Final Review

Political Economy and Development

Political Economy

  • Basic Terms

    • Political economy is concerned with the interactions between politics and economics. 

    • Some common metrics.  

      • GDP

      • GDP per capita

      • Gini Coefficient

      • Human Development Indices 

        • Maternal Mortality

        • Infant Mortality

        • Literacy

        • Birth and death rates 

    • Trade, Fiscal and Monetary Policy

      • Monetary policy is concerned with the amount of money in the economy, often regulated by a central bank.

      • Trade policy is concerned with policies around trade. 

        • Countries trade for things they want/need

        • Dynamics like "comparative advantage" incentivize trade, as well: you are better off buying products manufactured more efficiently than "wasting" your own capacity on them. 

          • Different trade "philosophies" affect trade policy. 

            • Mercantilism: "let me do everything myself"-- common during the imperial/colonial period, empires built immense domestic markets to avoid enriching their enemies. 

            • Interventionism: "Let me intervene when necessary"-- manifests as regulation, etc. 

            • Protectionism: "protecting my own"-- A country may seek to protect its own industries for a variety of reasons, be them strategic or political. Some tools include tariffs (taxes levied on certain imports) and subsidies (payments made to industry actors), as well as fiscal policies and industrial regulation. 

            • Laissez Faire: "let the market decide"-- a completely, or relatively, hands-off relationship between government and the economy. Rarely seen its purest form and rarely tolerated by populations, voting and otherwise. 

      • Fiscal policy is concerned with budgets. 

        • Taxes are the major source of income for most governments. They come in a variety of types, but the biggest ones include income, payroll, corporate, sales, tariffs and--in some places and levels of government--property. 

          • Taxes can be collected to a variety of schemes but, broadly, as flat (one rate for everyone), progressive (more money, more taxes on a sliding scale) and, occasionally, regressive (less money, more taxes.   

        • Some governments also manage investment funds, make direct sales abroad through state-owned companies, etc. 

      • Governments can spend their money on a full range of items. 

        • In most places, budgets and spending are approved regularly by legislatures. 

          • In some cases, there is a difference between mandatory spending (money that has already been pre-approved by law) and discretionary (where it's approved annually). 

        • In many--if not most-- countries, spending on social welfare programs (such as pensions, healthcare, education) are the largest expenditure. 

        • Defense, or security, spending is also a significant item in many places. Very few countries have NO military and, even those that do not, typically require military-grade hardware for other purposes (like policing, search and rescue, disaster relief, etc.)

        • Debt service can also be a significant expenditure for some countries; this means making payments on loans. 

        • Finally, most countries have miscellaneous spending items. These vary by country. It can include support for space programs, the arts, cultural initiatives--really anything you can imagine.  

Development

  • Development, as a concept, refers to the degree which a country is developed.

    • What being "developed" means, however, is subject to debate AND the time at which we're having that debate. 

      • Historically, "developed" meant "modern" or "industrialized,"  and--going further back--could mean "westernized." 

      • The terms 1st and 3rd World were cold war terms used to describe what we today would call "most" and "least" developed (or developing). 

        • 2nd World didn't get used often as a term, but implicitly referred to the Communist bloc, which could be as developed as the West in some areas, but "behind" in others. 

  • No matter if you're using economic (GDP, per capita), infrastructural (how many miles of road, availability of sewage and internet) or human (life expectancy, maternal mortality), we do see clear gaps around the world. 

    • Often, this is described as the global north (Developed) and south (less developed or undeveloped). This lines up, often, with colonizing and colonized states, as well. 

    • However, we do have variation in post-colonial performance and we have non-colonial states having been surpassed by colonial. So what gives? 

      • One theory, modernization, argues that there is a recipe for success; countries just need to follow that example. 

        • Rostow's "non-communist manifesto" is a great example of this. In it, he describes five different stages of development that all economies pass through. 

          • Pre-Modern/Traditional: Subsistence or pre-industrial economies. There are none of these remaining today. 

          • Take-Off: An economy identifies a product (products) or a service (services) that can be sold/provided on the market to generate income. That inflow of capital is vital, but so too are the indirect effects; as economies grow, they hit export bottlenecks that require new industries and this is called the...

          • Drive to Maturity: In this stage, that investment and expansion is affecting other, adjacent economic sectors until everything is fully mature and...

          • Mass Consumption: ...the economy can provide anything you want. At this stage, the economy is fully mature. 

          • Post-Modern: At some point, economic actors become concerned with more intangible "goods," and start to prioritize things that don't always have a clear price tag. For example, environmentalism, ethical food production, nature conservation, etc. 

        • However, if this were all true, we should see NO poor countries--everyone would just follow the recipe and we'd all be rich. 

      • Dependency theory argues that the global economic system creates winners and losers, structurally. 

        • There is a core (industrialized countries) and a periphery (raw material producing, least developed or developing countries). The periphery exports to the core, which manufactures products for sale for their own markets and those of the periphery. Since manufactured products are more expensive (value added), the periphery needs to produce much more in order to purchase them. 

        • The issue with dependency theory is that it would expect to see NO movement; there should be no countries that ever develop. In response, dependency theory added a "semi-periphery" that described higher-end peripheral nations and, later, some theorists even added a "semi-core," both of which have been used to describe China. 

      • In sum, neither modernization nor dependency theory completely explain the variation we see. 

            Is development Possible?

Theories of Development

  • Command vs. Market

    • Command economies are those in which economic planning, and in many cases execution, are centrally planned. 

      • These systems dominated in the Eastern/Soviet bloc and 1950s-80s China. They are efficient in certain circumstances, but often become disconnected from actual market needs because of lack of information, corruption, or general inefficiency. 

    • Market economies are those in which the traditional market forces (things like supply and demand) guide the economy. There are relatively few "pure" market economies; most market economies utilize a variety of "protectionist" measures (policies designed to protect local industry) or engage in "interventionism," things like regulation, etc. 

      • The US' dominate economic paradigm is usually referred to as being more "neoliberal." Neoliberalism emphasizes lower government intervention, lower taxes, improved transparency and combatting corruption to lower input costs and improve quality of information. It has been very successful at producing wealth but markets are "amoral;" they aren't necessarily good or evil, but generate wealth. That means it's not really concerned with economic stratification or its political impact. 

    • The Developmental State was a hybrid model championed in Japan and, later, exported to places like South Korea, Taiwan and--in some forms and according to some scholars--further abroad to places like Botswana and Mauritius. 

      • The Developmental state is a market economy that features very high levels of public-private coordination, a focus on exports, and a developmental goal: it intends to develop and build the economy and uses that to improve the overall quality of life for citizens. 

        • The Dev state features an independent bureaucracy, large corporate actors (Keiretsu in Japan). In Japan, corporations provided a lot of benefits early on which helped to marginalize the impact/influence of unions. 

        • The Dev state has been criticized for being too dependent on a specific time (the Cold war, industrial economies) or place (Japan, South Korea, Taiwan have unique institutions, etc.). alternatively, some critics have argued that every country had the same context and, in some cases, similar institutions and did NOT produce similar results. 

            Developmental Challenges: Least Developed, Developing, Most Developed

  • As states develop, there are some broad trends that seem to apply to all cases.

    • Populations tend to grow extensively during the developing period, level off and begin to decline once a state has become "developed." This is due to declining birth rates; declining birth rates are usually linked to improved education and greater access to reproductive control for women. In some places, this has reached a point at which populations have begun to decline as birth rates have dropped below replacement rate. 

  • In least developed states, communicable disease and physical security tend to be the biggest public health challenges. Economies are often agricultural or "raw materials" oriented, like fishing or lumber. Most of the population tends to be rural. 

  • In developing states, improved public health means that public health challenges have shifted toward occupational ones; workplace accidents, long-term effects of poor air quality, etc. Populations are usually industrial and have urbanized. 

  • In most developed states, public health challenges are predominantly chronic illness...like heart disease, cancer and diabetes. These economies are usually financial and service-oriented. They tend to see much greater degrees of suburbanization. 

 

Political Violence

  • One of the most fundamental questions about violence is whether it is learned or innate.

    • After World War 2, there was much study on the nature of human violence. Scholars like Goldhagen and Browning examined nazi police units and argued two different ends of the spectrum. 

      • For Goldhagen, these individuals were "willing executioners," steeped in historical and cultural antisemitism that made them eager to participate. 

      • Browning argued that most of these people were "ordinary men," that is to say, regular people who got caught up or were peer-pressured into participating. 

        • the Milgram (shock) experiment and Stanford Prison experiments suggest that human beings do defer to authority and even regular people can find themselves doing or facilitating awful things. Hannah Arendt, writing about Adolf Eichman (a nazi war criminal), said that most human evil was "banal:" punch-clock villains who were "just doing their job." 

  •  Political violence comes in different levels. Riots and pogroms are the lower and mid-levels; civil wars are the most intense manifestations of political violence. 

    • Civil wars can be fought over any number of different factors. 

      • According to Fearon, there are five broad types of civil wars which helps to correlate to how long they last. 

        • Coups/popular revolutions and anti-colonial wars tend to be quick, because the "math" is much simpler; you either have the strength to win or you don't. 

        • Contraband wars (ones in which one or more parties gain access to black/grey market goods) tend to drag out, as the additional income helps to balance out the two sides and leads to prolonged conflicts. 

        • "sons of the soil" wars are those in which the state has, historically and systemically, favored one group over another. This can lead to state-sanctioned settlements, for example, which can create very complex "battlefronts."

        • Eastern European Wars should have been longer than they were; they are an exception to the rule. 

    • Herbst wrote that civil wars are extremely costly but, in the past, have often led to social and political consolidation. In Europe, these wars ran out to their "logical conclusions," but in places like Africa, those civil wars typically see a lot of foreign intervention. That intervention balances out conflicts and prevents one side from ever winning. As such, even those states with the best intentions, may inadvertently end up creating more pain in the long-term.

           Terrorism:

  • Terrorism is defined as an act designed to inspire terror with a political agenda. 

    • Without the political agenda, it is not terrorism. 

    • Most terrorism is domestic and you find terrorist groups at any point on the political spectrum. 

    • International terrorism is difficult, due to logistical and communication issues and, as such, is actually comparatively rare. 

    • State-sponsored terror is terrorism carried out with a state-sponsor, such as Libya in the Lockerbie bombing. 

    • State or State-sanctioned terrorism is where the state either directly or indirectly carries out acts of political violence against a group, such as an ethnic or religious minority.