Lecture 01

INTRODUCTION TO
INTERNATIONAL POLITICAL
ECONOMY

• Ngo Thi Hong Ngoc, MA.

1
Grading Policy and Evaluation

Final term Grading Mid term Grading Class participation (bonus)

Sitting Exam (70%): 30% on Sitting Exam on Week 6 (20%) Maximum 20% of the
review questions, 70% on Quizzes (10%) mid term grade
lectures

2
TOPICS (Mid term paper)

BRI and Chinese debt trap

Covid-19 and Requirement
Trade wars in African/Asian
Global Inequality China motives countries • 2800 – 3500 words, in ENGLISH
• Constructive and Respectful
• Plausible Analysis and Argument
Regional trade
Problems of FTAs MNCs and Global leadership • Logical Structure
agreements and
developing role on climate • Good Content from Reliable Sources
(RCEP/CPTPP…) the WTO: conflict
countries change
or compatibility?
Evaluation Criteria (100%)
Conflict over FDI • Idea: 20%
Motives of flows to Immigration and • Analysis + argument: 40%
Financial crises
International Aids developing Anti-immigration
• Evidence: 40%
countries

3
Weekly Breakdown Week 1 Introduction to IPE

Week 2 Theoretical Approaches in IPE

Week 3 PE of International Trade

Week 4 PE of International Monetary System

Week 5 PE of Financial Crisis

Week 6 Mid-term Exam

Week 7 Developing Countries and the North-South Gap

Week 8 PE of Multinational Corporations

Week 9 PE of Environment

4
Lecture 01
INTRODUCTION TO
INTERNATIONAL POLITICAL
ECONOMY

• Ngo Thi Hong Ngoc, M.A.

5
 Introduction to
IPE

6
 • International Political Economy (IPE) is a social science that
What is IPE? attempts to understand international and global problems
using interdisciplinary tools and theoretical perspectives.
• IPE is the study of a problématique or set of related
problems. The traditional IPE problématique includes the
political economy of international trade, international
finance, North-South relations, transnational enterprises, and
hegemony.
• David Lake: “IPE is the study of the interplay of economics
and politics in the world arena”
• Robert Gilpin: “IPE is the study of the Problems and
Questions arising from the Parallel Existence and Dynamic
Interaction of State and Market.”
→ The relationship between politics and economy at the global
level.

7
 • Conflict/cooperation replaces war and peace
IPE: Key issues and
• International institutions are norms, NOT places
concepts • Domestic politics/comparative politics matter
International Political Economy • The tragedy of the commons at the international scale.
(IPE) emerged as one of the most
important sub-disciplines of • Homogenization or Americanization?
International Relations after a • Winners and losers of global economic exchange.
series of global economic
developments in the 1970s. • Economic globalization describes the international political
economy of the 21st century.
• Goods and services are produced and traded globally.
• A global “virtual” world ties us together through new
technology.
• New technologies and economic ties also lead to the
decreasing territorialization of daily life.

8
Are you interested in
the trade war between
the U.S and China?
9
What economic theory that
Mr. Trump is influenced by?

10
11
IPE: Framing focus • Tension between states and markets?

questions • Supportive relationship between states and markets?

• How are the global economy and trade governed?
• What is globalization and how far has it progressed?
• What is the proper role of government in economic
activities?
• Is global economic governance keeping up with the pace
of globalization? If not, what are the consequences?
• What roles do multinational corporations and the major
international economic institutions play in the
international political economy?

13
Definition of a Regime • A set of norms, rules, procedures and institutions which
constrains the behavior of the members of the regime.
o e.g., the World Trade Organization in Geneva,
Switzerland.

14
Four issue areas of IPE

International International Multinational Economic

Trade System Monetary System Corporations Development
– MNCs

15
Four IPE structures 1. The Production and Trade : who produces what, for
whom and on what terms lies at the heart of the IPE.
(Susan Strange) 2. Money and Finance: who has access to money and on
what terms, and how certain resources are distributed
between nations.
3. Security: safety from threats and actions of other states
and non-state actors
4. Knowledge and Technology: sources of wealth and
powers
• Each structure (foundation) contains a number of state
and nonstate institutions, organizations, and other actors
who determine the rules and processes that govern
access to trade, finance, security, and knowledge

16
Actor behavior • Levels of analysis (David N. Balaam): 4
1. Global level: global factors like changes in
technologies, commodity prices, and climate.
2. International level (interstate level)
3. State level
4. Individual level

17
 The evolution of
the IPE

19
 The evolution of the
IPE: Clashing Ideas
and Practices (1)

• The era from the late Middle

Ages to the end of the 18th
century:
o Age of Discovery: European
explorers opened up new
frontiers in the Americas,
Asia, and Africa.

20 20
 The evolution of the
IPE: Clashing Ideas
and Practices (1)

• The era from the late Middle

Ages to the end of the 18th
century:
o Age of Discovery: European
explorers opened up new
frontiers in the Americas,
Asia, and Africa.
o The exchange of good and
people tied the colonies and
the home states together.

21 21
Mercantilist World-Economy, ca. 1530-1776

22
The evolution of the IPE: Clashing Ideas and Practices (2)

• Mercantilism (statism) was the common practice of many governments

and a dominant economic doctrine at the time (16th - 18th).
o Mostly associated with the colonization era.
o Mercantilism’s goal is to build economic wealth and to build the
power of the state.
o 19th century Economic nationalism: boost exports by backing a
powerful state protecting domestic monopolies (i.e. British East
India Company).
• Jean-Baptiste Colbert (1617-83) argued that states should
accumulate gold and silver as well as build a strong central
government.
• Alexander Hamilton (1757-1804) made similar arguments in the
United States.
Jean-Baptiste Alexander 23
Colbert Hamilton
24
The evolution of the IPE: Clashing Ideas and Practices (3)

• (Economic) Liberalism
• Adam Smith (1723-1790) wrote of the idea that human are rational
and self-interested.
o To Smith, markets develop through individual, rational action.
o Markets need to be free from government action to function
properly.
• David Ricardo (1772-1823) also supported the implementation of free
trade and believed that minimal government intervention best
served an economy.

Adam Smith David Ricardo 25

26
The evolution of the IPE: Clashing Ideas and Practices (4)

• From the start of the 19th century to World War I colonialism expanded
greatly: the states of Europe industrialized.
• Marxism (Radicalism) emerged as a response to the excesses and
inequalities of the time.
o Society was conflictual. Conflict was focused on competition between
classes/groups.
o Owners of wealth versus workers.
→ This pressure for expansion creates tensions and creates the seeds of
the destruction of the system as a whole.

Friedrich 27
Karl Marx Engels
 The evolution of the
IPE: Hegemony (5)

• The “Pax Britanica” (1815-1914):

Britain, based on international trade
and her powerful Royal Navy, acted as
o a global hegemon to promote a
more peaceful world order;
o a large, dominant state provides
collective goods to the global
system (rules and peace along
marine routes).
• “Pax Britanica” is an example of
“hegemonic stability theory”.

28
29
 • The world’s largest economy is called a “hegemon”.
The Theory of • Britain in the 19th century (after 1815)
Hegemonic Stability • US after World War II
(Robert Gilpin) • Robert Gilpin (1930-2018): the Theory of Hegemonic Stability:
The stability of the International System requires a single
dominant state to articulate and enforce the rules of interaction
among the most important members of the system.
o Hegemony often arises as a result of a global war (Britain,
Waterloo 1815; US, WWII)
o The hegemon establishes regimes after such a war that are
favorable to its own interests. (→ the will to do so)
o However, the hegemon also has to bear the costs of
hegemony by providing public goods to the global system.

30
Robert Gilpin
The evolution of the IPE: Clashing Ideas and Practices (6)

• The 1930s saw the spread of harmful

“beggar thy neighbor” (protectionism,
zero-sum) policies that shut off
international trade and caused crisis.
• At the end of World War II, the goal was
to create a new system that could
prevent the disaster of the 1930s.

31
The evolution of the IPE: Clashing Ideas and Practices (7)

• The post-World War II system sought to promote the

following:
o Open trade
o Free flow of capital
o Stable exchange rates
• These three goals are the foundation of globalization
in the post-World War II period

32
Transition from British to • Occurred gradually during the period between WW1 and
WW2
US Hegemony • US reluctant to assume burden of leadership
• Outcome of WW2 led to British decline and full leadership
for US

Charles P. 33
Kindleberger
3 traditional schools of
international political
economy

Next week, we learn about theoretical

approaches that help provide insights
into how the global economy generates
winners and losers, and how the
policies that governments adopt affect
the evolution of the global economy.
34
Review Questions

35
 • Which country played a fundamental role in the
Review questions establishment of the liberal trading system after WWII?
A. The Soviet Union
B. China
C. The United States
D. Germany

• Economists define an "efficient" choice as one that

A. costs the least, regardless of benefits.
B. gives you the most benefit with the least cost.
C. uses all your available resources with none left over.
D. gives you the most benefit, regardless of cost.

36
 • International political economy can be defined as
Review questions
A. the international organizations such as the
International Monetary Fund and the World Bank that
direct international investments
B. the comparative advantage industrialized nations
have over agriculturally-based nations
C. the mutual relationship between the international
politics and national economy
D. the domestic fiscal and monetary policies developed
by sovereign states

37
 • Alexander Hamilton, the United States’ first secretary of
Review questions treasury, advocated protectionist policies to achieve
what objective?
A. protect American farmers
B. protect American jobs
C. prevent unfair competition with China
D. protect the new nation’s manufacturers
E. prevent offshoring to Mexico

• Which country was NOT included in the construction of

the postwar liberal economic order after 1945?
A. Canada C. Soviet Union
B. France D. West Germany

38
 • What, according to Classical economic theory, was the
Review questions purpose of Mercantilism in the 18th century?
A. Mercantilism was a means by which to strengthen the
sovereign state, and inherently linked to international
conflict.
B. Mercantilism was a means by which to promote
societal security for the populations of states.
C. Mercantilism was a route to increasing imports and
transnational trade.
D. Mercantilism was not a significant economic theory
until after the 18th century.

39
 • Which of the following is referred to as a predecessor to
Review questions WTO?
A. IMF
B. World Bank
C. GATT
D. OPEC

• Which of the following is NOT among the three

theoretical approaches to development?
A. social democracy
B. economic liberalism
C. mercantilism, economic nationalism
D. Marxism

40
Thank you very much! [email protected]

41