Identify the major changes in the International Political economy in post-Cold War period. (200 words) (2013, 15 Marks)
International political economy (IPE), in Susan Strange’s sense, studies how states and markets allocate wealth and power across borders. The Soviet collapse in 1991 left the United States the sole strategic pole, and the decades since have moved from near-universal market integration to a contested, security-driven globalisation.
1. Universalisation of the market
- The socialist bloc abandoned planning, China and India liberalised (India’s reforms of July 1991), and structural adjustment spread across Africa and Latin America. Market capitalism acquired the legitimacy Francis Fukuyama captured as the “end of history”.
- The Washington Consensus, named by John Williamson in 1989, codified fiscal discipline, trade liberalisation, privatisation and deregulation as the condition of finance.
2. Institutionalised rules and regional blocs
- The WTO (1995) turned GATT’s negotiating forum into an organisation covering services and intellectual property, with binding dispute settlement.
- Regionalism deepened alongside: the Maastricht Treaty (1992) created the EU, NAFTA began in 1994, and Asian regionalism culminated in RCEP (2022).
- Information technology and containerisation made global value chains possible.
3. A shift in the centre of gravity
- China’s export-led industrialisation, accelerated by WTO entry in 2001, rewired manufacturing and global prices; India integrated through IT services.
- Deepak Nayyar (Catch Up, 2013) documents the developing world’s rising share of world output and industry, concentrated in a few, mostly Asian, economies. That shift moved bargaining power: the G20 became a leaders’ forum in 2008, and BRICS, its New Development Bank and the AIIB emerged as hedges against stalled IMF quota reform.
4. Financialisation and its crises
- Strange’s “casino capitalism” proved prescient: capital flight produced the Asian crisis of 1997–98, and the 2008 crash began in Wall Street’s own mortgage markets, discrediting deregulation at its source.
- Yet the dollar’s centrality survived every crisis: it still makes up 57.1% of allocated reserves (IMF, first quarter of 2026), the structural power Strange located in control of credit.
5. From complex to weaponised interdependence
- Robert O. Keohane and Joseph S. Nye’s complex interdependence described dense, multi-channel ties; Henry Farrell and Abraham Newman showed that control of financial and information hubs lets states coerce, as in sanctions on Russia (weaponised interdependence, 2019).
- COVID-19 exposed supply-chain fragility, prompting friend-shoring and industrial policy (the US CHIPS Act, India’s production-linked incentives). Strategic sectors such as semiconductors, AI infrastructure and critical minerals made up 44% of greenfield investment value in 2025, against 16% in 2020 (UNCTAD).
- Protection became ordinary policy: the 2025 US tariffs imposed under IEEPA, struck down by the Supreme Court in February 2026, were replaced under other statutes. The WTO’s Appellate Body has been unstaffed since 2019, and at the Yaoundé ministerial (March 2026) the moratorium on duties on electronic transmissions, in place since 1998, lapsed for the first time. India moved from FTA scepticism to bilateral deals, including with the UK (signed July 2025).
Conclusion
The post-Cold War IPE has moved from liberal convergence towards geo-economic fragmentation: interdependence persists, with services still outgrowing goods, but it is being reorganised into trusted blocs and governed by security rather than efficiency. The BRICS New Delhi Declaration of September 2026, criticising unilateral tariffs and sanctions, shows the Global South contesting the terms of that reorganisation.