The Global Political Economy

The linkage of international banks, financial institutions, and trade illustrates the difficulties facing current government systems. There are suggestions that the current global political economy is beneficial to the Global South. In this paper, I will outline the extent to which the international political economy has undermined development in the South. With the advent of globalization, the relevance of the role of how the nation-state should manage economic systems in the development process has taken center stage. The reasoning behind this is that the economic systems presume that there is a political structure. Consequently, this means that development occurs in a global framework. at the same time, it arouses the question of the relevance of individual, national development plans. National development strategies become peculiar when there are other actors in the development process other than the nation-state. The importance of understanding the nature of the global political economy is because economic systems can not exist without a stable political framework. The North-South divide of the world represents the developed and the underdeveloped world. This division can be conceived as ongoing due to the global arrangement of the political and economic systems. The Global North refers to the industrialized countries mainly in the northern hemisphere, while countries in the Global South are mostly found in the southern hemisphere. in Africa, Asia, the Caribbean and Latin America (Kegley, 2008). The global political economy took a different turn after the oil shock of 1973. The member countries of OPEC established an oil cartel that saw the price of oil increased dramatically. Marxist offers the explanation that the oil crisis was not caused by OPEC but rather the Nixon administration. This premise asserts that the administration wanted to safeguard the interests of America capital .control the international money market.