Political Economy Flashcards
Individual political and economic freedom maximizes economic growth
State to facilitate competition and trade through minimal regulation
Examples: US, UK, Chile
Liberalism
Temper extremes of freedom and equality
State to create social rights, correct for market inequalities
Use the government to correct and adjust failures in the market
Mixed Economy - Market and government regulated economy
Conceptually ambiguous
Mixture of state-led and private-led economies
Present in the US
Social Democracy
Halfway point to communism
Government regulated economy (not a market economy)
Socialism
Societal equality
State to transform markets and property to make the economy a public good and pursue equality
E.g. Cuba, USSR
Communism
Economy is a tool in service of national strength
Rather than the state balancing freedom and equality, pursue state needs; economy generates state power
Most useful as a historical concept
Active industrial policy to prompt development and competitiveness
Biden-Economics
Mercantilism
Development allows for democracy: Societies are either primitive/agrarian societies or societies with efficient and scientific governments, complex divisions of labor, mass political participation, and an industrial economy
Modernization Theory
Modernization is caused by the geography/landscape of a state. Some countries have a comparative advantage, meaning that they produce resources more efficiently than other countries.
Acemoglu Theory of Modernization
Development of some countries comes from the exploitation of underdeveloped countries (exploitation of countries in the periphery)
Countries in the periphery are less industrialized and have less skilled workers while countries in the center rely on skilled workers and industrial economy
Dependency Theory
A strategy for economic growth in which a country restricts imports in order to spur demand for locally produced goods
Goal: Decrease imports leads to growth of domestic industries and development
Challenge: Size of the market matters (By developing new sectors, the country needs to borrow money from organizations like the World Bank, and eventually pay back this debt. However, if these new industries fail or go bankrupt, the country can not pay back their debts)
Import Substitution Industrialization
A strategy for economic growth in which a country seeks out technologies and develops industries focused specifically on the export market
Goal: Develop specific technologies leads to exports which leads to development
Challenges: inefficiencies, debt, usually done by authoritarian governments
Asian Tigers: Hong Kong, South Korea, Japan
Export-Oriented Industrialization (EOI)
A policy of economic liberalization, often adopted in exchange for financial support from international organizations (WB, IMF)
Private state-run firms
End subsidies
Welcome foreign investment
Shrink the size of the state
Challenge: Loans with conditionalities like decreasing tariffs, Inequality, Neocolonialism, Protests
Structural Adjustment/Washington Consensus/Neoliberalism
When a country produces a resource (e.g. oil) more efficiently than other countries, the country is usually controlled by an elite oligarchy that uses the money produced to fund government projects rather than tax citizens, decreasing the need for political representation. However, this lack of representation and control by the wealthy often leads to political turmoil and corruption.
Resource Curse (Ross)
