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Two Theories Of International Political Economy

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International Political Economy is a sub-part of International Relations focused on examining the international economic relations which include both states and markets (R. Gilpin, 1987, p8). Of course like all branches of political science political economy is concerned with questions of distribution of wealth. Who gets what, when and how? Another important question for political economy is - how institutions shape distributive outcomes. In this essay I will examine the two major opposing theories in International Political Economy – neoliberal institutionalism & state-centric realism. I will divide the essay in two parts. I will outline briefly how these two schools of thought answer these questions, and I will present their view of the global …show more content…

‘’The increased integration and instability of financial markets, and exchange rates fluctuations pose a serious threat to the stability of the global economy’’ (R. Gilpin, 2011, p380). There is a tendency of regionalisation in the open trading system, because countries and organizations share different opinions in which direction the world should be going. Still the dominant model is the American, although its status of a global hegemon is weakening. The growing regionalisation of the global market is another threat to neoliberal institutionalist – the EU and US based companies represents nearly 65% of the top research and development companies worldwide. (D. S. Hamilton, J. P. Quinlan, 2014). The biggest challenge imposed to the international economic organizations is the ‘democratic deficit’. I will use the example of World Trade Organization (WTO) to explain that better. WTO is the most powerful international organizations. It has the power to penalize each of its 130 members including the US, and each of its members has one vote, which makes it and the most democratic one. As Robert Gilpin points out – ‘’The WTO’s judicial and regulatory powers are unprecedented for an international organization. It approaches the neoliberal institutionalist ideal of an effective international institution.’’ The democratic ‘’... deficit is a product of the fact that the millions affected by the rules of the WTO are unable to have any direct influence on the rule-making process.’’(A. Narlikar, 2005, p133). People started to believe that the decisions on which their lives depend are made by anonymous bureaucrats and this leads to ‘’backlash against globalization and threaten to damage the global economy managed by international institutions.’’ (R. Gilpin, 2011, p382). The protests during the WTO meeting in Seattle (1999) appealed for participation of NGO’s in the decision-making

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