Analyzing the Global Political Economy

387 Pages·2008·1.31 MB·English

Analyzing the Global Political Economy
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Analyzing the Global Political Economy

Andrew Walter and Gautam Sen

Foreword by Benjamin J. Cohen
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Copyright © 2009 by Princeton University Press
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ISBN-13: 978-0-691-12412-4

ISBN-13 (pbk.): 978-0-691-10159-0

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Contents
List of figures and tables
Foreword Benjamin J. Cohen
Preface
Abbreviations
1. International Political Economy
2. The Emergence of a Multilateral Trading System
3. The Political Economy of Trade Policy: Interests and Institutions
4. The Evolution of the International Monetary System
5. The Consequences of Financial Integration
6. The Political Economy of Foreign Direct Investment
7. The Regulation and Policy Consequences of Foreign Direct Investment
8. Conclusion:
Web-based glossaries of economics and political science
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Bibliography
Index
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Figures and Tables

Figures

Figure 4.1: Monthly Reserves as a Multiple of Monthly Imports, High, and
Low/Middle Income Countries, 1960–2004
Figure 4.2: Capital Account Openness, Selected Country Groups, 1970–2003
Figure 5.1: Total Official and Private Financial Flows to Developing Countries,
1970–2006
Figure 5.2: Net Transfers to Developing Countries, Bonds and Bank Loans, 1977–
2006

Tables
Table 2.1: GATT Rounds and Subjects Covered
Table 4.1: South Korea: Balance of Payments, 1996:1–1999:1, by Quarter
Table 5.1: Public Social Expenditure as a Percentage of GDP, Selected Countries
and Years
Table 6.1: The World’s Top 40 Nonfinancial MNCs, Ranked by Foreign Sssets,
2004
Table 6.2: FDI Flows, 20 Major Countries, 1990–2005
Table 7.1: Outward FDI Stock, Major 10 Countries, 1980–2005
Table 7.2: Top 30 BITs Signatories, End 2005

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FOREWORD

Benjamin J. Cohen

What is International Political Economy, and how should it be studied? Most people
would agree that IPE, at its most fundamental, is about the complex interrelationship
of economics and politics at the level of international affairs. In the words of Robert
Gilpin, one of the field’s pioneers, IPE is about “the reciprocal and dynamic
interaction in international relations of the pursuit of wealth and the pursuit of power.”
By pursuit of wealth, Gilpin had in mind the realm of economics: the role of markets
and material incentives, which are among the central concerns of mainstream
economists. By pursuit of power, he had in mind the realm of politics: the role of the
state and management of conflict, which are among the principal concerns of political
scientists. IPE was to marry the two disciplines, integrating market studies and
political analysis into a single field of inquiry.
Remarkably, the field has not existed for very long – at least not as a
recognized academic specialty. Sharp observers had long understood, of course, that
connections existed between economics and politics in the real world. As a practical
matter, political economy has always been part of global relations. But as a distinct
scholarly domain, surprisingly enough, IPE was born just a few decades ago. Prior to
the 1970s, in the English-speaking world, economics and political science were
treated as entirely different disciplines, each with its own view of international affairs.
Relatively few efforts were made to bridge the gap between the two. Exceptions
could be found, often quite creative, but mostly among Marxists or others outside the
“respectable” mainstream of Western scholarship. A broad-based movement to
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integrate market studies and political analysis is really of very recent origin. IPE is a
true “interdiscipline.” Its achievement has been to build new bridges between older
established disciplines, providing fresh perspectives for our study of the world
economy.
Early on, the role of economics in IPE was allowed to wither a bit as the field
came to be dominated more by scholars from political science or other cognate
disciplines. People like myself, who came to IPE from a background in economics,
were far outnumbered as the interdiscipline gravitated toward departments of political
science or international studies or to self-standing programs of their own. Even as the
sophistication and accomplishments of the field grew, its grasp of the latest
developments in economic theory weakened. Students of IPE were all too frequently
underprepared in terms of contemporary economic concepts or methodology.
More recently, the pendulum has begun to swing back. Growing numbers of
specialists have turned once again to economics, with its emphasis on hard scientific
method – what elsewhere I have referred to as “creeping economism” in IPE. More
and more, the field finds inspiration in the twin principles of positivism and
empiricism, which hold that knowledge is best accumulated through an appeal to
objective observation and systematic testing. This is particularly true in the United
States and increasingly the case elsewhere as well. Yet the development is barely
evident in our textbooks. Most of the basic texts available to our students still reflect
the field’s early roots in political science and international studies.
Enter Andrew Walter and Gautam Sen. Analyzing the Global Political
Economy offers a valuable corrective, bringing the economics in IPE back to the front
and center of the stage. Economic theory is not prioritized, but neither is its
importance discounted. In a balanced treatment, Walter and Sen demonstrate just
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how much insight can be gained from a serious, critical engagement with the
economics discipline. Students could not hope for a better introduction to scholarship
in the field as it is actually practiced today.
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Preface

Why yet another textbook in International Political Economy (IPE), you might ask?
Since this is a very reasonable question, we should explain at the outset why we think
this book is distinctive and worthwhile reading for those students beginning serious
studies in this field. IPE emerged as an academic discipline in the 1970s, making it
one of the younger fields in the social sciences. It is also a field still marked by
considerable controversy and basic differences of approach in theory, method and
even in the identification of the field’s central questions. However, the centre of
gravity of the field has changed considerably since we began our studies in what was
then a very new subject. Much recent research in the field has actively engaged with
and utilized economic theory and concepts in a way that would have been seen as
misplaced or dangerous in the 1970s and 1980s. We hope that students who come to
study IPE with little or no background in economics will find this book useful, but we
also hope that economics students interested in political economy questions will find
that it increases their awareness of the cons as well as the pros of economic
approaches to political economy questions and to the comparative strengths of
political science.
In teaching IPE to upper undergraduates and masters students at the London
School of Economics and Political Science (LSE) for some years, we found that there
was no single text that provided a relatively concise overview of IPE theory and
approaches. Outside of the United States and in the LSE in particular, Susan Strange
still casts a long shadow. As one of the founders of the subject and of IPE studies at
the LSE, her iconoclasm and forthrightness inspired a generation of students, some of
whom went on to teach and research in the subject. Her antagonism towards
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