POLS-Y 107 Chapter 4 (Political Economy)

Political Economy

The study of how politics and economics are related and how their relationship shapes the balance between freedom and equality.

Markets

The interactions between the forces of supply and demand, and how they allocate resources through the process of those interactions.

Property

Refers to the ownership of anything tangible and intangible. Can refer to land, buildings, businesses, or personal item, to name some of its common forms. Regulated by the state.

Public Goods

Commonly defined as nonexcludeable and nonrivalrous. This means that no one can be easily excluded form using them. Can be a tool to generate equality because the public is able to share broadly in their benefits.

Social Expenditures

The state’s provision of public benefits, such as education, healthcare, and transportation, or what is commonly called welfare.

Political-economic system

The actual relationship between political and economic institutions in a particular country, as well as the policies and outcomes they create.

Laissez-faire

Holds that the economy should be allowed to do as it wishes.

Capitalism

A system of production based on private property and free markets.

Mercantilism

Focuses on the needs of the state. National economic power is paramount, and the domestic economy is an instrument used to generate that power. States using this system focus in particular on their position in the international system, for they believe that economic weakness undermines national sovereignty. Economic ministries seek to direct the economy toward certain industries and away from others through such policies as taxation and subsidies.

Human Development Index (HDI)

Looks at the total wealth in a society and its distribution but also gives equal weight to income, health (life expectancy), and average years of schooling.

Purchasing Power Parity (PPP)

Attempts to estimate the buying power of income in each country by comparing similar costs, such as food and housing expenses.

Gini Index

A mathematical formula that measures the amount of economic inequality in a society.

Economic Liberalization (neo-liberalization)

Cutting taxes, reducing regulation, privatizing state-owned businesses, and expanding property rights.