The global political economy is a multilevel system of economic activities and regulation in which the domestic level continues to predominate—in other words, it is a global system comprising national capitalist economies. Nations differ in terms of the regulations and institutions that govern economic activity, an observation that is embodied in the so-called “varieties of capitalism” (VoC) literature. Contemporary VoC approaches highlight the significance of social and political institutions in shaping national economies, in stark contrast to neoclassical economics which generally ignores institutions other than markets or sees them as hindrances to the functioning of free markets. Three analytical premises inform the diverse conceptual frameworks within the VoC literature: the firm-based approach, national business systems approach, and the governance or “social systems of production” approach. The VoC literature offers three important contributions to our understanding of the global political economy. The first is that different sources of competitive advantage for firms and nations are institutionally rooted and not easily changed. The second contribution is that these distinct national arrangements give rise to different interests/preferences in how the global economy is constructed and managed. Finally, the VoC approaches provide a framework for analyzing long-term institutional changes in capitalist systems and the persistence of diverse forms of capitalism, including the global financial crisis of 2008–2009 that may usher in yet another epochal change in the “battle of capitalisms.”
Donna Lee and Brian Hocking
Mainstream studies of diplomacy have traditionally approached international relations (IR) using realist and neorealist frameworks, resulting in state-centric analyses of mainly political agendas at the expense of economic matters. Recently, however, scholars have begun to focus on understanding international relations beyond security. Consequently, there has been a significant shift in the study of diplomacy toward a better understanding of the processes and practices underpinning economic diplomacy. New concepts of diplomacy such as catalytic diplomacy, network diplomacy, and multistakeholder diplomacy have emerged, providing new tools not only to recognize a greater variety of state and nonstate actors in diplomatic practice, but also to highlight the varied and changing character of diplomatic processes. In this context, two themes in the study of diplomacy can be identified. The first is that of diplomat as agent, in IR and international political economy. The second is how to fit into diplomatic agency officials who do not belong to the state, or to a foreign ministry. In the case of the changing environment caused by globalization, economic diplomacy commonly drives the development of qualitatively different diplomatic practices in new and existing economic forums. Four key modes of economic diplomacy are critical to managing contemporary globalization: commercial diplomacy, trade diplomacy, finance diplomacy, and consular visa services in relation to increased immigration flows. The development of these modes of economic diplomacy has shaped the way we think about who the diplomats are, what diplomats do, and how they do it.
Angus Cameron and Ronen Palan
Like many other social scientific terms, the exact meaning of globalization has always been unclear. It does not have a single point of origin, but emerged in the mid to late 1980s in several disciplines. In the general sense, globalization is the increasing interaction of people through the growth of the international flow of money, ideas, and culture. It first manifested in media and cultural studies as early as the 1970s—the spread of TV, telephones, information and communication technology (ICT), and other media provided an enduring image of the technological “shrinking” of space, a defining trait of globalization. Advances in the means of transport (such as the steam locomotive, steamship, jet engine, and container ships) and in telecommunications infrastructure (including the rise of the telegraph and its modern offspring, the Internet and mobile phones) have been major factors in globalization, generating further interdependence of economic and cultural activities. In connection to the study of globalization, global political economy (GPE), or international political economy (IPE), is an academic discipline that analyzes economics and international relations. As an interdisciplinary field, it draws on a few distinct academic schools, most notably economics, political economy, political science, sociology, history, and cultural studies. Other topics that command substantial attention among IPE scholars are international trade, international finance, financial crises, macroeconomics, development economics, and the balance of power between and among states and institutions.
Michael G. Hall
Political economy research in exchange rate policy generally focuses on three particular questions. First is the question of the exchange rate regime. The exchange rate regime is the rule a government uses to determine the value of an exchange rate. The issue here is what can determine the degree of government intervention in exchange rate policy. Second, political economy research investigates the choices concerning the value or level of the exchange rate. This raises the question of how and why policy affects the relative prices of foreign and domestic goods. Finally, political economy research also investigates the nature and causes of an international monetary regime—the international principles, norms, and rules concerning monetary relations that governments and market participants expect to see others practice. International monetary regimes can be global or regional in scope, and in practice contain four elements. First, states agree to rules concerning exchange rate regimes. Second, if those rules mandate a fixed exchange rate, states agree to fix to a common “anchor” currency. Third, the international regime emphasizes particular methods for adjusting balance of payments imbalances, described below. Fourth, states agree to common procedures for resolving interstate disputes over exchange rates, through either hegemonic leadership, negotiation, supranational organizations, or rules demanding automatic responses.
Darel E. Paul
Liberal international political economy (IPE) is the offspring of a marriage between mainstream international economics with its focus on markets and mainstream international relations with its emphasis on the state. While clearly involving the traditional disciplines of economics and political science, liberal scholarship in IPE tends to be housed almost exclusively in the latter. Liberal IPE has always maintained a special relationship with its absentee father economics, looking to it particularly as a source of theoretical and especially methodological inspiration. In its earlier phase, the “American school” of IPE, also known by its practitioners as Open Economy Politics (OEP), was strongly oriented toward studying the societal determinants of state trade policy and indeed continues to expand upon this terrain. OEP has moved into many diverse areas since then. Having roots in both neoclassical economics and realist international relations theory, OEP has a strong tendency to limit its empirical interest to observable behavior, define interest in strictly material terms, and assume the psychology of decision-making to be rational and therefore unproblematic. Unsurprisingly, OEP has little room for ideas as interesting and important objects of study, and in turn some of the early pioneers of the liberal approach in IPE have lamented its becoming “too materialistic.”
The Millennium Development Goals (MDGs), endorsed by 189 governments at the Millennium Summit, propose a concerted global effort to reduce the incidence of severe poverty and many of its most serious manifestations over a twenty-five-year period. The MDGs offer crucial insights into the politics of poverty and poverty reduction in international affairs. Their political dimensions can be analyzed in terms of agency, the nature and limits of accountability, the use and manipulation of quantitative goals for political ends, the dangerous illusion that MDG objectives can be accomplished in large part by mobilizing more development assistance, and the MDGs’ distinctly apolitical approach to the structural causes of poverty. The MDG initiative should be situated in three ongoing streams of debate and discussion: the debate over the relative priority of growth and of human development for poverty reduction; the tension between the assertion of rights and the enunciation of donor-driven goals as the political engine of poverty reduction; and the debate over the roles of markets and of state direction and regulation. While the MDGs concentrate on increasing aid flows to reduce the incidence of poverty and its manifestations, international trade and finance arrangements too often impede rapid progress. This is evident in water privatization, trade rules, and anti-retroviral medicines for HIV/AIDS patients. A way forward is to integrate the MDGs more deeply with human rights guarantees. Donors, for example, must take seriously the 2002 Draft Guidelines for the application of human rights to poverty reduction strategies.
Debora Halbert and Ashley Lukens
Intellectual property rights (IPRs) encompass several different legal regimes—such as patents, copyrights, trademarks, and “sui generis” protections—developed to protect intangible assets associated with ideas, expressions, and inventions, which are included under the broad umbrella term of “intellectual property” (IP). However, the evolution of these legal regimes has always been fraught with tension. Those desiring access to knowledge without restrictive property barriers resisted the expansion of IPRs, which means that the history of IP is entangled in development efforts. As member countries of the United Nations sought to fully extend IP protection around the globe, the World Intellectual Property Organization (WIPO) was created, central to which was the debate over the scope of international IP and demands by the less developed countries for less restrictive IPRs. However, it is the Trade Related Aspects of Intellectual Property Agreement (TRIPS) that has become the most powerful arbiter of IP rights. Meanwhile, the main debates and the specific political battles surrounding IPRs include, but are not limited to, biotechnology, biopiracy, copyright piracy, file sharing, traditional knowledge, access to knowledge, and access to medicine. Ultimately, the literature on international IP has evolved considerably, becoming increasingly relevant to more than legal scholars and business professionals. Nevertheless, additional research is needed in theorizing about the core concepts of IP; the complex role between nationalism, the state, culture, and IPRs; and the search for alternatives to IP.
Christoph Scherrer and Joscha Wullweber
Postmodern and poststructural theories and approaches in the field of international political economy (IPE) constitute a tangled, partly contradictory—rather than coherent—set of theories or a closed school of thought. Poststructuralism is more about ontology—the way we understand and theorize the being/the world—whereas postmodernism is situated more on the ontic level. Poststructuralist approaches deliver a powerful and comprehensive critique of mainstream approaches to IPE by challenging their basic theoretical, methodological, and epistemological assumptions as well as their explicit and implicit essentialisms (like empiricism, economism, voluntarism, methodological nationalism, individualism, etc.). The notion of contingency is fundamental and constitutive for virtually all poststructural and postmodern approaches, but poststructural approaches insist that the form of an object is historically contingent and discursively constructed. Poststructuralists conceptualize the economy as a (discursively produced) form and not as objective reality and claim that the political, the economic, and the social cannot be separated unambiguously. One common ground shared by poststructuralists with structuralists is their insistence that agency is always imbued by its social environment. Poststructuralists are not opposed to empirical research, and even acknowledge the need to explain causality rather than to derive it from logic. Despite the challenge from poststructuralism, IPE has been particularly resistant to poststructural intervention, although it may not remain unaffected by poststructural critiques and impulses in the long run.
Kimberly A. Weir
Pedagogy is the discipline that deals with the theory and practice of teaching. Pedagogy informs teaching strategies, teacher actions, and teacher judgments and decisions by taking into consideration theories of learning, understandings of students and their needs, and the backgrounds and interests of individual students. The teaching of global political economy (GPE) offers an alternative, and a challenge, to conventional economics education. Its emphasis on the competing currents of economic thought and their association with rival political philosophies adds complexity to the subject. However, this engagement with controversial issues creates more intellectual excitement than a narrow, “technical” treatment of orthodox analysis. There is also more scope for students to link their own personal experiences with the broader concerns of political economy. By emphasizing a liberal educational philosophy, educators can attain a more grounded approach to study, relating to students’ own experiences and more explicitly acknowledging the role of personal and political values. Scholars argue that there are viable alternatives to the standard micro-macro-quantitative curriculum and to the conventional teaching of economics. A pedagogy emphasizing controversies, linking competing economic analyses and different political perspectives, is possible. Ultimately, the teaching of global political economy has some inherent advantages as a means of interesting and engaging students.
Marc L. Busch and Edward D. Mansfield
A survey of the literature on trade has revealed that it is becoming more difficult for elected officials resist protectionist pressures by citing constraints imposed by global pacts and supply free trade. There are two main reasons why. First, the literature on the design and politics of international institutions increasingly emphasizes how they build in slack that can undermine government claims of being constrained. Second, as states accede to an ever-growing list of overlapping international institutions, there is often a choice among, or uncertainty over, which institution’s obligations apply. Where this situation creates more policy space for government officials, it also will make it more difficult for them to credibly tie their hands and supply free trade in the face of interest group pressures for protection. Currently, the literature is somewhat at a turning point. Questions about the design and politics of international institutions, and the growing thickness of the market for them, are very much in vogue. These questions have profound implications for the supply of free trade. The credibility of elected officials’ hands-tying strategies is likely undermined where institutions anticipate the political reactions of their members, or where members can shop for different rules on trade to accommodate domestic preferences. The irony is that the proliferation of international institutions may lead scholars of trade policy to renew their focus on domestic interest groups.