Theories Of International Political Economy

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Introduction The theory of International Political Economy is a theory that discusses the collapse of boundaries between economics and politics. It is a study of the political economy of international trade, international finance, North-South relations, multinational corporations and supremacy. The term of International Political Economy emerged during the 1970s due to the collapse of the Bretton Woods system. This failure alerted the United States of the status and the weakness of economic fundamentals of the world order. There are three main views of International Political Theory that emerged. The Liberal view has faith in independence for private owners at the cost of public power/the government as well as promoting a free market. The Realist/Mercantilist…show more content…
The international division of labour is the centre of analysis in this view. The developed countries outputs in all sectors are correspondingly higher, unlike the lesser developed countries, where the key export sectors are relatively exceedingly productive due to having a strong labour union, first-hand power in trade sectors and the existence of big clusters of people out of the market who live at subsistence level. The wealth is hence focused on a small group of people who mainly spend the money earned on foreign luxury goods. This dual nature leads to a structural problem; the decline of developing countries trade and division of labour benefit the developed…show more content…
The theory that adequately describes the relationship is the Structuralist/Marxist theory. This theory highlights that the developing South is economically dependent on the industrialized North as well as showing that the power of the North has created categories of rich and poor nations which has resulted in the poor nations looking to the rich nations for assistance. This cycle is then repeated. The recent trade dispute between the Republic of Korea and the United States shows the superiority of the industrialized North up against the developing South. Therefore, the perspectives of International Political Economy have a great effect on trade and the root of trade

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