The term “Political Economy” is derived from the combinations of the Greek words “polis” (city or state) and “oikonomos” (one who manages the household). The term can thus be used to analyze how countries are managed in a system where both economic and political factors are at work. Political Economy was the original term for studying the various acts of production, buying and selling and their relations with the laws. Customs and governance. It was meant to study the conditions under which production was organized in the new-born capitalist states. In a way, it could be named as branch of social science dealing with the production and distribution of goods and services and their management. Political Economy assumed the definition of the study of economies of polities or nation states in the 18th century. Gradually, the concept of the Physiocrats that land was the source of all wealth was surpassed by the labor theory of value supported by John Locke. Adam Smith and Karl Marx. Notably, Political Economy incorporated liberal, realist. Marxian and constructivist theories from political science. Starting from the 19th century, “economics” or the study of the economy replicated the term
“Political economy”. The latest version of the term i.e. international Political Economy (IPE), among other things, studies the effect of domestic monetary and fiscal policies on international trade and finance in relation to a specific country. Extensive use of IPE in today’s world.