Role and Responsibilities of International Institutions and States Within the International Political Economy


The idea or rather concept of economic efficiency is one that has been seen to be affecting the world and its entirety since time immemorial. It is one a factor or rather concept that has been seen to have had been tabled for discussion by many people since its significance in the world is one that cannot be easily ignored. Economic efficiency refers to a situation where the amount of resources or rather funds in each state can sustain the population in that state without there being cases of deficiency. This implies that the people in that country receive their basic and luxury needs without having to go through constraints such as spending more to get them. The world’s population has been growing significantly and this has led to the resources that are available being scarce thus calling for extra measures to be taken to ensure that these has been handled effectively. Human security may be a means of reducing human costs of violent conflicts, a strategy to allow governments to meet basic human needs, and address the inequalities arising due to globalization, and handle threats such as economic crisis (Acharya, 2001). This paper seeks a comprehensive review of the idea of global economic efficacy and its implications to the human populace as well as the challenges that are facing institutions in their bid to restore the global economy back to normalcy.

International Institutions

Over the past few years, the international community has increasingly become interconnected as well as inter-dependent with enhanced progress of technology and economic integration. The recent economic crisis has exposed the limitations of cooperation in the global economy and the fact that only diplomatic consensus has resulted in feasible solutions(Gabriela, 2013). There is a pertinent need to redesign global governance architecture, and this cannot take place without an active role of international organizations. While the states are dominant actors in the international arena and do play a crucial role in policy making process, international cooperation can be enhanced through international organizations(Gabriela, 2013). The international political economy is about an interplay of economics and politics in global affairs(Woods, 2001). The world markets are dominated by a set of rules and laws that governs various players includingmultinational organizations and this forms the international institutions.

International organizations are great actors in international politics with role in mediation, dispute resolution, peace keeping, and issuing sanctions(Gabriela, 2013). An international organization can be defined as an institutional agreement between the various members of an international system to attain their specific goals as per systemic conditions, aspirations and concerns of member participants(Gabriela, 2013). The modern international system has undergone three main architectural features over its development time(Gabriela, 2013). The first stage involved the state as a definitive tool for decision making in international relations. The second stage had agreements between various states. The third stage has a multilateral system architecture with its core in the United Nations. These three stages are likely to form a strong base for international relations for a long time.

Many countries are either excluded or left behind by the decisions of international organizations, and for many poor countries participating in an international system is beyond reality(Gabriela, 2013). For instance, the international trade system is dominated by powerful players that are preferred over the others. International organizations are often seen as closed systems and participants are mere packages limited by their stringent rules and regulations(Gabriela, 2013).

There is a rising concern among economists that the current dominant frameworks are no longer enough to fully address and analyse the issues of globalizing and transient economies. After the crisis of 2008, there is a consensus that major global problems such as rising poverty, higher inequality and environmental degradation are key blackspots for global economic framework(McGregor & Pouw, 2017). The concept of human wellbeing is used to denote the overall concept of living well, including both objective and subjective well-being. The approach to well-being is a central theme in many of the international frameworks being used to assess the same. Well-being has three main constructs –a material dimension, a relational dimension, and a subjective dimension. Hence, a person’s well-being depends on what he or she has (material), how he or she utilizes what he or she has (relational), and the level of satisfaction arising due to quality of life derived from what he or she has, and can do (subjective)(McGregor & Pouw, 2017).

International Financial Institutions such as International Monetary Fund (IMF), World Bank Group, African Development Bank, Asian Development Bank, Inter-American Development Bank, and European Bank for Reconstruction and Development allow only sovereign countries as owner members, but have a broad country membership with both borrowing developing countries, and developed donor countries(Bhargava, 2006).

In this never-ending race to be the most economical, one major aspect that has not been given much due consideration is linked to the capacity that a state has to meet the terms and conditions of different forms of human rights obligations, i.e. economic, cultural and social rights. To meet this challenge, IMF and the World Bank have imposed economic reforms that allow production of goods and services to be worth exporting along with being deregulated and privatized. Foreign investment has become a must. Today, all states are inclined towards easing labour standards and modifying legal taxes to attract foreign investors. This inclination of states, in turn has led to a major destruction of human rights principles and the capability of states to self-sufficiently regulate their progress. Cooperation is required not only on an international level but also from non-state actors to safeguard rudimentary societal and financial privileges.

International Relation Theory

“International Relations theory entails the development of conceptual frameworks and theories to facilitate the understanding and explanation of events and phenomena in world politics, as well as the analysis and informing of associated policies and practices” (Glinchey, et al., 2017). The discipline of international relation was authoritatively settled after World War 1 with a view to keeping away from future mass clashes and guaranteeing serene change. This remaining part a commendable objective, yet today the extension and complexities of world legislative issues request a comprehension of a significantly more extensive scope of issues (Stephen, 2017). Besides, new calculated systems and speculations are required to enhance our comprehension and aid the improvement of better arrangements and practices. Theory of International Relations enables us to comprehend and attempt to understand our general surroundings through different focal points, each of which speaks to an alternate hypothetical viewpoint(Glinchey, et al., 2017). International relations theory is the investigation of international relations from a hypothetical point of view. It endeavours to give a calculated structure where upon international relations can be analysed. The three most noticeable speculations are realism, liberalism, and constructivism.


Realism is one of the most established and most mainstream theories in the discipline since its reality and is a capable strategy to have profitable bits of knowledge into the area of global legislative issues(Glinchey, et al., 2017). The origination of realism is recognized from other International Relation theory principally by its accentuation on four noteworthy suggestions; state of international anarchy, primacy of state, rational nature of the states and survival of the states(Glinchey, et al., 2017). The realist camp trusts that the state is a unitary substance choosing its connection with different states and there is no super-expert over the state to manage its conduct as for different states. As the worldwide field exists in a steady condition of turmoil and the world framework being leaderless, the state as the supreme expert always flourishes to seek after its self-intrigue and battles to survive(O’Brien & Williams, 2016). It is dependably in a condition of either being forceful or worried about its own security (Glinchey, et al., 2017).So, the realists are of the firm feeling that there can’t be a typical direction which is authoritative upon all the global performers and the unrivalled choice left with the state is to continue viewing the worldwide field and embrace a sober minded way to deal with settle issues as they show up. The realist internationalism is the objective of feedback on a few grounds. All things considered, the pragmatist internationalism stays a standout amongst the most well-known and power theory in the train of international relations(Glinchey, et al., 2017). This approach argues that international institutions are and are expected to remain ineffective since they cannot prevent states from engaging in power-politics or self-interest(Crockett, 2012). Institutions only have marginal power in comparison to states, and international institutions only ensure peace by manipulating the action of member states(Crockett, 2012). For example, United Nations is an international institution set up to promote cooperation within states to settle their differences. The Earth Summit is a brilliant instance of such an international cooperation to fight climate change. The traditional realists rarely referred to international institutions as a concept, but they do focus on the role of international law and international relations(Carlsnaes, et al., 2012). The governments of various states are always willing to restrain any impact of international law on their foreign policies and are looking forward to using the same in their self-interest. As per hegemonic stability theory, international institutions are likely to be created bydominant states at the time of hegemony(Carlsnaes, et al., 2012).The hegemonic power is both able and willing to establish and maintain the norms and rules of a liberal economic system(Gilpin, 1987). However, the mere existence of hegemonic power is not sufficient alone to develop an internationally liberal economy. Hegemony can motivate, but not compel other powerful states to follow the rules of an open world economy. As per this concept, the hegemon or the leader has the responsibility to guarantee the provision of collective goods of an open trading system and a stable currency(Gilpin, 1987). There is a threat of cheaters in such an open system who do not pay their share of providing collective goods, but take benefits of the same(Gilpin, 1987). In the context of international relations, both United States and Great Britain have been hegemonic players, but their positions have relatively declined with the rise of new economies such as China which have now become powerful players in international arena (Callahan & Barabantseva, 2011). The 2007 financial crisis in USA can be considered because of contemporary capitalism(Lapavitsas, 2009). The issue became global due to the transformation of banks and international financial institutions.


Institutionalisms share a significant number of Realism’s presumptions about the global framework—that it is anarchic, that States are self-intrigued, sane performing artists trying to survive while expanding their material conditions, and that vulnerability plagues relations between nations(O’Brien & Williams, 2016). In any case, Institutionalism depends on microeconomic theory and game theory to achieve a profoundly extraordinary conclusion—that co-operation between countries is conceivable. The focal understanding is that co-operation might be a sound, self-intrigued system for nations to seek after under specific conditions(Keohane, 2001).

Institutionalisms contend that establishments that characterized as an arrangement of tenets, standards, practices and basic leadership techniques that shape desires can beat the vulnerability that undermines co-operation. Initially, establishments expand the time skyline of collaborations, making an iterated diversion instead of a solitary round (O’Brien and Marc, 2010). Nations concurring on impromptu duties may for sure advantage from deceiving their neighbours in any one round of arrangements. However, nations that know they should communicate with similar accomplices repeatedly through an organization will rather be motivated to conform to assertions in the fleeting, so they may keep on extracting the advantages of co-operation in the long haul.

Institutionalisms take note of that organizations can extraordinarily expand effectiveness. It is exorbitant for States to consult with each other on a specially appointed premise(O’Brien & Williams, 2016). Organizations can lessen the exchange expenses of co-appointment by giving a unified gathering in which States can meet. Institutionalism in this manner gives a clarification to worldwide co-operation considering the same hypothetical suppositions that lead Realists to be incredulous of global law and foundations(Carlsnaes, et al., 2012). As per this approach, international organizations inspire states to behave in a cooperative manner. For example, institutions such as NATO motivates cooperation among its various members. International institutions are successful in increasing international cooperation for complex issues(Carlsnaes, et al., 2012). Institutions are expected to enhance cooperation by raising concern for an issue, improving contractual environment and domestic capacity to implement the agreements. International institutions may also have a limiting effect on the development of new institutions(Carlsnaes, et al., 2012). Hence, the new institutions must be compiled within the construct of the existing institutions.


Constructivism isn’t a theory, yet rather ontology: An arrangement of suspicions about the world and human inspiration and office. Its partner isn’t Realism, Institutionalism, or Liberalism, yet rather Rationalism. By testing the realist system that undergirds numerous speculations of international relations, constructivists make constructivist choices in each of these groups of theories (Guilhot,2014).

In the Constructivist account, the factors important to researchers are not critical because they are target actualities about the world, but instead because they have certain social implications(Copeland, 2000). This significance is built from a mind boggling and particular blend of history, thoughts, standards, and convictions, which researchers must comprehend on the off chance that they are to clarify State conduct(Guilhot, 2014). An emphasis on the social setting in which international relations happen drives constructivists to stress issues of character and conviction. The impression of companions and adversaries, in-gatherings and out-gatherings, decency and equity all end up noticeably key determinant of a State’s conduct. While a few Constructivists would acknowledge that States are self-intrigued, objective performers, they would push that fluctuating personalities and convictions give a false representation of the oversimplified ideas of judiciousness under which States seek after essentially survival, influence, or riches(Guilhot, 2014).

While Institutionalism theory see organizations to a great extent as the uninvolved devices of States, Constructivism takes note of that worldwide administrations may try to seek after their own particular advantages even against the desires of the States that made them (Haynes, 2012). Rational constructivism approach explains international cooperation based on anarchy(Carlsnaes, et al., 2012). This approach brings social construct within international relations. The idea of international society is seen as an international community existing among states participating at an international level(Carlsnaes, et al., 2012). International institutions as per this theory are seen as a group of states that have established common rules and regulations for conduct of their relations, and recognize their self-interest while doing the same. International society refers to the legal and political idea on which concept of international institutions is based(Carlsnaes, et al., 2012). The constructivist approach is highly involved in framing rules and regulations. For example, when a rule is embedded within an international law, the various governments must satisfy a minimum condition of universality involved. As per this approach, the international institutions define the key players in a specific situation, and the way they define their roles, and hence place a limit of their behaviour. In a way, international organizations are pressuring the target actors to adopt new policies and laws, and monitor compliance to international standards. Hence, international organizations may be seen as key socializing agents(Carlsnaes, et al., 2012).


Neoliberalism is an old term, going back to the 1930s, however it has been restored as a method for portraying our present governmental issues – or even more exactly, the scope of thought permitted by our legislative issues (Haynes, 2012). In the consequence of the 2008 financial crisis, it was a method for doling out duty regarding the catastrophe, not to a political gathering as such, but rather to a foundation that had yielded its power to the market(Haynes, 2012).

No sooner had neoliberalism been ensured as genuine, and no sooner had it clarified the all-inclusive false reverence of the market, then the populists and dictators came to control. In the US, Hillary Clinton, the neoliberal curve scoundrel, lost – and to a man who knew sufficiently only to imagine he despised organized commerce(Haynes, 2012). Against the powers of worldwide coordination, national character is being reasserted, and in the crudest conceivable terms(Haynes, 2012).


Summarily, the paper looks at some of the concepts that are used in the running of the different international institutions and the different ways with which such functions affect the economy. There is a need to standardize international institutions and their corporate governance for better economic outcomes. The paper provides a comprehensive review of the idea of global economic efficacy and its implications to the human populace as well as the challenges that are facing institutions in their bid to restore the global economy back to normalcy.

Economic globalization has had quite a destructive impact on state regulation. People have been affected negatively and gradually the impact is increasing and becoming more obvious. The more competitive a nation, the lesser the regulations. Though this tactic is almost perfect in attracting multinational corporations, it is quite destructive in nature. In order to compete with such nations, other states are also forced to decrease their regulatory measures if they wish to get foreigners to invest in their country. No nation wishes to reduce its competitiveness or power. Foreign investors are now consuming the money that should have been legally invested in maintains the rights of the public socially, economically and culturally.


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