ABSTRACT
The chapter begins by looking at the historical emergence of international political economy (IPE). It examines three principal theoretical approaches to IPE – mercantilism, economic liberalism, and Marxism. The chapter examines the enormous role of TNCs in the global economy and the evolving relationship between states and markets. It concludes by discussing the sources and consequences of the Asian financial crisis of 1997–98 and the Great Recession that began in 2007. Until recent centuries, trade was local and based on barter – the direct exchange of goods without money. There are three dominant theoretical traditions in IPE – mercantilism, liberalism, and Marxism – each with distinctive analytic and normative elements. Unlike mercantilism, the underlying norm of economic liberalism is that economic policies should improve citizens’ standard of living, not increase state power. Thus, it is akin to political liberalism, much as mercantilism is related to realism.
