Monday, April 15, 2024

Political economy

Political economy refers to the interface between political and economic power in a given society that influences the growth and development prospects of that very society. According to Pranab Bardhan (1999) political economy refers to the dissemination of political and economic power in a given society and how such a rearrangement influences the directions and patterns of growth & development and policies & programmes that bear on them. Economic development is highly correlated with political economy of a state/country. Every nation undertakes a sequence of welfare and development works so as to bring positive changes in the economy, improve standard of living and quality of life of its citizens. The role of the political economy cannot be neglected as far as growth and development of a nation is concerned. In the entire process of growth and development, political economy of a state is the main protagonist as it plays the main role in the functioning of an economy. However, it has been observed that the political economy of developing countries in general and India in particular is very unstable for the past many decades or so because the benefits accruing from growth and development activities have not generated the desired outcome, and have failed to bring about a positive as well as desired change in the different aspects of lives of the people, which has raised queries and concerns regarding the role and efficacy of the state and put a question mark on the political economy of these countries. The quest for alternative paths to economic development so as to bring trickle-down effect (a theory that says benefits for the wealthy trickle down to everyone else) has been on the top list of political economists. Modern public-private partnership models and structures have emerged as the last resort to maintain the political economy of underdeveloped or developing economies. It needs no mention that the essence of good connectivity between political economy and economic development is realization of social and human welfare or maximization of social advantage. In fact, the understanding of political economy and economic development aim at benefiting the citizens and if both fail in providing benefits to citizens then such understanding is futile activity. Political economy and economic development are complementary as we cannot separate the two. We can expect good development results only in the presence of good political economy and in a good interface between political economy and economic development because as far as good political economy is concerned, it ensures equal participation of people in decision making, both political and economic decision making related to development programmes, which reflects the freedom and choice expansion of the people. Consequently, the basic and fundamental approach to bring a good connection between political economy and economic development has experienced large changes in contemporary times, which recognizes the importance of political economy in economic development and economic governance and political governance linkage as a key indicator to economic development. It is very important to realize the fact that sound understanding of political economy is essential food for the recipe of economic development. Good political economy is essential for sustainable development and that sound economic policies, firm democratic institutions receptive to the needs of the people and improved infrastructure, which are the product of good political economy are the basis for sustained economic growth, poverty alleviation and employment creation. And that freedom, peace and security, stability, respect for human rights, including the right to development, the rule of law, gender equality and market oriented policies and an over-all commitment to fair, objective and democratic societies are also achieved under the arena of good political economy. On the other hand, bad political economy has two outcomes – bad economy and bad governance/ bad polity which misleads the path of growth and development, and has inconsistent bearing on the general masses, particularly weaker sections of the society. The point is that developing states like ours need to develop strategies and policies to improve political economy so as to alleviate poverty and improve income, employment and output levels.