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International political economy

International political economy (IPE) or Global political economy (GPE) is the study of interactions between the economy on a global level and political and economic actors, systems and institutions.[1][2][3] More precisely, IPE/GPE focuses on global economic governance, through studies of macroeconomic phenomena such as globalization, international trade, the monetary and financial system, international inequality, and development, and how these are shaped by, amongst others, international organizations, multinational corporations, and sovereign states.[1][4][5]

The substantive issue areas of IPE are frequently divided into the four broad subject areas of 1. international trade, 2. the international monetary and financial system, 3. multinational corporations, and 4. economic development and inequality.[6] A central assumption of IPE theory is that these international economic phenomena do not exist in any meaningful sense separate from the actors who regulate and control them.[7][8] Alongside formal economic theories of international economics, trade, and finance, which are widely utilised within the discipline, IPE thus stresses the study of institutions, politics, and power relations in understanding the global economy.[9][10][11][12]

International political economy is a major subdiscipline of international relations[13] where it emerged in the 1960s and 1970s, prompted by the growth of international economic institutions such as the World Bank, International Monetary Fund, and the General Agreement on Tariffs and Trade, alongside economic turmoils such as the fall of the gold standard, 1973 oil crisis, and 1970s recession.[14] IPE/GPE is also a major field of study within history, especially economic history, where scholars study the historical dynamics of the international political economy.[15][16] Similar to the historical study of political economy, it is a broad field of inquiry which seeks to place economic life in context, and pay attention to questions of social relations, and power across time.[17]

History and emergence

International political economy has its historic roots in the discipline of political economy; the study of the national economy and its interactions with governance and politics.[18] While the newly founded discipline of economics; which studies economic phenomena absent political and social considerations; began to diverge from political economy studies in the late 19th century, political economy continued to live as an academic tradition within political science departments, as well as within modern economics as a pluralist approach.[19][20] While notable works from John Maynard Keynes' General Theory and Karl Polanyi's The Great Transformation published in the early 20th century are still written in the tradition of political economy, economics in its narrower form was dominating economics departments from the 1920s and onward.[21]

The emergence of international political economy can be traced to the late 1960s and early 1970s, when deepening economic interdependence prompted by the growth of post-war economic institutions such as the International Monetary Fund, World Bank, and General Agreement on Tariffs and Trade, drew increasing attention within international relations scholarship towards the study of these institutions, and more broadly, to the study of governance of the world economy. The need for a more comprehensive understanding on global economic governance within political science circles became increasingly apparent through the crises of the 1970s; with the end of the gold standard, the 1973 oil crisis, 1973-1975 recession and calls for greater trade protection.[22] Influential figures in the emergence of the discipline were international relations scholars Robert Keohane, Joseph Nye and Robert Gilpin in the United States, as well as Susan Strange in the United Kingdom.[23][24] IPE has since become a key pillar in political science departments as well as a major subdiscipline of international relations, alongside traditional international relations scholarship centred on material security.[22]

Topics of enquiry

International Finance

International finance and monetary relations is one of the core areas of study in IPE.[6] In IPE scholarship, the interrelation of economic and political interests in international finance assumes it impossible to separate the financial system from international politics in any meaningful sense.[25][26][27][28] The IPE of international finance is characterized by political network effects and international externalities,[29][30][31] such as beggar-thy-neighbour effects[32] and contagions.[33]

A key concept in IPE literature on international finance is the impossible trinity, derived from the Mundell–Fleming model, which holds that it is impossible to simultaneously pursue all of the following three economic policies:[34][35]

Another key dilemma in monetary policy is that governments have to balance the inflation rate (the price of money at home) and the exchange rate (the price of money outside the home market).[27]

There is no agreement in the economics literature on the optimal national exchange rate policy.[25] Rather, national exchange rate regimes reflect political considerations.[25] National exchange rate policies can be 1. fixed, floating, or a hybrid of the two, and 2. entail a strong or weak currency.[25] Different groups benefit disproportionately depending on the national exchange rate policies that is chosen.[25]

The liberal view point generally has been strong in Western academia since it was first articulated by Smith in the eighteenth century. Only during the 1940s to early 1970s did an alternative system, Keynesianism, command wide support in universities. Keynes was concerned chiefly with domestic macroeconomic policy. The Keynesian consensus was challenged by Friedrich Hayek and later Milton Friedman and other scholars out of Chicago as early as the 1950s, and by the 1970s, Keynes' influence on public discourse and economic policy making had somewhat faded.

 
Illustration of the impossible trinity in IPE finance scholarship; inspired by the Mundell-Fleming model in international economics. The theory postulates that a state may not have any more than two of the following policies in place at the same time; a fixed exchange rate, free capital movement, and an independent national monetary policy.

After World War II, the Bretton Woods system was established, reflecting the political orientation described as Embedded liberalism.[36] In 1971 President Richard Nixon ended the convertibility of gold that had been established under the IMF in the Bretton Woods system.[37] Interim agreements followed. Nonetheless, until 2008 the trend has been for increasing liberalization of both international trade and finance. From later 2008 world leaders have also been increasingly calling for a New Bretton Woods System.

Topics such as the International Monetary Fund, Financial Crises (see Financial crisis of 2007–2008 and 1997 Asian financial crisis), exchange rates, Foreign Direct Investment, Multinational Corporations receive much attention in IPE.

International Trade

There are multiple approaches to trade within IPE.[38] These approaches seek to explain international bargaining between states, as well as the foreign economic policies that states adopt. In terms of domestic explanations for the foreign economic policies of states, the two dominant approaches are the factor model and sector model,[39] both of which build on David Ricardo's theory of comparative advantage.[40]

The factor model (which has been called the H-O-S-S model) is shaped by the Heckscher-Ohlin model and the Stolper-Samuelsson theorem.[41][42][43][44][45][46][47] According to the Heckscher-Ohlin model of trade, the comparative advantage of countries in trade stems from their endowments of particular factors of trade (land, labor, capital). This means that a country abundant in land will primarily export land-intensive products (such as agriculture), whereas a country abundant in capital will export capital-intensive products (such as high-technology manufacturing) and a country abundant in labor will export labor-intensive products (such as textiles).[48] Building on this model, the Stolper-Samuelsson theorem holds that groups that possess the factors will support or oppose trade depending on the abundance or scarcity of the factors. This means that in a country which is abundant in land and scarce in capital, farmers will support free trade whereas producers in capital-intensive manufacturing will oppose free trade.[48][43] The factor model predicts that labor in developed countries will oppose trade liberalization (because it is relatively scarce), whereas labor in developing countries will support free trade (because it is relatively abundant).[45][49][50] Building on these insights, influential research by Ronald Rogowski argued that factor endowments predicted whether countries were characterized by class-conflict (capital vs. labor) or urban-rural conflict.[51][41][52][42] Similarly, an influential study by Helen Milner and Keiko Kubota argues that factor endowments explain why developing countries liberalize their trade after they democratize (the abundant factor, labor, supports trade liberalization).[53][54] Research has substantiated the predictions of the Stolper-Samuelsson theorem, showing that trade openness tends to reduce inequality in developing countries, but exacerbate it in advanced economies.[55]

The sectors model of trade, the Ricardo–Viner model (named after David Ricardo and Jacob Viner), challenges the notion that factors are key to understanding trade preferences.[41][43][45][46] Factors can be highly immobile, which means that capital-owners and labor who work in a particular sector may have similar interests. As a consequence, trade preferences are better understood by examining which economic sectors win or lose on trade liberalization. Whereas the factor model assumes that capital-owners in different sectors have similar trade preferences and that labor across different sector have similar trade preferences, the Ricardo-Viner model holds that in sectors where factors are immobile, labor and capital-owners in one sector may have the same trade preferences.[42][56][40][57] As a result, the Ricardo-Viner model predicts that class conflict over trade is more likely when factors are highly mobile, but that industry-based conflict is more likely when factors are immobile.[58]

Adam Dean has challenged the economic assumptions in both models, arguing that workers' wages do not consistently correspond to increases in productivity in a given industry (contradicting Ricardo-Viner) nor do workers consistently benefit from import restrictions when labor is the scarce factor of endowment (contradicting Heckscher-Ohlin).[59][60] The degree to which Ricardo-Viner and Heckscher-Ohlin are correct is conditioned by whether workers have profit-sharing institutions or are unionized (which helps them to bargain for higher wages amid productivity increases).[59][60] He has also challenged Milner and Kubota's study on trade liberalization in developing countries, as he shows that democratic developing countries frequently repressed labor unions amid trade liberalization.[61][62]

Studies by Dani Rodrik and Anna Mayda, as well as Kenneth Scheve and Matthew J. Slaughter have found support for the factor models, as they show that there is greater support for trade openness in developing countries (where labor is abundant and thus benefits from trade openness).[63][64] Other studies find no support for either model,[65] and argue that the models have limited explanatory value.[66] A 2022 study in the Journal of Politics found that comparative advantage predicts attitudes on free trade among individuals and legislators.[67] According to a 2017 assessment by Thomas Oatley, there are "no strong conclusions" in IPE scholarship as to which of these models better characterizes the sources of individual trade policies.[68]

Aside from the sector and factor models, there are firm-specific models of trade preferences (some times described as "New new" trade theory) which predict that those who work for large, productive and globally oriented firms support trade liberalization (as well as free movement of capital and labor), whereas employees in smaller firms are less supportive of free trade.[42][69][70][71][72][73][74][75] Economic geography approaches explain trade policies by looking at the regions that benefit and lose on globalization; it predicts that large cities support trade liberalization and that left-behind regions push back on liberalization.[76][77] Other alternative models to the factor and sector models may explain individual preferences through demographic data (age, class, skills,[78] education,[66] gender[79][80]), as well as ideology[81][82][83][84] and culture.[68][85] Some studies have raised questions about whether individuals understand the effects of trade protectionism, which puts doubt on theories that assume that trade policy preferences are rooted in economic self-interest.[86]

Trade may in and of itself alter domestic politics, including the trade preferences of the public. A 1988 study by Helen Milner found that trade openness substantially increased support for free trade by strengthening the position of firms that stand to lose from trade protectionism.[87] Influential studies by David Cameron,[88] Dani Rodrik[89] and Peter Katzenstein[90] have affirmed the insights of the Double Movement, as they show that greater trade openness has been associated with increases in government social spending.[91][92]

In terms of how preferences get aggregated and reconciled into foreign economic policies, IPE scholars have pointed to collective action problems,[46][43] electoral systems,[93][94] regime types,[53][95] veto points,[96] the nature of the legislative trade policy process,[97][98] the interaction between domestic and international bargaining,[99] and the interactions between political elites and epistemic communities.[100] Some IPE scholarship de-emphasizes the role of domestic politics and points to international processes as shapers of trade policy.[101][102][103][104] Some scholars have argued for a "new interdependence" approach, which restores insights from the complex interdependence of the 1970s, but emphasizes network effects, control over central nodes, and path dependence.[105][106][107][108]

Economic development

IPE is also concerned with development economics and explaining how and why countries develop.

Historical IPE approaches

Historically, three prominent approaches to IPE were the liberal, economic nationalist (mercantilist),[109][110] and marxist perspectives.[111][112]

Economic liberals tend to oppose government intervention in the market when it inhibits free trade and open competition, but support government intervention to protect property rights and resolve market failures.[113] Economic liberals commonly adhere to a political and economic philosophy which advocates a restrained fiscal policy and the balancing of budgets, through measures such as low taxes, reduced government spending, and minimized government debt.[114]

To economic nationalists, markets are subordinate to the state, and should serve the interests of the state (such as providing national security and accumulating military power). The doctrine of mercantilism is a prominent variant of economic nationalism.[109] Economic nationalists tend to see international trade as zero-sum, where the goal is to derive relative gains (as opposed to mutual gains).[115] Economic nationalism tends to emphasize industrialization (and often aids industries with state support), due to beliefs that industry has positive spillover effects on the rest of the economy, enhances the self-sufficiency and political autonomy of the country, and is a crucial aspect in building military power.[115]

Modern IPE approaches

There are several prominent approaches to IPE. The dominant paradigm is Open Economy Politics.[14][116][117] Other influential approaches include dependency theory, hegemonic stability theory, and domestic political theories of IPE.[14]

Early modern IPE scholarship employed a diversity of methods and did both grand theory and middle range theory, but over time, the scholarship has become more quantitative and focused on middle-range theories.[118][119][68][120][121][122][123][124] Robert Jervis wrote in 1998, "the IPE subŽfield, after a marvelous period of development in the 1970s and 1980s seems to be stagnating."[125]

The first wave of IPE scholarship focused on complex interdependence and the evolution of global systems of economic exchange.[120] This scholarship focused on hegemonic stability theory, complex interdependence, and regimes.[41] The second wave sought to explain the domestic sources of global economic cooperation or explain how global processes influence domestic policy-making.[120] The third wave increasingly focused on explaining the micro-foundations of policy.[120] According to Benjamin Cohen, "in terms of theory, consensus is often lacking on even the most basic causal relationships" in IPE scholarship.[4]

Open Economy Politics

Open Economy Politics (OEP) can be traced to domestic political theories of IPE; OEP emerged in the late 1990s.[14][126] OEP adopts the assumptions of neoclassical economics and international trade theory.[14][127] It strongly emphasizes microfoundations.[128] It has been characterized as employing rationalism, materialism and liberalism.[102] According to David Lake,[14][68][121][128]

  1. Interests: "OEP begins with individuals, sectors, or factors of production as the units of analysis and derives their interests over economic policy from each unit's position within the international economy."
  2. Domestic institutions: "It conceives of domestic political institutions as mechanisms that aggregate interests (with more or less bias) and structure the bargaining of competing societal groups."
  3. International bargaining: "It introduces, when necessary, bargaining between states with different interests. Analysis within OEP proceeds from the most micro- to the most macro-level in a linear and orderly fashion, reflecting an implicit uni-directional conception of politics as flowing up from individuals to interstate bargaining."

Thomas Oatley has criticized OEP for an overemphasis on domestic political processes and for failing to consider the interplay between processes at the domestic level and macro processes at the global level: in essence, OEP scholarship suffers from omitted variable bias.[102][129][68][130] According to Peter Katzenstein, Robert Keohane and Stephen Krasner, scholarship in this vein assumes that actors' preferences and behavior are derived from their material position, which leads to a neglect of the ways in which variation in information may shape actor preferences and behaviors.[131] Mark Blyth and Matthias Matthijs argue that OEP scholarship essentially black boxes the global economy.[130] Stephanie Rickard has defended the OEP approach, writing in 2021:[116]

OEP has matured and developed over the past decade. As a framework, it has proven to be enormously productive and adaptable—integrating diverse economic phenomena under a common theoretical umbrella and providing a framework flexible enough to react to significant events in the global economy... The accumulating body of scholarship in the OEP tradition has moved our understanding of world politics decisively forward. Critics of OEP have yet to offer an alternative, more empirically powerful theory and as a result, OEP continues to progress as the dominant paradigm in IPE research.

Scholars have questioned the empirical validity of the models derived from OEP scholarship on money[121] and trade,[102][68] as well as questioned the ability of OEP scholarship to explain momentous events in global political economy.[130] Challengers to the OEP framework include behavioral approaches (which do not necessarily accept that individual interests stem from material incentives), and economic geography approaches.[116] According to Stephanie Rickard, OEP scholars have modified their models to incorporate incomplete information (which affects how individual preferences are formed) and economies of scale (which affects the distribution of gains and losses).[116] Erica Owen and Stephanie Walter similarly argue that "second-generation" OEP frameworks incorporate both material and ideational preferences.[128]

Dependency theory

Dependency theory is the notion that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former. It is a central contention of dependency theory that poor states are impoverished and rich ones enriched by the way poor states are integrated into the "world system". This theory was officially developed in the late 1960s following World War II, as scholars searched for the root issue in the lack of development in Latin America.[132]

Dependency theory and world systems theory are not mainstream economic theory.[133]

Hegemonic stability theory

Early IPE scholarship was focused on the implications of hegemony on international economic affairs. In the 1970s, US hegemony appeared to be on the fall, which prompted scholars to consider the likely effects of this falling.[134] Robert Keohane coined the term Hegemonic stability theory in a 1980 article for the notion that the international system is more likely to remain stable when a single nation-state is the dominant world power, or hegemon.[134] Keohane's 1984 book After Hegemony, used insights from the new institutional economics, to argue that the international system could remain stable in the absence of a hegemon.[135]

American vs. British IPE

Benjamin Cohen provides a detailed intellectual history of IPE identifying American and British camps. The Americans are positivist and attempt to develop intermediate level theories that are supported by some form of quantitative evidence. British IPE is more "interpretivist" and looks for "grand theories". They use very different standards of empirical work. Cohen sees benefits in both approaches.[136] A special edition of New Political Economy has been issued on The 'British School' of IPE[137] and a special edition of the Review of International Political Economy (RIPE) on American IPE.[138]

Journals

The leading journal for IPE scholarship is the generalist international relations journal International Organization.[139] International Organization played an instrumental role in making IPE one of the prominent subfields in IR.[140] The leading IPE-specific journals are the Review of International Political Economy and New Political Economy.[139][141] Examples of journals within the historical study of IPE are Economic History Review and History of Political Economy.

Professional associations

  • British International Studies Association - International Political Economy Group (BISA-IPEG)
  • International Studies Association - International Political Economy Section (ISA-IPE)
  • ISA-IPE Mailing List

Notes and references

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Further reading

international, political, economy, study, political, economy, national, level, political, economy, global, political, economy, study, interactions, between, economy, global, level, political, economic, actors, systems, institutions, more, precisely, focuses, g. For the study of political economy on a national level see Political economy International political economy IPE or Global political economy GPE is the study of interactions between the economy on a global level and political and economic actors systems and institutions 1 2 3 More precisely IPE GPE focuses on global economic governance through studies of macroeconomic phenomena such as globalization international trade the monetary and financial system international inequality and development and how these are shaped by amongst others international organizations multinational corporations and sovereign states 1 4 5 The substantive issue areas of IPE are frequently divided into the four broad subject areas of 1 international trade 2 the international monetary and financial system 3 multinational corporations and 4 economic development and inequality 6 A central assumption of IPE theory is that these international economic phenomena do not exist in any meaningful sense separate from the actors who regulate and control them 7 8 Alongside formal economic theories of international economics trade and finance which are widely utilised within the discipline IPE thus stresses the study of institutions politics and power relations in understanding the global economy 9 10 11 12 International political economy is a major subdiscipline of international relations 13 where it emerged in the 1960s and 1970s prompted by the growth of international economic institutions such as the World Bank International Monetary Fund and the General Agreement on Tariffs and Trade alongside economic turmoils such as the fall of the gold standard 1973 oil crisis and 1970s recession 14 IPE GPE is also a major field of study within history especially economic history where scholars study the historical dynamics of the international political economy 15 16 Similar to the historical study of political economy it is a broad field of inquiry which seeks to place economic life in context and pay attention to questions of social relations and power across time 17 Contents 1 History and emergence 2 Topics of enquiry 2 1 International Finance 2 2 International Trade 2 3 Economic development 3 Historical IPE approaches 4 Modern IPE approaches 4 1 Open Economy Politics 4 2 Dependency theory 4 3 Hegemonic stability theory 4 4 American vs British IPE 5 Journals 6 Professional associations 7 Notes and references 8 Further readingHistory and emergence EditInternational political economy has its historic roots in the discipline of political economy the study of the national economy and its interactions with governance and politics 18 While the newly founded discipline of economics which studies economic phenomena absent political and social considerations began to diverge from political economy studies in the late 19th century political economy continued to live as an academic tradition within political science departments as well as within modern economics as a pluralist approach 19 20 While notable works from John Maynard Keynes General Theory and Karl Polanyi s The Great Transformation published in the early 20th century are still written in the tradition of political economy economics in its narrower form was dominating economics departments from the 1920s and onward 21 The emergence of international political economy can be traced to the late 1960s and early 1970s when deepening economic interdependence prompted by the growth of post war economic institutions such as the International Monetary Fund World Bank and General Agreement on Tariffs and Trade drew increasing attention within international relations scholarship towards the study of these institutions and more broadly to the study of governance of the world economy The need for a more comprehensive understanding on global economic governance within political science circles became increasingly apparent through the crises of the 1970s with the end of the gold standard the 1973 oil crisis 1973 1975 recession and calls for greater trade protection 22 Influential figures in the emergence of the discipline were international relations scholars Robert Keohane Joseph Nye and Robert Gilpin in the United States as well as Susan Strange in the United Kingdom 23 24 IPE has since become a key pillar in political science departments as well as a major subdiscipline of international relations alongside traditional international relations scholarship centred on material security 22 Topics of enquiry EditInternational Finance Edit International finance and monetary relations is one of the core areas of study in IPE 6 In IPE scholarship the interrelation of economic and political interests in international finance assumes it impossible to separate the financial system from international politics in any meaningful sense 25 26 27 28 The IPE of international finance is characterized by political network effects and international externalities 29 30 31 such as beggar thy neighbour effects 32 and contagions 33 A key concept in IPE literature on international finance is the impossible trinity derived from the Mundell Fleming model which holds that it is impossible to simultaneously pursue all of the following three economic policies 34 35 a fixed foreign exchange rate free capital movement absence of capital controls an independent monetary policyAnother key dilemma in monetary policy is that governments have to balance the inflation rate the price of money at home and the exchange rate the price of money outside the home market 27 There is no agreement in the economics literature on the optimal national exchange rate policy 25 Rather national exchange rate regimes reflect political considerations 25 National exchange rate policies can be 1 fixed floating or a hybrid of the two and 2 entail a strong or weak currency 25 Different groups benefit disproportionately depending on the national exchange rate policies that is chosen 25 The liberal view point generally has been strong in Western academia since it was first articulated by Smith in the eighteenth century Only during the 1940s to early 1970s did an alternative system Keynesianism command wide support in universities Keynes was concerned chiefly with domestic macroeconomic policy The Keynesian consensus was challenged by Friedrich Hayek and later Milton Friedman and other scholars out of Chicago as early as the 1950s and by the 1970s Keynes influence on public discourse and economic policy making had somewhat faded Illustration of the impossible trinity in IPE finance scholarship inspired by the Mundell Fleming model in international economics The theory postulates that a state may not have any more than two of the following policies in place at the same time a fixed exchange rate free capital movement and an independent national monetary policy After World War II the Bretton Woods system was established reflecting the political orientation described as Embedded liberalism 36 In 1971 President Richard Nixon ended the convertibility of gold that had been established under the IMF in the Bretton Woods system 37 Interim agreements followed Nonetheless until 2008 the trend has been for increasing liberalization of both international trade and finance From later 2008 world leaders have also been increasingly calling for a New Bretton Woods System Topics such as the International Monetary Fund Financial Crises see Financial crisis of 2007 2008 and 1997 Asian financial crisis exchange rates Foreign Direct Investment Multinational Corporations receive much attention in IPE International Trade Edit There are multiple approaches to trade within IPE 38 These approaches seek to explain international bargaining between states as well as the foreign economic policies that states adopt In terms of domestic explanations for the foreign economic policies of states the two dominant approaches are the factor model and sector model 39 both of which build on David Ricardo s theory of comparative advantage 40 The factor model which has been called the H O S S model is shaped by the Heckscher Ohlin model and the Stolper Samuelsson theorem 41 42 43 44 45 46 47 According to the Heckscher Ohlin model of trade the comparative advantage of countries in trade stems from their endowments of particular factors of trade land labor capital This means that a country abundant in land will primarily export land intensive products such as agriculture whereas a country abundant in capital will export capital intensive products such as high technology manufacturing and a country abundant in labor will export labor intensive products such as textiles 48 Building on this model the Stolper Samuelsson theorem holds that groups that possess the factors will support or oppose trade depending on the abundance or scarcity of the factors This means that in a country which is abundant in land and scarce in capital farmers will support free trade whereas producers in capital intensive manufacturing will oppose free trade 48 43 The factor model predicts that labor in developed countries will oppose trade liberalization because it is relatively scarce whereas labor in developing countries will support free trade because it is relatively abundant 45 49 50 Building on these insights influential research by Ronald Rogowski argued that factor endowments predicted whether countries were characterized by class conflict capital vs labor or urban rural conflict 51 41 52 42 Similarly an influential study by Helen Milner and Keiko Kubota argues that factor endowments explain why developing countries liberalize their trade after they democratize the abundant factor labor supports trade liberalization 53 54 Research has substantiated the predictions of the Stolper Samuelsson theorem showing that trade openness tends to reduce inequality in developing countries but exacerbate it in advanced economies 55 The sectors model of trade the Ricardo Viner model named after David Ricardo and Jacob Viner challenges the notion that factors are key to understanding trade preferences 41 43 45 46 Factors can be highly immobile which means that capital owners and labor who work in a particular sector may have similar interests As a consequence trade preferences are better understood by examining which economic sectors win or lose on trade liberalization Whereas the factor model assumes that capital owners in different sectors have similar trade preferences and that labor across different sector have similar trade preferences the Ricardo Viner model holds that in sectors where factors are immobile labor and capital owners in one sector may have the same trade preferences 42 56 40 57 As a result the Ricardo Viner model predicts that class conflict over trade is more likely when factors are highly mobile but that industry based conflict is more likely when factors are immobile 58 Adam Dean has challenged the economic assumptions in both models arguing that workers wages do not consistently correspond to increases in productivity in a given industry contradicting Ricardo Viner nor do workers consistently benefit from import restrictions when labor is the scarce factor of endowment contradicting Heckscher Ohlin 59 60 The degree to which Ricardo Viner and Heckscher Ohlin are correct is conditioned by whether workers have profit sharing institutions or are unionized which helps them to bargain for higher wages amid productivity increases 59 60 He has also challenged Milner and Kubota s study on trade liberalization in developing countries as he shows that democratic developing countries frequently repressed labor unions amid trade liberalization 61 62 Studies by Dani Rodrik and Anna Mayda as well as Kenneth Scheve and Matthew J Slaughter have found support for the factor models as they show that there is greater support for trade openness in developing countries where labor is abundant and thus benefits from trade openness 63 64 Other studies find no support for either model 65 and argue that the models have limited explanatory value 66 A 2022 study in the Journal of Politics found that comparative advantage predicts attitudes on free trade among individuals and legislators 67 According to a 2017 assessment by Thomas Oatley there are no strong conclusions in IPE scholarship as to which of these models better characterizes the sources of individual trade policies 68 Aside from the sector and factor models there are firm specific models of trade preferences some times described as New new trade theory which predict that those who work for large productive and globally oriented firms support trade liberalization as well as free movement of capital and labor whereas employees in smaller firms are less supportive of free trade 42 69 70 71 72 73 74 75 Economic geography approaches explain trade policies by looking at the regions that benefit and lose on globalization it predicts that large cities support trade liberalization and that left behind regions push back on liberalization 76 77 Other alternative models to the factor and sector models may explain individual preferences through demographic data age class skills 78 education 66 gender 79 80 as well as ideology 81 82 83 84 and culture 68 85 Some studies have raised questions about whether individuals understand the effects of trade protectionism which puts doubt on theories that assume that trade policy preferences are rooted in economic self interest 86 Trade may in and of itself alter domestic politics including the trade preferences of the public A 1988 study by Helen Milner found that trade openness substantially increased support for free trade by strengthening the position of firms that stand to lose from trade protectionism 87 Influential studies by David Cameron 88 Dani Rodrik 89 and Peter Katzenstein 90 have affirmed the insights of the Double Movement as they show that greater trade openness has been associated with increases in government social spending 91 92 In terms of how preferences get aggregated and reconciled into foreign economic policies IPE scholars have pointed to collective action problems 46 43 electoral systems 93 94 regime types 53 95 veto points 96 the nature of the legislative trade policy process 97 98 the interaction between domestic and international bargaining 99 and the interactions between political elites and epistemic communities 100 Some IPE scholarship de emphasizes the role of domestic politics and points to international processes as shapers of trade policy 101 102 103 104 Some scholars have argued for a new interdependence approach which restores insights from the complex interdependence of the 1970s but emphasizes network effects control over central nodes and path dependence 105 106 107 108 Economic development Edit IPE is also concerned with development economics and explaining how and why countries develop Historical IPE approaches EditHistorically three prominent approaches to IPE were the liberal economic nationalist mercantilist 109 110 and marxist perspectives 111 112 Economic liberals tend to oppose government intervention in the market when it inhibits free trade and open competition but support government intervention to protect property rights and resolve market failures 113 Economic liberals commonly adhere to a political and economic philosophy which advocates a restrained fiscal policy and the balancing of budgets through measures such as low taxes reduced government spending and minimized government debt 114 To economic nationalists markets are subordinate to the state and should serve the interests of the state such as providing national security and accumulating military power The doctrine of mercantilism is a prominent variant of economic nationalism 109 Economic nationalists tend to see international trade as zero sum where the goal is to derive relative gains as opposed to mutual gains 115 Economic nationalism tends to emphasize industrialization and often aids industries with state support due to beliefs that industry has positive spillover effects on the rest of the economy enhances the self sufficiency and political autonomy of the country and is a crucial aspect in building military power 115 Modern IPE approaches EditThere are several prominent approaches to IPE The dominant paradigm is Open Economy Politics 14 116 117 Other influential approaches include dependency theory hegemonic stability theory and domestic political theories of IPE 14 Early modern IPE scholarship employed a diversity of methods and did both grand theory and middle range theory but over time the scholarship has become more quantitative and focused on middle range theories 118 119 68 120 121 122 123 124 Robert Jervis wrote in 1998 the IPE sub field after a marvelous period of development in the 1970s and 1980s seems to be stagnating 125 The first wave of IPE scholarship focused on complex interdependence and the evolution of global systems of economic exchange 120 This scholarship focused on hegemonic stability theory complex interdependence and regimes 41 The second wave sought to explain the domestic sources of global economic cooperation or explain how global processes influence domestic policy making 120 The third wave increasingly focused on explaining the micro foundations of policy 120 According to Benjamin Cohen in terms of theory consensus is often lacking on even the most basic causal relationships in IPE scholarship 4 Open Economy Politics Edit Open Economy Politics OEP can be traced to domestic political theories of IPE OEP emerged in the late 1990s 14 126 OEP adopts the assumptions of neoclassical economics and international trade theory 14 127 It strongly emphasizes microfoundations 128 It has been characterized as employing rationalism materialism and liberalism 102 According to David Lake 14 68 121 128 Interests OEP begins with individuals sectors or factors of production as the units of analysis and derives their interests over economic policy from each unit s position within the international economy Domestic institutions It conceives of domestic political institutions as mechanisms that aggregate interests with more or less bias and structure the bargaining of competing societal groups International bargaining It introduces when necessary bargaining between states with different interests Analysis within OEP proceeds from the most micro to the most macro level in a linear and orderly fashion reflecting an implicit uni directional conception of politics as flowing up from individuals to interstate bargaining Thomas Oatley has criticized OEP for an overemphasis on domestic political processes and for failing to consider the interplay between processes at the domestic level and macro processes at the global level in essence OEP scholarship suffers from omitted variable bias 102 129 68 130 According to Peter Katzenstein Robert Keohane and Stephen Krasner scholarship in this vein assumes that actors preferences and behavior are derived from their material position which leads to a neglect of the ways in which variation in information may shape actor preferences and behaviors 131 Mark Blyth and Matthias Matthijs argue that OEP scholarship essentially black boxes the global economy 130 Stephanie Rickard has defended the OEP approach writing in 2021 116 OEP has matured and developed over the past decade As a framework it has proven to be enormously productive and adaptable integrating diverse economic phenomena under a common theoretical umbrella and providing a framework flexible enough to react to significant events in the global economy The accumulating body of scholarship in the OEP tradition has moved our understanding of world politics decisively forward Critics of OEP have yet to offer an alternative more empirically powerful theory and as a result OEP continues to progress as the dominant paradigm in IPE research Scholars have questioned the empirical validity of the models derived from OEP scholarship on money 121 and trade 102 68 as well as questioned the ability of OEP scholarship to explain momentous events in global political economy 130 Challengers to the OEP framework include behavioral approaches which do not necessarily accept that individual interests stem from material incentives and economic geography approaches 116 According to Stephanie Rickard OEP scholars have modified their models to incorporate incomplete information which affects how individual preferences are formed and economies of scale which affects the distribution of gains and losses 116 Erica Owen and Stephanie Walter similarly argue that second generation OEP frameworks incorporate both material and ideational preferences 128 Dependency theory Edit Dependency theory is the notion that resources flow from a periphery of poor and underdeveloped states to a core of wealthy states enriching the latter at the expense of the former It is a central contention of dependency theory that poor states are impoverished and rich ones enriched by the way poor states are integrated into the world system This theory was officially developed in the late 1960s following World War II as scholars searched for the root issue in the lack of development in Latin America 132 Dependency theory and world systems theory are not mainstream economic theory 133 Hegemonic stability theory Edit Early IPE scholarship was focused on the implications of hegemony on international economic affairs In the 1970s US hegemony appeared to be on the fall which prompted scholars to consider the likely effects of this falling 134 Robert Keohane coined the term Hegemonic stability theory in a 1980 article for the notion that the international system is more likely to remain stable when a single nation state is the dominant world power or hegemon 134 Keohane s 1984 book After Hegemony used insights from the new institutional economics to argue that the international system could remain stable in the absence of a hegemon 135 American vs British IPE Edit Benjamin Cohen provides a detailed intellectual history of IPE identifying American and British camps The Americans are positivist and attempt to develop intermediate level theories that are supported by some form of quantitative evidence British IPE is more interpretivist and looks for grand theories They use very different standards of empirical work Cohen sees benefits in both approaches 136 A special edition of New Political Economy has been issued on The British School of IPE 137 and a special edition of the Review of International Political Economy RIPE on American IPE 138 Journals EditThe leading journal for IPE scholarship is the generalist international relations journal International Organization 139 International Organization played an instrumental role in making IPE one of the prominent subfields in IR 140 The leading IPE specific journals are the Review of International Political Economy and New Political Economy 139 141 Examples of journals within the historical study of IPE are Economic History Review and History of Political Economy Professional associations EditBritish International Studies Association International Political Economy Group BISA IPEG International Studies Association International Political Economy Section ISA IPE ISA IPE Mailing ListNotes and references Edit a b international political economy economics Britannica www britannica com Retrieved 18 May 2022 Global Political Economy E International Relations 29 December 2016 Retrieved 18 May 2022 Political Economy Corporate Finance Institute Retrieved 18 May 2022 a b Cohen Benjamin J 2008 International Political Economy An Intellectual History Princeton University Press p 16 ISBN 978 0 691 13569 4 Milner Helen V 2004 Formal Methods and International Political Economy Models Numbers and Cases ISBN 9780472068616 a b Oatley Thomas 2019 International Political Economy Sixth Edition Routledge p 27 ISBN 978 1 351 03464 7 Frieden Jeffry Martin Lisa 2003 International Political Economy Global and Domestic Interactions Political Science The State of the Discipline W W Norton Cohen Benjamin J 2008 International Political Economy An Intellectual History Princeton University Press pp 32 35 ISBN 978 0 691 13569 4 Mosley Layna Singer David Andrew 30 November 2009 The Global Financial Crisis Lessons and Opportunities for International Political Economy International Interactions 35 4 420 429 doi 10 1080 03050620903328993 ISSN 0305 0629 S2CID 154921889 Araghi Farshad 2008 Political Economy of the Financial Crisis A World Historical Perspective Economic and Political Weekly 43 45 30 32 ISSN 0012 9976 JSTOR 40278747 Broz J Lawrence Frieden Jeffry A 2001 The Political Economy of International Monetary Relations Annual Review of Political Science 4 1 317 343 doi 10 1146 annurev polisci 4 1 317 ISSN 1094 2939 Oatley Thomas 2019 International Political Economy Sixth Edition Routledge pp 39 41 ISBN 978 1 351 03464 7 Robert O Keohane Biography amp Facts Britannica www britannica com Retrieved 18 May 2022 a b c d e f Lake David A 2009 Open economy politics A critical review The Review of International Organizations 4 3 219 244 doi 10 1007 s11558 009 9060 y hdl 10 1007 s11558 009 9060 y ISSN 1559 744X S2CID 62831376 Allen Robert C 2011 Global Economic History A Very Short Introduction Oxford University Press Blyth Mark 17 Routledge Handbook of International Political Economy IPE IPE as a Global Conversation Routledshe History of Political Economy History The University of Chicago history uchicago edu Retrieved 29 June 2022 political economy Britannica www britannica com Retrieved 20 May 2022 Mark Robbins 2016 Why we need political economy Policy Options 1 Cohen Benjamin J 2008 International Political Economy An Intellectual History Princeton University Press pp 17 19 ISBN 978 0 691 13569 4 political economy Historical development Britannica www britannica com Retrieved 20 May 2022 a b Cohen Benjamin J 2008 International Political Economy An Intellectual History Princeton University Press pp 38 41 ISBN 978 0 691 13569 4 Cohen Benjamin J 2008 International Political Economy An Intellectual History Princeton University Press ISBN 978 0 691 13569 4 Brown Chris 1999 Susan Strange a critical appreciation Review of International Studies 25 3 531 535 doi 10 1017 S0260210599005318 a b c d e Broz J Lawrence Frieden Jeffry A 2001 The Political Economy of International Monetary Relations Annual Review of Political Science 4 1 317 343 doi 10 1146 annurev polisci 4 1 317 ISSN 1094 2939 Broz J Lawrence Frieden Jeffry A 2008 Wittman Donald A Weingast Barry R eds The Political Economy of Exchange Rates The Oxford Handbook of Political Economy doi 10 1093 oxfordhb 9780199548477 001 0001 ISBN 978 0 19 954847 7 a href Template Cite web html title Template Cite web cite web a CS1 maint url status link a b Kirshner Jonathan 2003 Money Is Politics Review of International Political Economy 10 4 645 660 doi 10 1080 09692290310001601911 ISSN 0969 2290 JSTOR 4177480 S2CID 153878859 Kirshner Jonathan 1995 Currency and Coercion The Political Economy of International Monetary Power Princeton University Press doi 10 2307 j ctv173f2mk ISBN 978 0 691 03768 4 JSTOR j ctv173f2mk S2CID 241262086 Bauerle Danzman Sarah Winecoff W Kindred Oatley Thomas 2017 All Crises are Global Capital Cycles in an Imbalanced International Political Economy International Studies Quarterly 61 4 907 923 doi 10 1093 isq sqx054 ISSN 0020 8833 Winecoff William Kindred 2020 The persistent myth of lost hegemony revisited structural power as a complex network phenomenon European Journal of International Relations 26 209 252 doi 10 1177 1354066120952876 ISSN 1354 0661 S2CID 222003135 Oatley Thomas 2021 Weaponized International Financial Interdependence The Uses and Abuses of Weaponized Interdependence Brookings Institution Press a href Template Cite web html title Template Cite web cite web a CS1 maint url status link Eichengreen Barry Sachs Jeffrey 1985 Exchange Rates and Economic Recovery in the 1930s The Journal of Economic History 45 4 925 946 doi 10 1017 S0022050700035178 ISSN 1471 6372 S2CID 153802154 Oatley Thomas Winecoff W Kindred Pennock Andrew Danzman Sarah Bauerle 2013 The Political Economy of Global Finance A Network Model Perspectives on Politics 11 1 133 153 doi 10 1017 S1537592712003593 ISSN 1537 5927 S2CID 3817169 Thompson Nicholas 2020 Open economy monetary politics The Routledge Handbook to Global Political Economy Routledge pp 129 145 doi 10 4324 9781351064545 11 ISBN 978 1 351 06454 5 S2CID 218780961 Copelovitch Mark S Pevehouse Jon C W 2015 Martin Lisa L ed Bridging the Silos The Oxford Handbook of the Political Economy of International Trade doi 10 1093 oxfordhb 9780199981755 001 0001 ISBN 978 0 19 998175 5 In recent years IPE scholars have reached a broad consensus on the use of the Mundell Fleming trilemma as the workhorse framework for analyzing the political economy of monetary policy and exchange rate regime choice in an open economy a 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Political Economy The Oxford Handbook of International Political Economy doi 10 1093 oxfordhb 9780198793519 013 1 ISBN 978 0 19 879351 9 a href Template Cite web html title Template Cite web cite web a CS1 maint url status link Bush Sarah Sunn Prather Lauren 2020 Foreign Meddling and Mass Attitudes Toward International Economic Engagement International Organization 74 3 584 609 doi 10 1017 S0020818320000156 ISSN 0020 8183 S2CID 226723351 Ba Heather 2021 Pevehouse Jon C W Seabrooke Leonard eds The Evolving State of the State in International Political Economy The Oxford Handbook of International Political Economy doi 10 1093 oxfordhb 9780198793519 013 19 ISBN 978 0 19 879351 9 a href Template Cite web html title Template Cite web cite web a CS1 maint url status link Farrell Henry Newman Abraham 2016 The new interdependence approach theoretical development and empirical demonstration Review of International Political Economy 23 5 713 736 doi 10 1080 09692290 2016 1247009 ISSN 0969 2290 S2CID 157812944 Farrell Henry Newman Abraham L 2014 Domestic Institutions Beyond the Nation State Charting the New Interdependence Approach World Politics 66 2 331 363 doi 10 1017 S0043887114000057 ISSN 0043 8871 JSTOR 24577015 S2CID 45047593 Farrell Henry Newman Abraham L 2019 Weaponized Interdependence How Global Economic Networks Shape State Coercion International Security 44 1 42 79 doi 10 1162 isec a 00351 ISSN 0162 2889 S2CID 198952367 a b Helleiner Eric 2021 The Neomercantilists A Global Intellectual History Cornell University Press ISBN 978 1 5017 6014 3 Helleiner Eric 2021 The Diversity of Economic Nationalism New Political Economy 26 2 229 238 doi 10 1080 13563467 2020 1841137 ISSN 1356 3467 Gilpin Robert Gilpin Jean M 1987 The Political Economy of International Relations Princeton University Press ISBN 978 0 691 02262 8 JSTOR j ctt19wcct3 Oatley Thomas 2019 International Political Economy Sixth Edition Routledge pp 33 38 ISBN 978 1 351 03464 7 Oatley Thomas 2019 International Political Economy Sixth Edition Routledge pp 25 34 35 ISBN 978 1 351 03464 7 Archived from the original on 21 July 2021 Retrieved 21 July 2021 Simmons Beth A Dobbin Frank Garrett Geoffrey 2006 Introduction The International Diffusion of Liberalism International Organization 60 4 781 810 doi 10 1017 S0020818306060267 ISSN 1531 5088 S2CID 146351369 a href Template Cite journal html title Template Cite journal cite journal a CS1 maint url status link a b Gilpin Robert 1987 The Political Economy of International Relations Princeton University Press pp 31 34 ISBN 978 0 691 02262 8 a b c d Rickard Stephanie J 2021 Pevehouse Jon C W Seabrooke Leonard eds Open Economy Politics Revisited The Oxford Handbook of International Political Economy doi 10 1093 oxfordhb 9780198793519 013 40 ISBN 978 0 19 879351 9 Retrieved 17 July 2021 a href Template Cite web html title Template Cite web cite web a CS1 maint url status link Paul Darel E 2010 Liberal Perspectives on the Global Political Economy Oxford Research Encyclopedia of International Studies doi 10 1093 acrefore 9780190846626 013 32 ISBN 978 0 19 084662 6 a href Template Cite web html title Template Cite web cite web a CS1 maint url status link Farrell Henry Finnemore Martha 2009 Ontology methodology and causation in the American school of international political economy Review of International Political Economy 16 1 58 71 doi 10 1080 09692290802524075 ISSN 0969 2290 S2CID 145230528 McNamara Kathleen R 2009 Of Intellectual Monocultures and the Study of IPE Review of International Political Economy 16 1 72 84 doi 10 1080 09692290802524117 ISSN 0969 2290 JSTOR 27756144 S2CID 145476039 a b c d Winecoff W Kindred 2017 How Did American International Political Economy Become Reductionist A Historiography of a Discipline Oxford Research Encyclopedia of Politics doi 10 1093 acrefore 9780190228637 013 345 ISBN 978 0 19 022863 7 a href Template Cite web html title Template Cite web cite web a CS1 maint url status link a b c Cohen Benjamin 2017 The IPE of money revisited Review of International Political Economy 24 4 657 680 doi 10 1080 09692290 2016 1259119 ISSN 0969 2290 S2CID 33868682 Katzenstein Peter J 2009 Mid Atlantic Sitting on the knife s sharp edge Review of International Political Economy 16 1 122 135 doi 10 1080 09692290802524158 ISSN 0969 2290 S2CID 154587700 Drezner Daniel W McNamara Kathleen R 2013 International Political Economy Global Financial Orders and the 2008 Financial Crisis Perspectives on Politics 11 1 155 166 doi 10 1017 S1537592712003660 ISSN 1537 5927 S2CID 143476037 Drezner Daniel 2021 Power and International Relations a temporal view European Journal of International Relations 27 1 29 52 doi 10 1177 1354066120969800 ISSN 1354 0661 S2CID 228821591 Jervis Robert 1998 Realism in the Study of World Politics International Organization 52 4 971 991 doi 10 1162 002081898550707 ISSN 1531 5088 S2CID 144123356 Lipscy Phillip Y 2020 COVID 19 and the Politics of Crisis International Organization 74 98 127 doi 10 1017 S0020818320000375 ISSN 0020 8183 Lake David A 2009 Wittman Donald A Weingast Barry R eds International Political Economy Vol 1 Oxford University Press pp 757 777 doi 10 1093 oxfordhb 9780199548477 003 0042 ISBN 978 0199548477 a b c Owen Erica Walter Stefanie 2017 Open economy politics and Brexit insights puzzles and ways forward Review of International Political Economy 24 2 179 202 doi 10 1080 09692290 2017 1307245 ISSN 0969 2290 S2CID 152185426 Oatley Thomas 2021 Regaining relevance IPE and a changing global political economy Cambridge Review of International Affairs 34 2 318 327 doi 10 1080 09557571 2021 1888880 ISSN 0955 7571 S2CID 233235562 a b c Blyth Mark Matthijs Matthias 2017 Black Swans Lame Ducks and the mystery of IPE s missing macroeconomy Review of International Political Economy 24 2 203 231 doi 10 1080 09692290 2017 1308417 ISSN 0969 2290 S2CID 157518024 Katzenstein Peter J Keohane Robert O Krasner Stephen D 1998 International Organization and the Study of World Politics International Organization 52 4 645 685 doi 10 1017 S002081830003558X ISSN 1531 5088 S2CID 34947557 Ahiakpor James C W 1985 The Success and Failure of Dependency Theory The Experience of Ghana International Organization 39 3 535 552 doi 10 1017 S0020818300019172 ISSN 0020 8183 JSTOR 2706689 S2CID 154491620 Norrlof Carla 2010 America s Global Advantage US Hegemony and International Cooperation Cambridge Cambridge University Press p 9 doi 10 1017 cbo9780511676406 ISBN 978 0 521 76543 5 a b Cohen Benjamin J 2008 International Political Economy An Intellectual History Princeton University Press pp 66 68 ISBN 978 0 691 13569 4 Keohane Robert O 2020 Understanding Multilateral Institutions in Easy and Hard Times Annual Review of Political Science 23 1 1 18 doi 10 1146 annurev polisci 050918 042625 ISSN 1094 2939 Cohen Benjamin J 2008 International Political Economy An Intellectual History Princeton University Press New Political Economy Symposium The British School of International Political Economy Volume 14 Issue 3 September 2009 Not So Quiet on the Western Front The American School of IPE Review of International Political Economy Volume 16 Issue 1 2009 a b Pepinsky Thomas 2020 Is International Relations Relevant for International Money and Finance Bridging the Theory Practice Divide in International Relations Georgetown University Press a href Template Cite web html title Template Cite web cite web a CS1 maint url status link Cohen Benjamin J 2008 International Political Economy An Intellectual History Princeton University Press pp 35 36 ISBN 978 0 691 13569 4 Seabrooke Leonard Young Kevin L 2017 The networks and niches of international political economy Review of International Political Economy 24 2 288 331 doi 10 1080 09692290 2016 1276949 hdl 10398 560a0b04 b5cd 40e3 b2b8 9924ecbbe171 ISSN 0969 2290 S2CID 152218180 Further reading EditBroome Andre 2014 Issues and Actors in the Global Political Economy Basingstoke Palgrave Macmillan ISBN 978 0 230 28916 1 Cohen Benjamin 2008 International Political Economy An Intellectual History Princeton NJ Princeton University Press ISBN 978 0 691 13569 4 Gill Stephen 1988 Global Political Economy perspectives problems and policies New York Harvester ISBN 0 7450 0265 X Gilpin Robert 2001 Global Political Economy Understanding the International Economic Order Pon NJ Princeton University Press ISBN 0 691 08677 X Paquin Stephane 2016 Theories of International Political Economy Oxford University press Don Mill Oxford University Press ISBN 9780199018963 Phillips Nicola ed 2005 Globalizing International Political Economy Palgrave Macmillan ISBN 978 0 333 96504 7 Ravenhill John 2005 Global Political Economy Oxford Oxford University Press ISBN 0 19 926584 4 Archived from the original on 1 December 2014 Retrieved 25 March 2015 Watson Matthew 2005 Foundations of International Political Economy Palgrave Macmillan ISBN 978 1 4039 1351 7 Retrieved from https en wikipedia org w index php title International political economy amp oldid 1136205954, wikipedia, wiki, book, books, library,

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