“International Political Economy”
Lecture 1 What is International Political
Economy?
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Three features of this course
theoretical
This course locates IPE as a major subfield
of international relations (IR)
research
Some contents of the course reflects my
own research interests and outcomes
empirical
The hidden topic of this course is the rise
of China
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The position of IPE in IR
Security Study
International
Relations (IR)
International Political
Economy
• Security study is still dominant in Asia
• In Europe, IPE is a more important subfield of
IR than Security Study
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The definition of IPE
• IPE (International Political Economy): The
politics of international economic relations
• A subject to examine reciprocal and dynamic
interactions between the pursuit of power
and the pursuit of wealth
• Interactions between the state and market
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The concept of IPE
International
Politics
State
Economics
Interaction
Pursuit
of Power
Market
Pursuit
of Wealth
Relations between the state and
market
In the world with the
absence of the market,
the state would allocate
available resources to
attain
its
political
objectives
In the world with the
absence of the state,
relative prices would
allocate goods and
services
In the real world, the
state and market exist
with significant mutual
impacts
Interactions between the state
and market
State provides institutions
and rules to sustain and
develop the market
The position of
economic
wealth has
become crucial
for state power
state ｖ.ｓ.
market
Economic
activity is
defined by
domestic/
global politics
Market produces economic
wealth that is one source
of state power
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The objectives of IPE
To examine comprehensively and systematically
interactions between politics and economics that
hold different logics and mechanisms
In details
How do the state and
its associated political
processes affect the
production and
distribution of wealth?
What influence do the
functions and evolution
of the market have on
decision-making and
interactions of political
actors?
The birth of IPE
The main international issues in the
1950s and 1960s： Security affairs
Significant changes in the 1970s
The collapse of the
Bretton Woods
system in 1971 and
the 1st Oil Shock in
1973
Intensive economic
and trade frictions
between US and
Japan and Europe
and Japan
Growing interests
in the North-South
Problem (New
International
Economic Order in
1974)
The birth of IPE (cont.)
• The politicization of various economic issues
• The existing theories and studies centered
on security affairs could not explain and
analyze international tensions regarding
economic affairs
• IPE that analyses interactions between
international politics and economics emerged
and developed as an important subfield of IR
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The target of IPE
Various economic issues among states
The evolution of the international economic
system and its relations with the states
Economic policies and political processes
regarding them within the state
Cross-border economic relations among
transnational actors (MNCs)
Global issues (climate change issue)
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Politics and economics
Politics
Economics
Authoritative
allocation of values
(including
resources)
The allocation of
resources through
market mechanism
Politics and economics
originally have little
relevance as disciplines,
and mutually indifferent
However, the state and
market, the targets of
each discipline, are
interactive, and their
relations are cyclical
The logic and role of the state
• The state is based on the concepts
of territoriality and exclusivity, and
its basic principle is sovereignty
• The political actors within the state
take advantage of economic
activities and fruits from them to
attain political objectives
• The state implements fiscal, labor,
and agricultural policies as well as
economic regulations
13
The logic and role of the state （cont.）
• The state controls the redistribution of
incomes among the nation
• The expansion and control of national
wealth has become a crucial role for the
state (the welfare state)
• The provision of greater wealth for the
people is indispensable for political
leaders to get support from them
14
The logic and function of the market
• The market is based on the concepts of
functional integration and contractual
relationships, and its basic principle is
efficiency
• The economic actors exchange goods and
services based on market price
• Imperative for the market is the absence of
all forms of obstacle to the operation of the
price mechanism
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The logic and function of the
market (cont.)
The market economy
incorporates temporal and
geographical dynamism
Temporal
Producers
continuously strive
to improve efficiency
and technology to
win competition in
the market
Geographical
Capitalists who are
motivated to hunt
for greater profits
expand
their
operations
beyond
national borders
Limitations to market efficiency
• The market that relies on efficiency alone
often tends to change other crucial values
(community, family, human bond, social
tradition) into market mechanisms
• Market competition produces winners and
losers, tending to unequal distribution of
wealth within and between the nations
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The universality of the market and the
territoriality of the state
• The market principle is universal and diffuses
beyond national borders
• The current international system does not
form one government but comprises of some
200 sovereign states with individual
governance systems
• The states are protected by territorial
boundaries that guarantee national autonomy
and political unity
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