1. Introduction

International political economy (IPE), also called Global Political Economy (GPE), is about the interplay of economics and politics in world affairs. The core question of IPE is: what drives and explains events in the world economy?

For some people this comes down to a battle of `states versus markets’. However, this is misleading. The `markets’ of the world economy are not like local street bazaars in which all items can be openly and competitively traded and exchanged. Equally, politicians cannot rule the global economy much as they might like to. World markets and countries, local firms, and multinational corporations which trade and invest within them are all shaped by layers of rules, norms, laws, organizations, and even habits. Political scientists like to call all these features of the system `institutions’. International political economy tries to explain what creates and perpetuates institutions and what impact institutions have on the world economy.