What is political economy pdf

While political science has emerged as a distinct field which is considered to be primarily disconnected from economics. All the works of these economists have led to the creation of what political economics as a field of study is.

It constitutes the analysis of the relation between the economy and politics both in the domestic and international domain. Owing to the history of its development, the political economy focuses on the following three approaches: —. In this approach, we study the role of economic structures, political systems and government institutions and their impacts on each other both globally and within the nations.

The modern method of study emphasizes on the further discussion of the economic policies formulated by the government rather than limiting only to their analysis as a theory. This area of study analyses the economic interdependence among various countries, influenced by their political ties. Hence, it is also called the global political economy. It includes the understanding of international trade, the working of imports, exports, custom duties, trade surplus and deficits.

Political science and economics are inseparable and this is relevant more than ever. Our political environment, economic systems and the social construct are closely intertwined and go hand-in-hand. To have effective and desired results, a holistic understanding of all is required.

Political economy efficiently integrates all these areas of study and facilitates the analysis of various socio-economic theories such as capitalism , communism, socialism, liberalism etc. Resources are owned both publicly and privately.

Government controls the economic activities of essential sectors such as water, electricity, defence, and partly the health and education. Others are dominantly operated by private firms and left to the guidance of the invisible hand. But capitalist markets fuel the disparity between the rich and the poor. This is where the government institutions have to interfere to ensure an equitable distribution of wealth across all levels of the society.

It is achieved by the imposition of taxes and subsidies and other aids and incentives. The exercise of these methods to their maximum utility requires government policymakers to have the all-round knowledge of the economic condition as well as the social structure to which the citizens are bound to.

Furthermore, the scope of political economy is not only confined to the boundaries of a country but also extends to an international approach.

Globalization has increased the need to comprehend the relations between two nations on the grounds of the political environment as well as trade exchanges. The growth of multi-national companies MNCs has been synonymous with growth in employment generation. But government supervision is necessary to safeguard the interests of the workers as well. This leads to the formulation of labour protection laws and their proper execution.

Consider the economic output of a nation to be a pie that is to be distributed among its citizens. On favouring efficiency, the economic pie will be as large as possible but divided into unequal pieces while upholding equality will ensure equitable distribution but cause the economic pie to shrink.

Political economy facilitates a holistic comprehension of these underlying affairs and enables us to make the most rational decisions. Ushashi is a content writer at Sociology Group. Thus, political economy is the study of how to manage a state taking into account its political, economic and social characteristics. Political economics helps us to understand the formulation and execution of public policies and their effect on the economy as well as the social systems.

Political economy as an academic discipline dates back to the span from 16 th to 18 th century, during the period of mercantilism. It is an economic system advocating the idea of maximizing exports and minimizing imports for the economic prosperity of the nation.

Mercantilists also believed that state action is necessary to optimize the stock of assets of a country. Political economy developed majorly as a reaction to mercantilism during the mid th century. Political economists like Adam Smith emphasized that free markets possess the ability to maximize the resources of the country rather than a strict state regulation on production and consumption. He argued that individuals are motivated to act in accordance with their own interests but in doing so, the outcome is automatically in the best interest of the society as a whole.

The output generated by a free economy is always greater than that of a state-regulated economy. Further, in the 19 th century, David Ricardo, an English political economist forwarded the notion of comparative advantage. It says that a country should produce goods which it can make at a lesser cost than others and import those which other nations can generate more profitably.

In the mid th century, communist economist and philosopher Karl Marx presented an analysis of political economy which was majorly based on the social class. Communism is a socio-economic and political ideology that aims to establish a classless and stateless society.

It advocates for the common ownership of the means of production without the influence of social class and the government institutions. Economics has come out to be more methodological, statistical and far off from moral philosophy. It has become more market-centric. While political science has emerged as a distinct field which is considered to be primarily disconnected from economics. All the works of these economists have led to the creation of what political economics as a field of study is.

It constitutes the analysis of the relation between the economy and politics both in the domestic and international domain. Owing to the history of its development, the political economy focuses on the following three approaches: —. In this approach, we study the role of economic structures, political systems and government institutions and their impacts on each other both globally and within the nations.

The modern method of study emphasizes on the further discussion of the economic policies formulated by the government rather than limiting only to their analysis as a theory. This area of study analyses the economic interdependence among various countries, influenced by their political ties. Hence, it is also called the global political economy. It includes the understanding of international trade, the working of imports, exports, custom duties, trade surplus and deficits.

Political science and economics are inseparable and this is relevant more than ever. Our political environment, economic systems and the social construct are closely intertwined and go hand-in-hand. To have effective and desired results, a holistic understanding of all is required.

Political economy efficiently integrates all these areas of study and facilitates the analysis of various socio-economic theories such as capitalism , communism, socialism, liberalism etc.