Why Constructivism Is Important in
International Political Economy (IPE)
Introduction
Constructivism emerged in the 1990s as a major theoretical perspective challenging materialist
explanations of International Political Economy. Thinkers such as Alexander Wendt, Martha
Finnemore, and Kathryn Sikkink argue that the global economy is not merely a system of
markets and power, but a social world built on shared ideas, norms, and identities. Economic
and political behavior is shaped as much by beliefs about what is appropriate as by material
capabilities.
1️⃣ The Global Economy as a World of Beliefs
Constructivists emphasize that markets, institutions, and rules are social constructions—they
work because actors believe in them. Institutions like the WTO, IMF, or World Bank operate not
only through coercion but through legitimacy and trust.
Economic ideas—such as “free markets,” “competition,” or “efficiency”—are normative
frameworks, not scientific laws. They define what governments see as rational policy. For
example, countries often adopt fiscal austerity not from necessity but because it aligns with the
norm of ‘sound economic management’ accepted globally. Thus, the global economy is
sustained by a structure of shared meaning as much as by trade and finance.
2️⃣ Globalization as a Constructed Idea
Constructivism explains how “globalization” became a dominant world view. From the 1980s
onward, leaders and institutions promoted the idea that global market integration was both
inevitable and beneficial. This created a belief system equating openness with progress and
modernity.
Thinkers like Mark Blyth and Kathleen McNamara show how neoliberal globalization gained
legitimacy through discourse—textbooks, speeches, and media narratives portraying it as
natural. In India, for example, the 1991 reforms reflected not only economic crisis but also
acceptance of a global discourse of modernization. Hence, globalization is powerful not
because it is materially inevitable, but because it is widely believed to be inevitable.
3️⃣ Sustainability and the Rise of Global Norms
Constructivism also clarifies how sustainability became a universal moral and policy goal. Norm
entrepreneurs—scientists, NGOs, and UN agencies—framed climate change as a shared
ethical responsibility. As Balaam & Dillman note in Box 5.1 (“Framing Climate Change”), states
interpret the issue differently:
● The EU frames it as a moral duty and element of identity.
● The United States often frames it in economic or security terms.
Through continuous discourse, the idea of sustainable development became internalized
worldwide, illustrating how norms evolve and influence policy even without enforcement.
4️⃣ Development as a Social Construction
Constructivists reject a single, universal model of development. They argue that what counts as
“development” depends on cultural values and historical experiences. Western institutions often
equate it with GDP growth and industrialization, while many Global South societies link it to
social justice, empowerment, and ecological balance. For example, the Washington Consensus
promoted liberalization based on Western norms of progress, whereas China’s Beijing
Consensus stresses stability and state direction. Balaam & Dillman highlight that development
discourses differ because societies define progress in their own terms, reflecting identity and
belief.
5️⃣ Broader Significance in IPE
Constructivism broadens IPE beyond material calculations by focusing on the power of ideas
and meanings:
● Explains why some policies gain legitimacy even when ineffective.
● Shows how language (“reform,” “competitiveness,” “innovation”) shapes perception and
policy.
● Demonstrates that world orders change when norms and identities shift—as with
decolonization, gender equality, or human rights.
It thus connects economics with culture, ethics, and identity—dimensions ignored by classical
theories.
Conclusion
Constructivism is crucial for understanding IPE because it reveals that the international
economy is made, maintained, and transformed by shared beliefs rather than by material forces
alone. It explains how ideas like globalization, sustainability, and development gain moral
authority, influence state behavior, and redefine national interests. By uncovering the ideational
foundations of power, Constructivism shows that changing ideas can ultimately change the
world economy itself.
