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Introduction - To - Political Economy 2

Chapter 1 introduces International Political Economy (IPE), tracing its origins from mercantilism to modern neoliberalism, highlighting key economic theories and historical events that shaped global economic relations. It discusses the role of IPE in contemporary issues such as trade wars, financial crises, and global inequality, emphasizing the influence of international organizations and multinational corporations. The chapter concludes by stressing the importance of studying IPE to understand current and future global economic challenges.

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18 views2 pages

Introduction - To - Political Economy 2

Chapter 1 introduces International Political Economy (IPE), tracing its origins from mercantilism to modern neoliberalism, highlighting key economic theories and historical events that shaped global economic relations. It discusses the role of IPE in contemporary issues such as trade wars, financial crises, and global inequality, emphasizing the influence of international organizations and multinational corporations. The chapter concludes by stressing the importance of studying IPE to understand current and future global economic challenges.

Uploaded by

tkgwez1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Chapter 1: Introduction to International Political Economy (IPE)

1.1 The Origins and Evolution of International Political Economy

1.1.1 Early Economic Thought and the Foundations of IPE

Mercantilism (16th–18th Century)


- The first major economic theory that linked state power directly to economic wealth.

- Advocated for maximizing exports and accumulating precious metals as a means of


national strength.

- Led to colonial exploitation, as European powers extracted resources from their colonies
to fuel economic expansion.

- Example: British colonial policies in India deliberately restricted local industries to benefit
British manufacturing.

Classical Political Economy (18th–19th Century)


- Adam Smith's *Wealth of Nations* (1776) introduced the concept of free markets and
limited government intervention.

- David Ricardo's theory of **Comparative Advantage** encouraged international trade


based on specialization.

- Karl Marx's critique of capitalism highlighted its tendency to exploit workers and create
economic inequality.

The Gold Standard and Early Globalization (19th–Early 20th Century)


- The gold standard linked national currencies to gold reserves, creating stability in
international trade.

- Increased global economic integration but also deepened economic inequalities.

- The system collapsed after World War I, leading to economic nationalism.

1.1.2 The Birth of Modern IPE (1940s–Present)

The Great Depression (1929–1940s)


- Triggered by stock market crashes, mass unemployment, and declining industrial
production.

- Governments shifted from laissez-faire policies toward interventionist strategies.

- John Maynard Keynes advocated for government spending to stimulate demand.


The Bretton Woods System (1944–1971)
- Established fixed exchange rates and global financial institutions.

- Collapsed in 1971, leading to floating exchange rates.

The Rise of Neoliberalism (1980s–Present)


- Policies emphasized privatization, deregulation, and free trade.

- IMF and World Bank imposed Structural Adjustment Programs (SAPs) on developing
countries.

- Criticism: Neoliberalism increased economic inequality and financial instability.

1.2 The Role of IPE in Contemporary Global Politics

1.2.1 Trade Wars: The Case of U.S.-China Economic Rivalry


- The U.S. has accused China of intellectual property theft and market manipulation.

- Tariffs have led to higher consumer prices and supply chain disruptions.

1.2.2 Financial Crises and Their Political Implications


- 2008 Global Financial Crisis: Triggered by subprime mortgage lending and bank failures.

- Keynesian vs. Neoliberal debates on economic intervention.

1.2.3 Development and Inequality: The North-South Divide


- Modernization Theory vs. Dependency Theory on global inequality.

- Africa's reliance on raw materials while Western countries dominate high-value


industries.

1.3 Key Themes in IPE

1.3.1 The Role of International Organizations


- IMF, World Bank, and WTO influence global economic policies.

1.3.2 The Impact of Multinational Corporations (MNCs)


- Large corporations shape markets and government policies.

- Debate: Do MNCs exploit developing nations or create opportunities?

Conclusion: The Importance of Studying IPE


- Understanding IPE explains global trade conflicts and financial crises.

- Future debates will focus on climate change, digital economies, and China's economic rise.

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