What is the relationship between Politics and Economics?

Answer 1

Due to globalization, societies and governments throughout the world are increasingly interconnected. The promotion of liberal trade (ie trade beyond state control) has further complicated the relationship between politics and economics. States need to have strong economies to operate properly. Increasingly, corporations have moved beyond designated state boundaries and states are less able to directly control both their own economies and the world economy. Shortly, politics affects economics and economics is a large part of politics.

There is an entire area of political science known as International Political Economy that explicitly examines the link between politics and economics and their interactions. Economic issues have been linked to political disputes including war. There is also evidence that increased trade between states increases state interdependence and thus lessens the incentive for war. Some scholars have argued that war is economically inefficient for states.