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This chapter assesses regional trade agreements (RTAs). The number of RTAs has grown rapidly since the World Trade Organization (WTO) came into existence in 1995. Roughly one-half of world trade is now conducted within these preferential trade arrangements, the most significant exception to the WTO's principle of non-discrimination. Governments have entered regional economic agreements motivated by a variety of political and economic considerations. They may prefer trade liberalization on a regional rather than a global basis for several reasons. The chapter then reviews the political economy of regionalism: why RTAs are established; which actors are likely to support regional rather than global trade liberalization; the effects that regionalism has had on the trade and welfare of members and non-members; and the relationship between liberalization at the regional and global levels.

This chapter details the history, politics, and recent trends and challenges of the multilateral trade system. The twentieth century witnessed a remarkable emergence of international institutions, and nowhere was their impact greater than in international trade. Following decades of depression and war, a global trading regime was initiated with the creation of the General Agreement on Tariffs and Trade (GATT) in 1947, which expanded steadily in both scope and membership through the twentieth century and culminated in the establishment of the World Trade Organization (WTO) in 1995. Underpinned by the philosophy that open markets and non-discriminatory trade policies promote the prosperity of all countries, and issued with a powerful dispute settlement mechanism, the WTO has been hailed as the most prominent example of cooperation between countries. At the same time, however, the WTO has been subject to internal and external criticism and now faces a number of difficulties.

This chapter provides a systematic account of the causes of economic globalization. Within the global political economy (GPE) literature, economic globalization tends to be more precisely specified as ‘the emergence and operation of a single, worldwide economy’. This assists its measurement by reference to the intensity, extensity, and velocity of worldwide economic flows and interconnectedness, from trade, through production and finance, migration to information and data. Understood as a historical process, the concept of economic globalization also infers an evolving transformation or evolution in the organization and operation of the world economy. The chapter then reviews the principal theories of economic globalization, drawing upon the GPE literature. It develops a multi-theoretic account of economic globalization which captures its structural, conjunctural, and contingent causal factors. The chapter also demonstrates how this multi-theoretic framework is relevant to understanding the current crisis of economic globalization. It considers whether, in the aftermath of the Global Financial Crisis, this crisis is the precursor to a period of accelerating deglobalization.

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.