International Political Economy and its relation to International Finance

Abstract

International political economy (IPE) is a rapidly growing study that appeared as sub-discipline of the International Relations which appeared after World War II, different definitions were given to International Political Economy by researchers, where some define it as an interaction between states and markets at international level, others define it as the study of the interplay of economics and politics in the world arena, but what was agreed on that IPE is an interdisciplinary study, that relates different fields together as international economics, international finance, international trade , multinational corporations and other fields. A focus on International finance which is a study that touches every aspect of World economy especially nowadays with the globalization and having a free global financial market, international finance affects the welfare of billions of investors; foreign investors can contribute in the economic growth and also can be a trigger to economic crises (Tomz, 2012, p.692). As there is inseparable mix between politics, economics, and finance there are always debates which could lead to political conflicts, which were due to the existence of an open economy, which created a volatile exchange rates, and also on the other side role of the international organizations such as the IMF, World bank and WTO play in political economy decisions. This paper will focus mainly on the relation between international political economy and international finance on different aspects, as global financial markets, volatility of exchange rate, and the role of international organizations.