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This chapter introduces the key concepts of Ideational European Political Economy. It primarily focuses on actor-centred constructivism while discussing the significance of ideas and the key tenets and assumptions of the ideational approach. The Ideational approach builds on the constructivist literature, which involves the actor's interpretation of reality, appropriate policy goals, and the supportive coalition's identified goals. The chapter explains the ideational approach to EPE and posits that socially constructed elements matter in the institutional development and economic policies of the European Union. It then presents empirical examples of the ideational approach applied to major institutional and policy developments in EPE.

This chapter covers three dimensions in answering questions about the role of state power and geopolitics in the Global Political Economy (GPE). The first answer focuses on how changes in the global economy affect the nature and the effectiveness of the economic instruments available to governments as they pursue their foreign policy goals. The second cluster of answers focuses on the ways in which politics and economics are bound together in the construction and evolution of economic institutions and economic orders. The third cluster of answers accepts the need to think in terms of power operating within economic orders but this time with the causal arrow flowing from politics into the economy. Ultimately, the dynamics of the international political system are what drive the foreign economic policies of governments, shape the states and societies making up the global system, and help explain the character and operation of the global economy.

How can one understand the problems of collaboration and coordination in the global political economy (GPE)? In situations of global interdependence, individual action by states often does not yield the desired result. Many argue that the solution to the problem of interdependence is to create international institutions. Yet this approach itself raises the issue of how states might go about creating such institutions in the first place. This work examines the conditions under which states might wish to cooperate and provides an introduction to game theory as an approach to understanding interdependent decision-making. It then discusses the conditions under which international institutions are likely to be developed and how they may facilitate international cooperation. Finally, the work examines dimensions of institutional variation, with a discussion of factors that shape the design of international institutions.