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International Political Economy

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International Political Economy, 9781138390348 (1138390348), Routledge, 2018
Local developments reflect global forces, and global forces are in turn shaped by these local developments. Consider the Trump administration that entered office in January 2017. It seems clear that Trump’s somewhat surprising victory was due in part to support from workers in key Rust Belt states who had seen their jobs disappear as a consequence of global competition and trade. Trump’s promise to “make America great again” held considerable appeal to these voters as the promise seemed to indicate that Trump could revitalize manufacturing employment in the American Midwest. Trump’s unlikely victory in the 2016 election is in turn shaping and reshaping the global economy. Since entering office, Trump has been a rather disruptive force for the international trade system. He almost immediately withdrew the United States from the Trans-Pacific Partnership trade agreement, he initiated a sweeping review of the World Trade Organization, and he began to renegotiate the North American Free Trade Agreement with Mexico and Canada. The outcomes from these processes that Trump has initiated will shape the American economy and in doing so will probably have an impact on the outcome of the 2020 presidential election.

More broadly, Trump’s election and the subsequent trade policy initiatives he has embraced highlight the extent to which our ability to understand the global economy requires knowledge of politics as well as economics. For globalization is not a spontaneous economic process: it is built on a political foundation. Governments share a broad consensus on core principles; core principles inform the elaboration of specific rules. Specific rules establish international institutions—the World Trade Organization, the World Bank, and the International Monetary Fund. These international institutions in turn facilitate a political process through which governments reduce barriers to global exchange and create common rules to regulate other elements of the global economy. This political system—the foundation and the process—has enabled businesses to construct the network of international economic linkages that constitute the economic dimension of globalization. Understanding the global economy, therefore, requires a political economy approach: we must study its political as well as its economic dimensions.
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