International political economy (IPE) is a subdiscipline of political science that studies global issues through economic and political analysis. It emerged in response to the 1973 oil crisis and the breakdown of the Bretton Woods system, leading to the need for a global financial system. The IPE school of thought has evolved since then, offering a complex analytical approach to understanding the decline in political and economic hegemony and the relationship between the US and the rest of the world.
An international political economy (IPE) is a subdiscipline in the field of political science that examines international issues and problems. This discipline began in the 1970s in response to the 1973 global oil crisis. Higher education institutions began offering courses that focused on the historical foundations of sociology, economics, and political science. The eventual breakdown of the Bretton Woods system, a method of global monetary management, has convinced many academics to teach and study the economic basis of world political structure. Many scholars view international political economy as an approach focused on studying and understanding international and global problems through economic and political analysis.
The various aspects of the international political economy school of thought have evolved since the birth of the Organization of the Petroleum Exporting Countries (OPEC) and the Arab oil embargo in 1973 and 1974. foreign policy decisions made by participating countries, the oil embargo reinforced the idea that there were political economies within the greater corpus of global politics. Furthermore, many political scholars began to recognize that there was an important link between domestic politics and economics, as well as international politics and economics. These international economic issues have created the need for a global financial system.
Each of the major Bretton Woods institutions, including the World Bank, the International Monetary Fund (IMF) and the General Agreement on Tariffs and Trade (GATT), has sought advice from the United States for leadership in forming a system international political economy. On August 15, 1971, US President Richard Nixon ended the gold link to the US dollar that had previously underpinned the Bretton Woods monetary system. President Nixon’s action led to the collapse of the peg system previously used to define the global monetary system.
As a result of this global economic and political shift, scholars have sought new ways to understand the decline in political and economic hegemony and the relationship between the United States and the rest of the world. The new international political economy offered a complex analytical approach to the study of events that made it possible to overcome political and economic issues. The international political economy that emerged was seen as an unusual new approach to the more traditional focus on international studies in law, politics, and diplomatic history.
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