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Before defining the concept of International Political Economy, one has to take note of few words of warning. First, there is no universal agreement on how IPE should be defined. This in turn implies that defining the concept is not as simple or straightforward as one might expect (or want). Second,...

Before defining the concept of International Political Economy, one has to take note of few words of warning. First, there is no universal agreement on how IPE should be defined. This in turn implies that defining the concept is not as simple or straightforward as one might expect (or want). Second, definitions are important because it is the definitions that tell us what to include in our analysis and what to leave out. In other words, definitions within a given area of inquiry tell us what is considered legitimate---what matters, or what is relevant---within that field, as well as how it is supposed to be studied. And, after all, without definitions and hence clarity of concepts there can be no clarity of thinking and action. This is also the case in the most common definitions of International Political Economy. Consider, for instance, the definition which tells us that International Political Economy ―is the study of the tension between the market, where individuals engage in self-interested activities, and the state, where those same individuals undertake collective action‖. This definition is based on several important, but un-clear assumptions. First, it suggests that there are only two significant subjects of International Political Economy: (a) markets, which are composed of self interested individuals (and the firms that they operate), and (b) states, which are the primary political institutions of the modern international system. Furthermore, it suggests that a clear-cut distinction exists between economic or market-based activities and political or state-centered ones. Second, this definition tells us that the most important aspect of the relationship between markets and states is based on tension, which is ―a strained state or condition resulting from forces acting in opposition to each other‖. In other words, the definition assumes that states and markets relate to one another in fundamentally adversarial ways. Indeed, such definition has big truth in it because states and markets are obviously the two key actors in the discussion of IPE and also the relationship between the two is often antagonistic.Yet, the definition misses other important side of the story. For instance, political society is not solely represented by the state in (especially today's) global/world politics. We have also equally or even more powerful (than states) non-state actors in global politics such as Transnational Corporations/Multinational Corporations (TNCs/MNCs). The definition that excludes these important actors in IPE thus becomes misleading. Similarly, unlike what the definition suggests, state-market relation in IPE could be (and is often the case) reciprocal/cooperative or even mutually constitutive one making the definition useless. Such problems have thus forced many to develop two contending definitions of IPE. One is state-centered definition of IPE and the other Marxist definition of IPE which focuses on social class based definition of IPE because the state for Marxists is an appendage (nothing more than the instrument of the dominant class) and hence it is not considered as relevant in the definition. There is also other significant limitation in defining the concept of IPE. This limitation stems from the use of the term International in the concept. Strictly speaking, International applies only to relations between and among sovereign states. The term also implies a clear distinction between the national and the international---between what goes on inside states and what goes on outside states. It is clear though that a great deal of economic activity that occurs in the world today is conducted---and sometimes controlled---by non-state actors in ways that transcend national boundaries. Most of us know, for example, that large corporations engage in all sorts of economic transactions and activities that cut across borders: from buying, selling, and trading products and services, to building and investing in global chains of production (whereby a single product is designed, manufactured, assembled, distributed, and marketed in various locations throughout the world), to forging strategic alliances with other corporations based in a range of different countries. These types of firms are named as Transnational Corporations (TNCs). Due to this trend in today's political economy, IPE's definition is getting ever widened and deepened in content and even the name of the field is changing from IPE to GPE (Global Political Economy). For the purpose of discussion in this chapter, therefore, a broader definition of IPE is adopted because a market economy cannot exist and operate without some kind of political order (the state). This is not a new observation, nor is it one that many (political) economists, even neoclassical economists, would disagree though there is a great deal of disagreement over exactly what kind of political order is needed. Some take a minimalist view: the best political order is one in which the state only provides the legal-institutional framework for enforcing contracts and protecting private property (this is a view with which most neoclassical economists would agree). Others are convinced that the most appropriate political order is one in which the state plays an active and direct role in a much wider range of economic activity. What then can this broader definition be? International Political economy (IPE) is a field of inquiry that studies the ever-changing relationships between governments, businesses, and social forces across history and in different geographical areas. Defined this way, the field thus consists of two central dimensions namely: the political and economic dimension. A political dimension accounts for the use of power by a variety of actors, including individuals, domestic groups, states (acting as single units), International organizations, nongovernmental organizations (NGOs), and Transnational corporations (TNCs). All these actors make decisions about the distribution of tangible things such as money and products or intangible things such as security and innovation. In almost all cases, politics involves the making of rules pertaining to how states and societies achieve their goals. Another aspect of politics is the kind of public and private institutions that have the authority to pursue different goals. The economic dimension, on the other hand, deals with how scarce resources are distributed among individuals, groups, and nation-states. Today, a market is not just a place where people go to buy or exchange something face to face with the product's maker. The market can also be thought of as a driving force that shapes human behavior. When consumers buy things, when investors purchase stocks, and when banks lend money, their depersonalized transactions constitute a vast, sophisticated web of relationships that coordinate economic activities all over the world.. Theoretical perspectives of International Political Economy There are three major theoretical (often ideological) perspectives regarding the nature and functioning of the International Political economy: liberalism, Marxism, and nationalism (mercantilism). Each of these perspectives has been around for a long time. Mercantilism is the oldest of the three, dating back as early as the 16th century (perhaps even earlier). Many scholars point to Friedrich List(1789--1846) as the intellectual father of the mercantilist thought and it is a thought in response to classical economics and, more specifically, to Adam Smith's (1723--1790) liberal perspective. Marxism, by contrast, is the youngest of the three and is advanced by Karl Marx who also emerged as a critique of classical economics. Since the mid-1980s, the relevance of the three perspectives has changed dramatically. With the end of both communism and the ―import-substitution‖ strategies of many less developed countries (LDCs), the relevance of Marxism greatly declined, and liberalism has experienced a relatively considerable growth in influence. Around the world, more and more countries are acceptingliberal principles as they open their economies to imports and foreign investment, scale down the role of the state in the economy, and shift to export-led growth strategies. Marxism as a doctrine of how to manage an economy has been discredited but as an analytic tool and ideological critique of capitalism it survives and will continue to survive as longas those flaws of the capitalist system remain-e.g. widespread poverty side by side with great wealth, and the intense rivalries of capitalist economies over market share. Mercantilism/nationalism: is a theoretical and ideological perspective which defends a strong and pervasive role of the state in the economy -- both in domestic and international trade, investment and finance.In arena of international trade, for instance, mercantilism emphasizes the importance of balance-of-payment surpluses in trade with other countries and to this end it often promotes an extreme policy ofautarky to promote national economic self-sufficiency. As it developed in the 21st century, mercantilism (or neo-mercantilism) defended even a much more sophisticated and interventionist role of the state in the economy-for example, the role of identifying and developing strategic and targeted industries (i.e. industries considered vital to long-term economic growth) through a variety of means, including tax policy, subsidization, banking regulation, labor control, and interest-rate management. According to mercantilists, states should also play a disciplinary role in the economy to ensure adequate levels of competition. The proof of the relevance of mercantilist thought in the contemporary international political economy is found in the recent experience of the Japanese,South Korean, Taiwanese and Chinese national political economies whose states fulfilled the above stated roles almost perfectly. Instead of the term mercantilism, however, these states the East Asian economies (especially Japan, South Korea, and Taiwan) used the term‗developmental state approach' (a less politically laden term) to describe the nature of their national political economy system. Liberalism: is a mainstream perspective in International political economy and it defends the idea of free market system (i.e free trade/trade liberalization and free financial and Foreign Direct Investment (FDI) flows). Accordingly, removing impediments (barriers) to the free flow of goods and services among countriesis the foundational value and principle of liberalism. The consensus amongadvocates of free trade is that it reduces prices, raises the standard of living for more people, makes a wider variety of products available, and contributes to improvements in the quality of goods and services. In other words, liberal political economists believe that by removing barriers to the free movement of goods and services among countries, as well as within them, countries would be encouraged to specialize in producing certain goods, thereby contributing to the optimum utilization of resources such as land, labor, capital, and entrepreneurial ability worldwide. If countriesfocused on what they do best and freely trade their goods with each other,all of them would benefit. The concept that captures this idea is also known ascomparative advantage. However, the theory of comparative advantage has been undermined by the current wave of economic globalization. The growth of transnational or multinational corporations(MNCs) complicates global trading. The production of goods and services is strongly influenced by costs, arbitrary specialization, and government and corporate policies. These developments thus mark a shift from the conventional theory of comparative advantage to what is known as competitive advantage. As a result, despiteglobal acceptance of the concept of free trade, governments continue to engage in protectionism. For example, the European Union (EU) and the United States each support their own commercial aircraft industries so that those industries cancompete more effectively in a market dominated by a few companies. Marxism:Followingthe collapse of the Soviet Union in the 1990's and the apparent embrace of the free market economy by a significant number of developing countries, there was a widely held belief that such phenomenon marks a clear failure and hence death of Marxism. However, while it is certainly true that central planning in command economies (which was what existed in Soviet Union and other so called socialist/communist states- they were not true communists though!)has proven to be a failure, it is notnecessarily true that all or even most of the Marxist critique of capitalism has been negated by any historical and contemporary realities. In fact, according to advocates of Marxism just the opposite is the case. Global and national income inequality, for example, remains extreme: the richest 20 percent of the world's population controlled 83 percent of the world's income, while the poorest 20 percent controlled just 1.0 percent; Exploitation of labor shows no sign of lessening; the problem of child labor and even child slave labor has become endemic and so on and so forth. Marxists then tell us that all of these crises are cut from the same cloth. In particular, they all reflect the inherent instability and volatility of a global capitalist system that has become increasingly reliant on financial speculation for profit making. Some actors are always making huge sums of money from the speculative bubbles that finance capitalism produces, and this is creating the illusion that everything is working well. Give all the above realities about contemporary International political economy, therefore, the report of Marxism's death is greatly exaggerated.In addition to the above mentioned foundational theories of International Political economy, the following three contemporary theories of International political economy are also worth considering. Hegemonic Stability Theory (HST):is a hybrid theory containing elements of mercantilism, liberalism, and even Marxism. Its closest association, however, is with mercantilism. The connection with mercantilism may not be immediately apparent, but it is not difficult to discern. The basic argument of HST is simple: the root cause of the economic troubles that bedeviled Europe and much of the world in the Great Depression of the 1920s and 1930s was the absence of a benevolent hegemon---that is, a dominant state willing and able to take responsibility (in the sense of acting as an international lender of last resort as well as a consumer of last resort)for the smooth operation of the International (economic) system as a whole. In this regard, what thenhappened during the Great depression period was the old hegemon, Great Britain, had lost the capacity to stabilize the international system, while the new (latent) hegemon, the United States, did not yet understand the need to take on that role---or the benefits of doing so-hence global economic instability. During its explanatory power to the Great Depression, HST has thus influenced theestablishment of the Bretton Woods institutions (IMF and WB)- both beingthe products of American power and influence. On this point, it is specifically worth noting that Great Britain was given an important role to play but British interests and desires were clearly secondary. U.S. dominance was manifested, in particular, by the adoption of the U.S. blueprint for the IMF. Structuralism:is a variant of the Marxist perspective and starts analysis from a practical diagnosis of the specific structural problems of the international liberal capitalist economic system whose main feature is centre-periphery (dependency) relationship between the Global North and the Global Southwhich permanently resulted in an ―unequal (trade and investment) exchange.‖ The perspective is also known as the ‗Prebisch-Singer thesis' (named after its Latin American proponents Presbish and Singer) and it advocates for a new pattern of development based on industrialization via import substitution based on protectionist policies.During the 1950s, this Latin American model spread to other countries in Asia and Africa and then the domestic promotion of manufacturing over agricultural and other types of primary production became a central objective in many development plans.Developmental State Approach:Realizing the failure of neo-liberal development paradigm (in the 1980's) in solving economic problems in developing countries, various writers suggested the developmental state development paradigm as analternative development paradigm. The concept of the developmental state is a variant of mercantilism and it advocates for the robust role of the state in the process of structural transformation. The term developmental state thus refers to a state that intervenes and guides the direction and pace of economic development. Some of the core features of developmental state include;  Strong interventionism: Intervention here does not imply heavy use of public ownership enterprise or resources but state's willingness and ability to use a set of instruments such as tax credits, subsidies, import controls, export promotion, and targeted and direct financial and credit policies instruments that belong to the realm of industrial, trade, and financial policy.  Existence of bureaucratic apparatus to efficiently and effectively implement the planned process of development.  Existence of active participation and response of the private sector to state intervention  Regime legitimacy built on development results that ensured the benefits of development are equitably shared and consequently the population is actively engaged in the process of formulating and executing common national project of development\....etc.