Political Economy of Development (SHS-ETC011)

The field of economic development has become increasingly entwined with the concepts and frameworks of political economy, reflecting a growing recognition that development outcomes are heavily influenced by the interplay between political and economic forces.

One of the central preoccupations in the intersection of politics and economic progress is the persistent puzzle of why certain developing nations are able to achieve robust, sustained economic growth while others remain mired in stagnation or even decline. What are the underlying political dynamics, institutional structures, and policy choices that enable some of the developing countries to thrive and achieve middle income status, while others falter and fail to escape the clutches of underdevelopment?  These are weighty questions without easy answers, as the interactions between political and economic factors are often complex, context-dependent, and resistant to simplistic generalizations.

In discussing these matters, the course will introduce students to two pivotal topics within the political economy of developing nations: resource curse theory and the developmental state.   Students will be exposed to theoretical framework and a diverse array of current academic debates on these two topics. 

The overarching objective is to empower students to not merely comprehend these vital discussions, but to thoughtfully contribute their own insights and perspectives, advancing the academic discourse surrounding the political economy of developing countries.

The political economy of developing nations is a rapidly evolving field, and this course aims to equip students with the analytical tools and conceptual frameworks needed to grapple with its many nuances and challenges, ultimately working towards a more holistic understanding of the forces that shape economic progress and social transformation in the developing nations.

Course outline

Learning unit one:  Theoretical foundations and empirical challenge of the new political economy

In the first learning unit, we shall focus on the theoretical and practical developments in the political economy of development.  

Learning unit two:  the political economy of developing countries with economic success

In learning unit two, we will delve into the fascinating topic of the political economy of developing countries that have experienced remarkable economic success. The central focus will be on understanding why the East Asian "tiger" economies, such as South Korea, Taiwan, Singapore, and Hong Kong, saw such dramatically faster growth compared to most South Asian and African economies in the latter half of the 20th century. By examining this striking divergence, we can glean valuable lessons that could benefit African nations and other countries in the Global South as they seek to emulate the rapid industrialization and robust economic expansion achieved by the East Asian tigers.

The underlying question in this learning unit is:  Why did economic growth in the East Asian tiger economies so dramatically outstrip that in most South Asian and African economies in the second half of the twentieth century? What lessons can African countries and other countries in the Global South learn from their rapid industrialization and economic growth?  What explains the recent resurgence of the economies of Latin America?   To help the learners to grapple with these questions, the learning unit will provide an analysis of the influential theory of the "developmental state" - the idea that an active, strategically-minded government can play a crucial role in guiding and catalyzing economic development, as exemplified by the East Asian tigers' remarkable growth trajectories. 

Learning unit three:  the political economy of the developing countries with economic stagnation and resource curse

In the learning unit three, the focus will shift to examining the complex political economy of "resource-curse" countries - those nations that possess an abundance of natural resources, such as oil, gas, or valuable minerals, yet have paradoxically struggled to translate this wealth into broad-based economic development and prosperity for their citizens.

The key underlying question in this unit is: Why have some resource-rich economies, like the success stories of Botswana and Norway, have been able to effectively manage and leverage their natural resource endowment to fuel sustainable growth, while so many others have manifestly failed to reap the same benefits, becoming mired in economic stagnation, political instability, and entrenched inequality?  To help the learners to develop a nuanced understanding of this phenomenon, the learning unit will provide an in-depth analysis of the natural resource curse theory. 

Summary

LEARNING UNIT 1: EMERGING ISSUES IN THE ‘NEW” POLITICAL ECONOMY OF DEVELOPMENT

1 - Introduction

2 - The “New” Political Economy:  Theoretical Foundation and Empirical Challenges

• Theoretical Foundation
• Empirical challenges

3- Political Economy of different categories of Developing Countries

• Political economy of developing countries with economic success
• Political economy of developing countries caught up in middle-income trap
• Political economy of developing countries with failed states
• Political economy of the natural resource curse countries
• Political economy of the new economic international order

LEARNING UNIT 2: THE POLITICAL ECONOMY OF COUNTRIES WITH ECONOMIC SUCCESS – DEVELOPMENTAL STATES

1- Introduction

2- Origins and Definition of Development State

• Explanation of a development state
• Which Countries can be referred to as developmental state
• Historical context of developmental state

3- Attributes of a Developmental State

• A distinction: Economic and Political attributes
• A shared developmental vision that inspires nationalistic project
• Strong bureaucratic competence
• What is the Weberian bureaucracy?
• State organs that are both autonomous, embedded, politically insulated
• Relationship between developmental state and democracy

4- Mechanisms of Development State

• Industrialization policies and domestic investment
• Human Capital Development and Macro-Fiscal Management
• Social policies focused on developmental objectives
• Execution and Planning Agencies with Public Sector Reforms

5- Criticism of Developmental State

LEARNING UNIT 3: THE POLITICAL ECONOMY OF THE RESOURCE CURSE COUNTRIES

1- Introduction

2- Origins and Definition of the Theory

• Before 1982:  The thesis that natural resources has positive role in economic development
• 1982:  The emergence of the Dutch Disease theory
• 1988:  Establishment of the resource curse thesis
• 1993:  The term “resource curse” is coined
• 1995:  Empirical evidence confirms adverse effects of resource dependency
• After 1995: Divergent views

3- Attributes and Effects of the Natural Curse Theory

• The paradox of plenty
• Democracy deficit
• Conflict
• Inefficient spending and borrowing
• Limited government capture of benefits
• Weaker institutional development
• Social and environmental problems

4- Economic and Political Mechanisms of the Curse Theory

5- More Information about Rent Seeking Theory

• Elements of the rent seeking theory
• Critiques of Rent-seeking theory

6- More Information about the Dutch Disease Theory

• The elements of the dutch disease theory
• Critique of Dutch Disease theory

7- Critique of Theory of the Natural Resource Curse