Week 2- Tuesday, Jan 11, 2022

Introduction to International Political Economy

International Political Economy focuses on interrelationships between:

- individuals
- governments
- public policy

It is a branch of social sciences.

In the past, this term was used to refer to economics.

Political Economy also studies the application of theories such as socialism, capitalism and communism
in the real world.

The government often uses these theories to generate revenue and to distribute its resources in a way
that is most beneficial to the majority of the citizens.

Neoliberalism vs social-democracy (debate within capitalism)

Framework from MENA

- Three pillars and their simultaneous interaction:

o State Structure and Policy
 The possible structures of the governance system:
 democratic
 semi-authoritarian
 authoritarian
 Statist to free mkt (development model)
 ISI
o Structural Transformation
 Economic grown isn’t equal in all sectors of the economy
 Example: decrease in agriculture; Its effect: decrease in food security
o Social actors
 class-based system
 there are winners and losers (due to the economic strategies that are
applied)

There are 4 important areas in IPE:

- International trade system: WTO, NAFTA, ASEAN, MERCOSUR

- The international monetary system: (economic transactions)
- Multinational corporations
 o Positives:
 highly beneficial for developing countries (bring employment opportunities
and new technologies)
 they benefit from government subsidies and this can be connected to
investment in local firms in the future.
o Negatives:
 profit is the primary goal, so they often tolerate unethical labor standards
 environmental costs
- Economic development: State lead versus market lead

Liberalism: mkts are more important than states

Mercantilism: (opposite) = state is more important than the mkt

Marxism: class is more important than states and mkts

Globalization: helps with integration of economies, but it also creates global inequalities