Global political economy - IB
Lecture 1
What is international political economy?
: an academic field of study of the interaction of economic and political phenomena across
state borders
: an interdisciplinary social science field of study that investigates, analyzes and proposes
changes in the processes of economic flows and political governance that cross over and/or
transcend national boundaries
Global political economy
- the conomic & political environment since the 1970’s
International political economy
- history of economic and political activity across states until the 1970’s
- The academic field of study
GPE and related disciplines
- economics: choice under scarcity, comparative advantage, supply and demand,
the operation of markets
- politics: states and the use of power, the machinery of the government
- international relations: causes of war, foreign policy of states, international organizations
Approaches to economics
Neo-classical economics
- central problem: allocations of scarce resources
- solution: free markets allow for mutually advantageous exchange
- individuals: rational, free, equal, fully informed, utility-maximizing
Keynesian economics
- government intervention is crucial to:
- A well-functioning economy, especially in times of depression or recession
- The provision of a wide range of public goods
Institutional economics
- highlights the role of formal institutions and informal institutions
- markets are the results of institutions
- economics is embedded in and cannot be separated from the political and social systems
Realism: the international system lacks an overarching power and states continuously
compete for power
liberalism: possibilities for cooperation among states (free trade, democracy can foster
peace)
,Different methods of GPE
Case studies
small number: why did an event happen the way it did
- detailed investigations of an event/issue to understand the causal factors/pathways
- apply insights to similar situations
- starting point for theory-building
- disadvantage: may be unrepresentative
Statistical analysis
- statistical examination of larger datasets
- example: does free trade lead to prosperity?
Rational choice
explains outcomes as the results of actors’ choices
- actors are utility-maximizers
- actors calculate the costs and benefits before choosing an action
Prisoner’s dilemma: some environments can lead rational actors to make decisions that lead
to poor outcomes
Institutionalism
- mostly used among liberal scholars
- focus on rules, institutions which shape individual decisions
ex. What explains different sorts of capitalism in anglo-american countries vs. Germany vs.
japan.
Constructivism
- norms and values not only shape states’ interests but they are identities and
therefore interests themselves
- identities explain states’
interactions Key questions:
- what are actors’ beliefs & preferences, how have they been created and how might
they change?
- how do dominant ideas come about?
, Lecture 2
3 theoretical perspectives
Liberalism (cooperation, interdependence, positive sum game)
- The Roots
- Enlightenment/industrial revolution
- individuals are rational. individuals can comprehend natural and social
laws, therefore they can improve their condition and create a just society
through cooperation and exchange
- Locke: people are good-natured and governed by reason; the role of the
government is limited to protecting property
- Montesquieu: war is a product of society
- Kant: collective action of self-interested nations can overcome anarchy
- Adam Smith: opposed mercantilism, protectionism, and restriction of
economic activity
- David Ricardo: Theory of comparative advantage (all nations can benefit from
trade). Even if a state has no absolute advantage in producing any good, it should
specialize in products for which it had a relative advantage.
- Neoliberal institutionalism: why do we see so much cooperation?
- States cooperate most of the time
- States connect through multiple channels
1. Informal interactions
2. States care about issues other than security (ex. Environment, trade)
3. States interconnected through treaties & international institutions do not
fight one another
- Assumptions
- The free markt: at the core of economic life
- Letting diverse individuals pursue their own interests -> prosperity
- Exchange & economic integration: (positive-sum game, everyone benefits)
- Key Actors
- Individuals: self-interested and rational
- The firm is a source of economic wealth
- State control distorts market and leads to economic
failure liberals are suspicious of the state
- Key Dynamics
- IPE= search for wealth
- Free markets create growth
- The role of government intervention
Keynes: government intervention is needed to solve problems such as depressions
and recessions
Hayek: government intervention can never be the solution to market imperfections
Lecture 1
What is international political economy?
: an academic field of study of the interaction of economic and political phenomena across
state borders
: an interdisciplinary social science field of study that investigates, analyzes and proposes
changes in the processes of economic flows and political governance that cross over and/or
transcend national boundaries
Global political economy
- the conomic & political environment since the 1970’s
International political economy
- history of economic and political activity across states until the 1970’s
- The academic field of study
GPE and related disciplines
- economics: choice under scarcity, comparative advantage, supply and demand,
the operation of markets
- politics: states and the use of power, the machinery of the government
- international relations: causes of war, foreign policy of states, international organizations
Approaches to economics
Neo-classical economics
- central problem: allocations of scarce resources
- solution: free markets allow for mutually advantageous exchange
- individuals: rational, free, equal, fully informed, utility-maximizing
Keynesian economics
- government intervention is crucial to:
- A well-functioning economy, especially in times of depression or recession
- The provision of a wide range of public goods
Institutional economics
- highlights the role of formal institutions and informal institutions
- markets are the results of institutions
- economics is embedded in and cannot be separated from the political and social systems
Realism: the international system lacks an overarching power and states continuously
compete for power
liberalism: possibilities for cooperation among states (free trade, democracy can foster
peace)
,Different methods of GPE
Case studies
small number: why did an event happen the way it did
- detailed investigations of an event/issue to understand the causal factors/pathways
- apply insights to similar situations
- starting point for theory-building
- disadvantage: may be unrepresentative
Statistical analysis
- statistical examination of larger datasets
- example: does free trade lead to prosperity?
Rational choice
explains outcomes as the results of actors’ choices
- actors are utility-maximizers
- actors calculate the costs and benefits before choosing an action
Prisoner’s dilemma: some environments can lead rational actors to make decisions that lead
to poor outcomes
Institutionalism
- mostly used among liberal scholars
- focus on rules, institutions which shape individual decisions
ex. What explains different sorts of capitalism in anglo-american countries vs. Germany vs.
japan.
Constructivism
- norms and values not only shape states’ interests but they are identities and
therefore interests themselves
- identities explain states’
interactions Key questions:
- what are actors’ beliefs & preferences, how have they been created and how might
they change?
- how do dominant ideas come about?
, Lecture 2
3 theoretical perspectives
Liberalism (cooperation, interdependence, positive sum game)
- The Roots
- Enlightenment/industrial revolution
- individuals are rational. individuals can comprehend natural and social
laws, therefore they can improve their condition and create a just society
through cooperation and exchange
- Locke: people are good-natured and governed by reason; the role of the
government is limited to protecting property
- Montesquieu: war is a product of society
- Kant: collective action of self-interested nations can overcome anarchy
- Adam Smith: opposed mercantilism, protectionism, and restriction of
economic activity
- David Ricardo: Theory of comparative advantage (all nations can benefit from
trade). Even if a state has no absolute advantage in producing any good, it should
specialize in products for which it had a relative advantage.
- Neoliberal institutionalism: why do we see so much cooperation?
- States cooperate most of the time
- States connect through multiple channels
1. Informal interactions
2. States care about issues other than security (ex. Environment, trade)
3. States interconnected through treaties & international institutions do not
fight one another
- Assumptions
- The free markt: at the core of economic life
- Letting diverse individuals pursue their own interests -> prosperity
- Exchange & economic integration: (positive-sum game, everyone benefits)
- Key Actors
- Individuals: self-interested and rational
- The firm is a source of economic wealth
- State control distorts market and leads to economic
failure liberals are suspicious of the state
- Key Dynamics
- IPE= search for wealth
- Free markets create growth
- The role of government intervention
Keynes: government intervention is needed to solve problems such as depressions
and recessions
Hayek: government intervention can never be the solution to market imperfections
