International Political Economy (IPE)

As Frieden and Lake explain, "Realists perceive politics as determining economics" (1996, p. 31). With power as the chief political concern, it follows that political benefit, or power, would translate into economic benefit, and that any benefit a nation-state might enjoy in the geopolitical arena would come at the expense of benefits and power of other nation-states. In the area of free trade, the Realist position would be that the nation-state would aim to (for example) minimize its own liability for tariffs or other fees on goods that it exported, while attempting to levy tariffs or other fees on goods that it imports, so as to protect the ability of domestic makers of similar goods to compete with those goods on price, hence shore up its domestic economy and demonstrate its ability to manipulate trade: "Thus, trade protection--which might reduce a country's overall income by restricting the

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ce power relationships. As Drucker indicates (1996), this could involve accepting a large foreign-trade deficit in order to maintain a high valuation on domestic currency. Moving manufacturing from domestic to foreign shores may mean job loss at home, but the benefit is in the revenue stream that keeps flowing homeward; thus in the long run "investment abroad creates jobs at home" (Drucker, 1996, p. 71). In any case, jobs are less important than the revenue stream that fuels economic growth; market forces are able to maintain the integrity of the IPE. The liberal view of international power relations is that the invisible hand of geopolitical market dynamics tends to regulate the behavior of nation-states because it obliges them to integrate their various economies to harmonize the position and behavior of the whole (Frieden & Lake, 1996). Gilpin cites the idea of "economic interdependence" as the foundation of "peace and cooperation in the competitive and anarchical state system" (1996, p. 12). In other words, economic incentives function as a disincentive for international conflict, as well as an "engine of growth" domestically (p. 14). The global economy, on that view, becomes a politically stabilizing force. Drucker agrees, a
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Approximate Word count = 2076
Approximate Pages = 8 (250 words per page)