How does international political economy connect political decisions and economic choices?

International political economy (IPE) is a field of study that examines the inseparable connection between political decisions and economic choices. It recognizes that while politics and economics are often studied as distinct disciplines, they are fundamentally intertwined: economic factors shape political decisions, and political factors exert a decisive influence on economic outcomes.12

This relationship is analyzed through several theoretical lenses:

• Mercantilism (Economic Nationalism): Asserts that economic activity should serve the interests of the state. It emphasizes that national power depends on a strong economy, often requiring protectionism, tariffs, and government intervention to preserve domestic industries.12
• Economic Liberalism: Contends that maximizing prosperity requires markets to operate free from government interference. Proponents argue that free trade and comparative advantage lead to global efficiency and peace, suggesting that states should minimize their role in economic affairs.12
• Structuralism (Marxist/Neo-Marxist): Focuses on how global economic structures create power imbalances. Dependency theory argues that participation in international capitalism can subordinate poorer nations to wealthier ones, often leading to exploitation.12

Ultimately, IPE highlights that in a globalized world, the distinction between domestic and foreign policy is increasingly blurred, as international financial crises, trade linkages, and the actions of multinational corporations directly impact national political and economic stability.23