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8.5: Student Resources

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    Key Terms/Glossary

    • Zero-sum game - a situation where one person, or entity, gains at the equal cost of another.


    Section #8.1: What is Political Economy?

    Political economy is a social science which considers and analyzes the various economic theories (like Mercantilism, Free Market Capitalism / Liberalism, Marxism / Economic Structuralism), practices and outcomes either within a state, or among and between states in the global system. Consideration of political economy can be traced back to the work of Plato and Aristotle, though the most modern initiation of the discussion can be attributed to the work of Adam Smith in his Wealth of Nations. Overall, comparative politics would be lacking if it neglected conversations and scholarship relating to political economy, as many political outputs and outcomes are inherently tied to economic structures and ideologies.

    Section #8.2: Political Economic Systems

    Political economies also vary in how they are implemented, with a major variable being the role of the state in its economy. In some political economy systems, the state is much less involved, sometimes mostly absent, referred to as laissez-faire, which translates from French as ‘let it be’. At the other end of the spectrum are states that have complete control of an economy. There are four main political economic systems, including: Mercantilism (Economic Nationalism), Free Market Capitalism (Economic LIberalism, Marxism (Economic Structuralism), and Socialism (Social Democracy). These political economic systems can result in different outcomes which affect both citizens and the state at large in significant ways.

    Section #8.3: Comparative Case Study - Germany and China

    Germany and China have different economic systems, but both play prominent roles in the global community as major exporters. When countries are large exporters, they can experience similar problems despite their very different economic systems. Both China and Germany’s political leaders need to constantly and carefully balance the domestic concerns of their economies alongside their global “customers” who depend on their exports. If the global “customer” base fails, or switches trade partnerships, China and Germany’s economies will be unable to thrive. Beyond this, relying on exports leaves states vulnerable to the economic conditions of those they trade with; if a state is no longer able to afford the product or buy the good, the exporter will struggle.

    Review Questions

    At least 5 multiple choice questions which will be converted to Canvas question banks and quizzes

    1. The field of political economy is concerned with:
      1. International organizations like the World Bank and the International Monetary Fund
      2. The relationship between political and economic policies.
      3. International monetary policies and domestic fiscal policies.
      4. Comparative advance and the balance of trade.
    2. Which theory in this chapter credits capitalism, globalization and international trade with contributing to poverty in developing countries?
      1. Economic Liberalism
      2. Economic Realism
      3. Economic Nationalism
      4. Economic Structuralism
    3. Which option below best describes the concept of comparative advantage?
      1. Countries compete by trying to produce all items and products within their own country, working to decrease reliance on imports.
      2. Countries compete by trying to outsource all production, working to increase reliance on imports.
      3. Countries cooperate economically, encouraging countries to produce what they are most efficiently and cheaply able to produce relative to other countries.
      4. None of these is correct.
    4. Which theory described in this chapter argues that once economic inequalities are apparent, they have a tendency to become self-perpetuating?
      1. Feminism
      2. Economic Liberalism
      3. Mercantilism
      4. Economic Structuralism
    5. What is Autarky?
      1. A situation where countries trade freely with each other.
      2. A situation where a country does not trade with other countries.
      3. A situation where a country is only able to trade with a few countries.
      4. A situation where countries work to destabilize other economies.

    Answers: 1.b, 2.d, 3.c, 4.d, 5.b

    Critical Thinking Questions

    1. What contributed to the rise of political economy as a field of academic study? Describe the factors involved and discuss implications for future research and study.
    2. What lessons can we learn from the responses to the COVID-19 pandemic about the importance of political economy?
    3. There are a number of different belief systems about the appropriate role of government in economic affairs. How do these beliefs manifest in practical terms? Consider the application of these different belief systems in the context of energy and environment policies.
    4. The effects of changes in climate and the environment can impact countries in uneven and, arguably, unfair/inequitable ways. To what extent do various economic systems respond or react to these inequalities/inequities? Are some economic systems more able to handle environmental and climate shifts? If so, how?

    Suggestions for Further Study

    Journal Articles

    • Acemoglu, Daron, Simon Johnson and James Robinson/ [2001] “The Colonial Origins of Comparative Development: An Empirical Investigation” American Economic Review, 91, 1369-1401.
    • Rodrik, Dani. [1997] “Sense and Nonsense in the Globalization Debate.” Foreign Policy 107: 19-37.
    • Valenzuela, J. Samuel and Arturo Valenzuela. [1978] “Modernization and Dependency: Alternative Perspectives in the Study of Latin American Underdevelopment.” Comparative Politics 10:4 (July), pp. 535-557.
    • Books
    • Piketty, T. [2017] Capital in the Twenty-First Century. The Belknap Press of Harvard University Press.
    • Spero, J. E. [1990] The Politics of International Economic Relations. St. Martin’s Press, Inc.
    • Stilwell, F. [2011] Political Economy, the Contest of Economic Ideas. Oxford University Press; 3rd Edition.