Understanding Political Economy
The study of political economy may be approached in any of three ways:
1. Interdisciplinary Studies
The interdisciplinary approach draws upon sociology, economics, and political science to define how government institutions, an economic system, and a political environment affect and influence each other.
In this approach, political economy is concerned with three subareas: economic models of political processes and the links of various factors to each other; the international political economy and the impact of international relations, and the role of the government in resource allocation for each kind of economic system.
2. New Political Economy
The new political economy approach does not treat a political ideology as a framework that must be analyzed. Rather, it is studied as a set of actions and beliefs. It seeks to make explicit assumptions that lead to political debates about societal preferences.
Political economy may draw upon sociology, economics, and political science to define how government, an economic system, and politics influence each other.
The new political economy approach encourages the discussion of a real-world political economy that is grounded in particular cultural, social, and historical details.
This approach combines the ideals of classical political economists and newer analytical advances in the field of economics and politics. It rejects old ideas about agencies, structures, material interests, states, and markets.
3. International Political Economy
Also known as global political economy, this approach analyzes the link between economics and international relations. As it stems from the interdisciplinary approach, it draws from many academic areas including political science, economics, sociology, cultural studies, and history.
International political economy is ultimately concerned with how political forces like states, individual actors, and institutions shape systems through global economic interactions and how such actions affect political structures and outcomes.