- John Ravenhill
This chapter provides an overview of the current state of the world economy. The contemporary international economic system is more closely integrated than in any previous era. The global financial crisis and its aftermath provide a clear illustration of the relationship between trade, finance, international institutions, and the difficulties that governments face in coping with the problems generated by complex interdependence. The chapter then traces how the world economy evolved to reach its present state. Before 1945, the spectacular increase in economic integration that had occurred over the previous century was not accompanied by institutionalized governmental collaboration on economic matters. The end of the Second World War marked a significant disjunction: global economic institutions were created, the transnational corporation emerged as a major actor in international economic relations, and patterns of international trade began to change markedly from the traditional North–South exchange of manufactures for raw materials. Since the emergence of global political economy (GPE) as a major subfield of the study of international relations in the early 1970s, GPE scholars have generated an enormous literature that has employed a wide variety of theories and methods. Most introductions to the study of GPE have divided the theoretical approaches to the subject into three categories: liberalism, nationalism, and Marxism.