependence among countries.

GLOBALIZATION AND ECONOMIC RELATIONS

Characteristics of globalization include:

• Market Integration: The creation of a single global market fostering trade and investment.

• Diverse Economic Dependencies: Various countries relying on one another for resources, labor, and technology.

• Policies Shaping International Trade: Government regulations, international agreements, and organizational frameworks that guide global commercial practices.

COLLABORATION VS COMPETITION

Thomas Friedman discusses the dual effects of globalization:

• Increased collaboration in production processes due to technological advancements.

• Heightened competition among global actors as racial and economic divides challenge cooperative efforts.(Reference: Friedman, The World Is Flat).

GLOBALIZATION AND CONFLICTS

Issues stemming from globalization include:

• Resource Scarcity: Competing national interests over dwindling resources leading to conflict.

• Technology Accessibility Issues: The digital divide and unequal access to technological advancements fueling disparity.

• Shifts in Power Dynamics: Alterations in global power relations leading to trade wars and governance challenges.

• Formation of Economic Blocs: Political and economic alliances formed in response to globalization's pressures.

STATES AND TNCs/INTERNATIONAL PRODUCTION RELATIONS

Central elements of national power encompass control of valuable resources, influencing geopolitical strategies and economic policies.