Page 12 - Global Political Economy_Understanding The International Economic Order

Preface

INCE PUBLICATION of my book, The Political Economy of Inter-
Snational Relations, in 1987, the internationaleconomy has experi-
1
enced a number of fundamentalchanges. These changes include the
end of the Cold War and the victory of democratic capitalism over
authoritarian communism, the rise of the information or Internet
economy, and the triumph of neoliberal market-oriented economic
ideology (deregulation, privatization, and a decreased role for the
state in the economy). Important technological advances in telecom-
munications, transportation, and information technology have sig-
nificantly increased the interdependence of national economies. These
severaldevelopments have transformed the internationaleconomy
and ushered in a new era of economic globalization.
In addition to these important steps toward the creation of a truly
global economy, since the mid-1980s the world has also witnessed
the extraordinary growth of economic regionalism as a countermove-
2
ment to economic globalization. Western Europe has been the lead-
ing player in what Jagdish Bhagwati has called the “Second Regional-
3
ism.” The North American Free Trade Agreement (NAFTA) and less
formalarrangements in Pacific Asia have, along with the European
Union, moved the world toward regional economic arrangements.
Regionaland other important developments in the realworld of eco-
nomic and political affairs have been accompanied by innovations
in economic theory that are highly relevant for an understanding of
internationalpoliticaleconomy (IPE). Theoreticalinnovations include
the “new growth theory,” the “new economic geography,” and the
4
“new trade theory.” Taken together, these noveltheories constitute
1
Robert Gilpin, The Political Economy of International Relations (Princeton:
Princeton University Press, 1987).
2
The historic tension between the forces of unification and of fragmentation is the
subject of Ian Clark, Globalization and Fragmentation: International Relations in the
Twentieth Century (New York: Oxford University Press, 1997).
3
Jagdish Bhagwati and Arvind Panagariya, eds., The Economics of Preferential
Trade Agreements (Washington, D.C.: AEI Press, 1996), 2
4
Although I discussed the new trade theory or theory of strategic trade in my 1987
book (see footnote 1 above), I did not consider it in detail; nor did I consider it in
conjunction with the new growth and economic geography theories.
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