Political Economy Of Development Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

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The political economy of development looks into the fundamental question of why some countries and regions of the world are rich and others are poor. A variety of competing schools of thought seek to explain the main reasons for underdevelopment and how to overcome development challenges. The political economy of development deals with economic considerations, but it also includes political dimensions as key factors for development prospects of countries and regions.

Defining and measuring development and underdevelopment are crucial for the political economy of development. As a rule, development indicators are used in an attempt to measure levels of poverty. Traditionally, gross domestic product and related growth rates were used almost simultaneously to define development. In the 1980s and especially the 1990s, various efforts were made to define development in a much broader sense. Such new indicators and indices as the Human Development Index (HDI) were developed.

Explaining underdevelopment and development through different theories and approaches has a long tradition that can even be traced back to early research on different levels of industrialization in Europe. Especially since the 1960s, a number of schools have been established to explain development and underdevelopment. One of the main features of these schools has been their universal approach. Influential debates were sparked by Walt Whitman Rostow’s model of the five stages of growth. He tried to explain the stages of economic development that are needed before high mass consumption is reached. Other schools were looking at structures of global exploitation. The Independencia schools, originating mainly in Latin America, were influential in this context, especially in the 1970s and 1980s. These and other theories implicitly or explicitly consider explanations to be found in or outside developing countries. New concepts are engaged in the analysis of the impact of globalization on developing countries. In general, theories of the political economy of development can be subdivided into (1) approaches developed by political scientists (e.g., Samuel Huntington) that focus on governance issues and historical development conditions, and (2) approaches developed by economists (e.g., Jeffery Sachs; see below) that focus on specific production models and the dominance of economic conditions for development prospects.

Since the early 2000s two distinct schools of thought have emerged during the development debate: The first, a “poverty trap” (standing for a number of concepts) identified by Jeffery Sachs, is assumed to be a function of a low savings ratio combined with high population growth, a situation that leads to stagnation in capital accumulation and prevents economic growth from triggering a self-sustaining dynamic. Sachs sees such factors as high transportation costs and low productivity agriculture as principal structural causes. The poverty trap approach sees a need for a broad-based counterstrategy through a “big push.” A massive increase in foreign aid is therefore necessary.

Critics of an approach of this kind point to the long tradition of the big-push idea and strategies based on external funding. Neither, it is claimed, has proved reasonable or appropriate. Counterarguments have been advanced, especially from a governance perspective. Therefore, the second set of schools of thought, the governance schools, ascribe underdevelopment mainly to governance weaknesses in the shape of insufficient legitimacy, a nonfunctioning monopoly of power, inefficient institutions, and inadequate basic government services. It is, in other words, not primarily a lack of financial resources but deficient governance structures that prevent development successes. This applies inter alia to countries affected by violent conflict or fundamental governance problems. Furthermore, it is claimed that although a number of countries have substantial income (e.g., from oil revenues), the problem is that income is not put to productive use.

Against the background of these debates, the specific links between different development dimensions are being increasingly examined. Research is, for example, focused on the influences of good governance on economic growth and vice versa and on analyzing the relationship between foreign aid and development. Particularly important in this context are the negative effects of aid (e.g., on governance structures in developing countries or on a country’s own revenue efforts) and the conditions needed for positive impacts.

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