The globalization problem is quite different from the traditional state-centered concerns of International Relations, which is one reason some IPE scholars consider IPE a distinct academic discipline, not just a sub-field of International Relations. As a process driven by the global expansion of production and finance, globalization forces us to look at the interrelationships between politics, business, culture, technology, the environment, and migration, to name only the most obvious areas.

At the heart of the globalization problem is the question of the state. Many scholars argue that the nation-state is increasingly incapable of dealing with global issues and has lost significant power relative to other actors in the global economy. For example, MNCs can easily move capital from one country to another, and this mobility has allowed them to reduce the taxes they pay.

Globalization has forced IPE scholars to search for new theories to explain complex global interactions. One of the most recent theories is constructivism, which focuses on the power of ideas to shape how states and institutions perceive and respond to global problems. An outgrowth of this perspective is literature on how globally-coordinated groups of non-state, non-business actors—called transnational advocacy networks—have been able to convince governments to care more about problems such as human rights and environmental destruction.

It is clear that globalization has generated an array of social and environmental problems that demand the attention of IPE scholars. Growing economic inequality has had profound effects on the quality of democracy and social stability. The rise of China and the creation of the euro currency have reshaped geopolitics. Most importantly, globalization has helped produce serious threats and crises that states and international institutions seem incapable of controlling, such as global warming, financial turmoil, and refugee flows. The challenge for IPE is to develop theories and concepts that help us make sense of what is now truly a “global political economy.”


*”What is International Political Economy?” is based upon an article written by Michael Veseth in 2004 for a UNESCO international encyclopedia project. © Michael Veseth, 2004. He updated it in March 2007. Bradford Dillman revised and updated it in December 2015.

Posted in Geopolitics