THEORIES OF ECONOMIC DEVELOPMENT

Article on Political Economy
Overview
Political economy influences other aspects of political interaction.Throughout the discussions,
the influence of domestic and international economic institutions and the idea of economic
interdependence appear as important factors when examining political decision-making. The
contemporary discussion on the level of government involvement in the economy begins
after WWII with the theoretical debate between those who believe governments should have
some control of the economy, the Keynesians,and those who believe government should
stay out of the economy, the Chicago School of Economics influenced by Hayek (Cran,
Sullivan, Stiers, & Yergin, 2002). The Keynesians won out, and most governments enacted
some level of government control over the economy. In Europe, this became control over the
“commanding heights” of the economy, or those areas that are necessary for production, like
oil, steel, electricity, etc. Even in the United States, government regulations and controls
influenced the price of commodities and items like airline tickets. In the 1970s, advanced
economies began to slow, resulting in what was called “stagflation”—a combination of
stagnation in the market along with the inflation of prices (Cran et al., 2002). Margaret
Thatcher and Ronald Reagan heralded in a change, following Hayek and Friedman’s ideas
(the Chicago School of Economics) on keeping the government out of the economy.
Deregulation became the norm, creating short term constraints in economic development,
but longer term benefits for some of the populations. Over time, domestic and international
policies moved toward these market ideas, influencing economic development worldwide
(Cran et al., 2002).
The real long-term benefits of less government controls over the market are still being
debated. With the worldwide economic downturn in 2008, many countries faced austerity
measures that drastically reduced standard of living benefits. Questions arose on whether
governments should have more control over markets and economies, especially in the areas
where personal greed influences improper or illegal behavior.
Many of the foreign policy interactions between states include trade agreements. The level
of tariffs, price fixing, and openness of markets influences domestic production and foreign
supply. The United States imports roughly three times as much goods in dollars to China
than it is able to export, creating an ever growing trade deficit (U.S. Census Bureau).

However, U.S. industries invest heavily in China, like General Motors, with China being a
significant part of their market share (Morrison, 2014). The China-U.S. example also reflects
the complex relationship between trading partners, with the United States promoting more
open and free trade while China continues to enact protectionist policies (Morrison, 2014).
International organizations like the World Trade Organization (WTO), the World Bank, and
the International Monetary Fund (IMF), greatly influence the economic relationships between
and among states and domestic policy decisions. As part of the requirement for IMF
investment, states must show how they are applying economic reforms, which often means
more open and democratic policies and structures. The WTO creates structures and
opportunities for trade relationships for member states, while the World Bank provides funds
for economic development. Debate surrounds the effectiveness of each of these
organizations as opportunities for development and trade or institutions focused on the
benefitting persons, groups, and states already holding power.
Conclusion
In this paper,we will explore the complex interaction between states and economies.
The domestic influences on global economic systems create norms and structure that
appear to be leading toward more interdependence politically and economically. At the same
time, economic interdependence means greater influences when one state falls into an
economic decline. In the discussion, students will examine the origins of the economic crisis
in the United States and the effects globally, appraising the effectiveness of states and
international organizations to address crisis situations like the global economic crisis. This
discussion becomes part of the continuing discussion on whether there is a reality of
growing political and economic interdependence in global politics or if it is realist anarchy as
usual.

References
Cran, W., Sullivan, M., Stiers, D. O., Yergin, D., InVision Productions, Heights Productions, Inc., & WGBH
(Producers). (2002). Commanding heights: The battle for the world economy (Television broadcast).
Boston: WGBH Boston Video.
Morrison, Wayne M. (2014). China-U.S. trade issues. Congressional Research Service. Retrieved from
http://fas.org/sgp/crs/row/RL33536.pdf
.
Trade goods with China. (2014). U.S. Census Bureau [Data file]. Retrieved from
https://www.census.gov/foreign-trade/balance/c5700.html.

Please answer the following questions on the
Theories of Economic Development
 Evaluate competing theoretical and methodological perspectives/approaches used in the readings to answer questions about political economy. Compare and contrast three theoretical or methodological approaches and consider which approach provides the best means for understanding the decision-making process regarding political-economic issues in order to formulate a direction for future policy. You may use other sources of  information beyond the material provided(readings) but the article readings must be the major sources used in the assessment. Support for your position/argument will be drawn from scholarly,academic sources using APA style citations.
(1).Formulate (propose solutions)  future policy actions to address economic and development issues. (2).Why is your solution best for the real-world practice of politics? Justify your claims
 and includes specific
 details
.
 (3)Accurately formulate policy
 actions to address economic and development issues direction for the future and includes
 specific details
.


Relevant Sources that maybe used:-
Classic Theories of Economic Development: Four Approaches
web.uvic.ca/~ramanik/320s/
University of Victoria
Literature on economic development is dominated by the following four strands of thought: Linear-stages-of-growth model: 1950s and 1960s. Theories and patterns of structural change: 1970s. International-dependence revolution: 1970s. Neo-classical, free-market counterrevolution: 1980s and 1990s.
[PDF]Theories of Economic Development - Springer
www.springer.com/.../..
Springer Science+Business Media
2.1 Introduction. 2.2 Goals of Economic Development. 2.3 The Evolution of Economic Development Thoughts. 2.3.2.1 The Linear Stages of Growth Models. 2.3.2.2 Structural Change Models. 2.3.2.3 International Dependence Models. 2.3.2.4 Neoclassical Counter-Revolution Models. 2.3.3.1 New Growth Theory.
[PPT]5. Theories of economic development - Kansas State ...
www.k-state.edu/economics/..
Kansas State University
Theories of economic development. Theory – systematic explanation of interrelationships among economic variables. Purpose – to explain causal relationships.