Political economy is the study of how political forces interact with economic forces to shape systems of production, exchange and distribution of resources, goods and services. This can be done at both domestic and global levels. It has been described as analyzing the interaction of economic and political ideologies such as capitalism, socialism and communism. It is an important field of study because political decisions and economic structures are inextricably linked; governments make decisions which have huge economic implications, and economic realities shape the political landscape.

At the domestic level, political economy looks at the various factors which shape economic systems. These include the nature of property rights and the balance of power between different social classes or interest groups. It examines the way in which governments pursue macroeconomic policies, use regulation and taxation to influence the economy, and interact with markets. It is also concerned with the distribution of wealth and the interactions between individuals and firms, and governments and firms.

Global political economy looks at how globalization and global economic integration lead to the increasing economic interdependence of nations. It is concerned with the formation and implementation of global economic policies such as trade liberalization and monetary policy. It looks at the implications of the activities of transnational corporations, flows of international investment, and the effects of economic aid and development. It also analyzes the dynamics of regional or world trade processes, the operation of exchange rates and the effects of financial crises.

Political economy is an interdisciplinary field which draws on contributions from economics, politics, sociology, history and anthropology. It is a broad field of scholarship which offers a diverse and comprehensive approach to understanding the complex relationship between economics and politics. As the global economy becomes increasingly integrated, understanding its linkages with the political landscape is an important research field which offers the potential to inform real-world policies and to shape future economic and political developments.