Political Economy Development

The area of development economics has only recently begun to take the influence of the political economy on the development process of a nation or country recently. Political economy coming from the Greek words “polis” (city or state) and “oikonomos” (one who manages the household) has long been the study of the “economics of polities” or of the political dimensions of economic relations between countries.

The area of development economics has only recently begun to take the influence of the political economy on the development process of a nation or country recently. Political economy coming from the Greek words “polis” (city or state) and “oikonomos” (one who manages the household) has long been the study of the “economics of polities” or of the political dimensions of economic relations between countries. The nature of political economy has been to draw heavily on the fields of economics, law and political science to study the relations of production in a country or economic and political relations between different countries. [br]

Political economy has recently taken the form of an International Political Economy (IPE) which although is a commingle between International Relations and Political Economy, deals with a wide range of issues such as economic growth to global warming to increasing recognition of women’s rights across the world.

Political economy development or the political economy of development can be defined as the impact the international political economy can have on the development prospects of a nation. The key issues covered in this literature include the relation between democracy and growth with inequality, the issue of social capital formation political barriers coming in the way of developmental schemes undertaken by the government, corruption, fiscal decentralization and political instability.

Development of the Political Economy or Political Economy of Development exposes the intertwined topics covering both the issues and shows how political relations can play a key role shaping the development prospects of a region apart from the general economic considerations attached to development or underdevelopment of a nation. The central argument relating to the issue of political economy of development is the definition of development itself. We question what we mean by development as it’s mainly propagated to be a growth in per capita incomes. Several social issues such as the inequality in incomes and the growth in per capita incomes percolating to the lowest level comes under the ambit of political economy of development.[br]

The role of the state becomes increasingly important in the role of development of a nation. With the free market system largely ineffective in the less developed economies where most of the people live at the subsistence level without any access to the basic means of living, such as food and potable drinking water, the mechanism of price allocating and distributing resources of a nation ensures growth with inequality. While we may have average per capita incomes rising, it may be a pseudo-image of the economy where many people still live below the poverty line and the gap between the have-nots and have-lots is found to be widening. Thus political economy seems to address why so many are still poor in the developing countries with the fruits of development not reaching the lowest levels with the incidence of a general lack of education, ill health and famines spreading across the country.

The prominent case studies that can emerge out this branch of social science can be China and Chile. While China under the leadership of Deng Xiaoping largely opened up its international trade and liberalized the economy, Chile, after the fall of Augusto Pinochet in the 70’s also experienced a sea change in the economy. The fallout of the Chinese rise in per capita incomes on an average still shows about 130 million people living below the poverty line as in 2006. The Chilean economy also showing rapid growth in GDP levels among the South American nations has gone through phases of high inflation and unemployment in recent times. The general levels of poverty and deprivation still persist in Chile.

Thus, in conclusion, it can only be stated that the role of the polity, the government and the political economy of a nation play crucial role in the development of a country. Government mechanisms should be strong and sound to efficiently allocate and distribute the wealth and resources of an economy. Urgent political will and a corruption free state acknowledging some of the favourable aspects of a free market system which can benefit an underdeveloped economy as well, can certainly pull out a third world nation out of its trap of underdevelopment.