POLITICAL ECONOMY

By: KAREN F. PEREZ, MPA

Copyright © 2020 by Karen F. Perez, MPA and the University of Nueva Caceres

No part of this course module/study guide may be reproduced or transmitted in any form or
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University of Nueva Caceres

Published in the Philippines by the University of Nueva Caceres

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First printing, 2020
 Topic Page

Introduction to the Study of Political Economy 5

Topic 1: What is Political Economy?
Topic 2: Approaches to Political Economy

Political Economy of States 7

Topic 1: The Role of the State in Economic Development and in Economics
Topic 2: The Formation of the State

Economic Power 9
Topic 1: Economic Power
Topic 2: Globalization and Economic Power

Democratization and the Emergence of Democratic Institutions 11

Topic 1: Democratization
Topic 2 Trends in Democratization
Topic 3: The Emergence of Democratic Institutions

Economic Structure and Democracy 13

Simple Model of Economic Structure

Change and Persistence in Institutions 15

Topic 1: Economic Institutions
Topic 2: Effective Reform

Economic Political Compromise 17

Topic 1: Market Compromise
Topic 2: The Necessity of Property
Topic 3: Dynamics of Political Compromise

Differences in Economic Institutions 21

Topic 1: Correlation between Institutions and Good Governance
Topic 2: Differences in Economic Institutions
 POLITICAL SCIENCE ELECTIVE 2 POLITICAL ECONOMY

COURSE CODE: Political Science Elective 2

COURSE TITLE: Political Economy

COURSE DESCRIPTION:

This course will guide students in analyzing economic phenomena in a political

perspective. This course uses concepts both from economics and political science to
develop a theoretical model on how policy making and governmental institutions
affects the economy. This will also help students understand the connection between
the economy and politics.

OVERVIEW OF THE COURSE:

This course deals with the development of political economy in developed and
developing countries. Throughout this course, determinants of economic growth and
economic institutions will be taken into consideration. We will also examine the
governmental strategies that could be used to promote growth and industrial
development.

COURSE OBJECTIVES:

After finishing the course, the students are expected to:

• Evaluate political factors and its effect on the economy.

• Appraise socio-political concepts from an economic perspective.
• Formulate solutions to economic problems using theories of political economy.

PREREQUISITE KNOWLEDGE AND SKILLS FOR THE COURSE:

(1) Basic digital literacy skills required for studying such as being able to communicate
through email, FB messenger, and video call (these are especially for students with
unstable or zero connectivity at home). For students who have stable connectivity,
one should know the basic skills in downloading and uploading content material using
Google Suite (Google docs, Google drive, Google sheets). Students will need this as a

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basic tool when engaging with their teachers and groupmates. Students also need to
have basic skills in using Google Hangouts or Zoom as platforms to be used during
real-time or synchronous sessions with their professor and classmates. To facilitate
the use of these tools, it would be advisable for students to create their own gmail
accounts.

(2) Good socialization skills are expected from the learners. As the teachers and
students are away from each other, students need to exert extra effort to establish
and maintain quality relationships through one’s communication skills, collaboration
skills, initiative, critical thinking skills, and the like.

GRADING SYSTEM:
Milestones/ Learning Activities- 70%
Class Participation- 20%
Behavior- 10%
100%

LEARNER SUPPORT SYSTEM:

Asynchronous - the learning occurs through online channels without real-time

interaction (https://thebestschools.org); in UNC, asynchronous engagement is one
where the learning activities will be experienced through the use of a Learning
Management System (LMS) or a learning platform (such as Coursera, LinkedIn, and
others) and these learning activities can happen or can be accessed by the students
at any time and at their own pace, given a certain time frame.

Synchronous - the learning is online that happens in real time

(https://thebestschools.org); in UNC, the teaching-learning activities happen in real-
time through the use of real-time platforms such as Zoom or Google Meet.

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COURSE OUTLINE AND SCHEDULE:

This course is divided into 8 parts. The students are expected to finish this course in
2 and a half months or ten weeks. They are required to secure a soft copy of the
Appendices in this module at the College of Arts and Sciences Dean’s Office after
enrollment. The files can be saved on their smart or android phones to make it
accessible even without Internet.

Study Topic Learning Assessment

Period Activities
Week 1 Introduction to the Study of Learning Activity Video presentation
Political Economy 1
Topic 1: What is Political Economy?
Topic 2: Approaches to Political
Economy

Week 2 Political Economy of States Learning Activity Case Analysis

Topic 1: The Role of the State in 2
Economic Development and in
Economics
Topic 2: The Formation of the State

Week 3 :Economic Power Learning Activity Essay

Topic 1: Economic Power 3
Topic 2: Globalization and Economic
Power

Week 4 Democratization and the Learning Activity Power point

Emergence of Democratic 4 presentation
Institutions
Topic 1: Democratization
Topic 2 Trends in Democratization
Topic 3: The Emergence of
Democratic Institutions

Week 5 Economic Structure and Democracy Learning Activity Creation of Economic

Simple Model of Economic Structure 5 Model

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Week 6 Change and Persistence in Learning Activity Creation of Economic

Institutions 6 Strategy
Topic 1: Economic Institutions
Topic 2: Effective Reform

Week 7 Economic Political Compromise Learning Activity Analysis of Primary

Topic 1: Market Compromise 7.1 Economic Source/
Topic 2: The Necessity of Property Article Analysis

Topic 3: Dynamics of Political Learning Activity Political Slogan

Week 8
7. 2
Compromise

Week 9 Differences in Economic Institutions Learning Activity Position Paper

Topic 1: Correlation between 8. 1
Institutions and Good Governance

Topic 2: Differences in Economic Learning Activity Vlog

Week 10 8.2
Institutions

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LEARNING GUIDE 1
INTRODUCTION TO THE STUDY OF POLITICAL ECONOMY

LEARNING OUTCOMES:

After finishing this module, the students are expected to:

-Discuss the basic concepts of Political Economy
-Elaborate the relationship of political systems and global economy.
-Create video on the importance of studying political economy.

Introduction

The birth of globalization allowed people to integrate the workforce with the idea of
economic sovereignty. This allowed the creation of different approaches to envision
goods and services in a different perspective. There is a need to study Political
Economy in the field of Political Science as a different concept vis-à-vis Economic
structure due to technological advancements. This Module will provide students with
a brief introduction to Political Economy.
What is Political Economy?

Political economy in its simplest form is the interaction between political and
economic processes. It deals with human welfare using the economic lens. This
covers state affairs and business interests in different parts of the world.

Approaches to Political Economy

Various approaches to global political economy includes state-centered approaches

to Marxist approaches that involves the international arena and capitalism. Liberal
approach focuses on individual actors rather than social groups.

*for full discussion on the topics, read:

Appendix A-Excerpt of Introduction to Political Economy, Political Economy Lecture
Notes by Daron Acemoglu (Political Economy Open Educational Resource, 2010)

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Activity for the Week

Learning Activity 1
Create a short video presentation on the importance of studying Political Economy.
Your video presentation should not exceed five (5) minutes.

Assessment Tool
Video Presentation Rubric (Appendix I- Rubric 1)

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LEARNING GUIDE 2
POLITICAL ECONOMY OF STATES

LEARNING OUTCOMES:

At the end of this module the students are expected to:

-Explain the role of state in Economic Development.
-Determine causes of an economic problem.
-Plan and provide own solutions to an economic problem.

Introduction

The role of the state in political economy is an issue that is yet to be resolved in the
field of Political Science. According to Max Weber’s famous approach, the state is the
agency and society distinguished by its “monopoly over legitimate violence”. The
states’ ability for coercive action either for public welfare or interest of some groups
and its implications will be discussed in this module.

The Role of the State in Economic Development and in Economics

Development relies on institution building and it takes different forms in different

countries. Some countries are unable to create social order and basic needs of its
constituents due to some underlying factor while other countries can promote
industrialization because they have the ability to do so.

The Formation of the State

State capacity differs because of each country’ differences in political and economic
development. Weber’s famous notion of the state as “a human community that
(successfully) claims the monopoly of the legitimate use of physical force within a
given territory” is a manifestation of the vital role of government in economic and
societal affairs.

*for full discussion on the topics, read:

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Appendix B- Excerpt of the discussion on Political Economy of States, Political

Economy Lecture Notes by Daron Acemoglu (Political Economy Open Educational
Resource, 2010)

Activity for the Week

Learning Activity 2
Case Analysis

Instructions:

1. Choose a state from other continents.

2. Identify an economic problem from the state of your own choice.
3. Discuss the relevant facts.
3. Analyze and discuss the cause of the economic problem.
4. Uncover and provide 5 possible solutions.
5. Discuss your proposed solutions.

Assessment Tool
Critical Thinking Rubric (Appendix I- Rubric 2)

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LEARNING GUIDE 3
ECONOMIC POWER

LEARNING OUTCOMES:

At the end of this module the students are expected to:

1. Explain the concept of economic power.
2. Discuss the relationship of employment and political control.
3. Determine how employment and political control affects economic growth.

Introduction

Power is a relational concept in Political Science. It comes in many forms: allocation

of resources of society, the extent of governmental control to utilities available to the
public and how much it affects an entire state.

Economic Power

Economic power is a states’ ability improve their standard of living of its people. It
involves the ability to benefit from available resources and its relationship to freedom
as exercised within the state.

Globalization and Economic Power

Global economy whose elements involves land, natural resources, and the ability to
provide for people’s needs and to spend more if necessary is important as it
contributes to the creation of sound economic policies. This allows a good economic
policy, educated and reliable work force, healthy market competition and a reliable
government.
*for full discussion on the topics, read:
Appendix C- Excerpt of the discussion on Economic Power, Political Economy Lecture
Notes by Daron Acemoglu (Political Economy Open Educational Resource, 2010)

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Activity for the Week

Learning Activity 3
Write an essay on political control and how it affects economic growth.

Assessment Tool
Critical Thinking Rubric (Appendix I- Rubric 2)

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LEARNING GUIDE 4

DEMOCRATIZATION AND THE EMERGENCE OF DEMOCRATIC INSTITUTIONS

LEARNING OUTCOMES:

At the end of this module, the students are expected to:

- Explain the concept of democratization

-Elaborate the emergence of democratic institutions.
-Discuss the birth of democratization.

Introduction

The concept of democracy stems from the peoples’ desire for freedom of choice. The
rise of nationalism in Europe paved the way for democratic ideas. The Philippines
being a democratic and republican state and other democratic countries allows the
integration of liberal ideas to political aspects. It is noteworthy to understand the idea
of democratization and its emergence in democratic institutions.

Democratization

Democratization deals with the process of spread of democracy in political

institutions. It started in the mid-20th Century which spread drastically in the
international arena.

Trends in Democratization

The process of democratic transitions occurs globally. There are three waves of
globalization identified by Samuel Hantington is a manifestation of the expansion of
democratic political ideas vis-à-vis integration of sound economic principles.

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The Emergence of Democratic Institutions

Democratic Institutions started emerging in the 19th Century in states who has
portion of population denied of suffrage. The origin of democracy back then could be
traced to the teachings of Plato and Aristotle in Ancient Greece.

*for full discussion on the topics, read:

Appendix D- Excerpt of the discussion on Democratization, Political Economy Lecture
Notes by Daron Acemoglu (Political Economy Open Educational Resource, 2010)

Activity for the Week

Learning Activity 4
Using a power point presentation, discuss the birth of democratization and
emergence of democratic institutions in an economic concept.

Assessment Tool
Critical Thinking Rubric (Appendix I- Rubric 2)

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LEARNING GUIDE 5

ECONOMIC STRUCTURE AND DEMOCRACY

LEARNING OUTCOMES:

At the end of this module, the students are expected to:

-Discuss basic concepts of economic structure.
-Explain the basic model of economic structure.
-Create their own economic model using a circular flow diagram.

Introduction

Political Institutions exercises political power in social and economic structures due
to the need to regulate and properly allocate resources. This learning guide will cover
the relationship between democracy and human capital, how industries affects
democratization. A simple economic model will be provided to show these
relationships.

Simple Model of Economic Structure

Economic structure covers the equilibrium between human needs and wants. This
involves the different economic sectors, labor, employment, economic industries. A
simple model of economic structure is an economy with consumption of goods
produced through a functional production method involves a fully competitive
economy with unique final consumption good, produced via the aggregate
production function

*for full discussion on the topics, read:

Appendix E- Excerpt of the discussion on Economic Structure and Democracy, Political
Economy Lecture Notes by Daron Acemoglu (Political Economy Open Educational
Resource, 2010)

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Activity for the Week

Learning Activity 5
Using a Circular Flow Diagram, create your own economic model. Explain you model
in 5 sentences.

Assessment Tool
Circular Flow diagram Rubric (Appendix I- Rubric 3)

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LEARNING GUIDE 6

CHANGE AND PERSISTENCE IN INSTITUTIONS

LEARNING OUTCOMES:
At the end of this module, the students are expected to:
-Explain economic reform.
-Assess the relationship of economic institutions and economic reform.
-Create their own strategy to achieve economic reform.
Introduction
Different institutions can influence economic and political power. When there is a
change in political rule, amendment in a Constitution and change in government
structure, the political power also shifts. Dictatorship and democracy both have
effects in economic growth.

Economic Institutions
Economic Institutions refers to:
1. Agencies either government or private, that supplies a good or a service
important to the economy of a country.
2. Structures which are part of culture.
Effective Reform
Both democracy and dictatorship has advantages and disadvantages to the state-
either in small or large values. A reform can be undertaken with the switch back and
from democracy.

*for full discussion on the topics, read:

Appendix F- Excerpt of the discussion on Change and Persistence in Institutions,
Political Economy Lecture Notes by Daron Acemoglu (Political Economy Open
Educational Resource, 2010)

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Activity for the Week

Learning Activity 6
Create a ten point strategy (1 strategy with 10 steps) on how to achieve economic
reform in the Philippines.

Assessment Tool
Critical Thinking Rubric (Appendix I- Rubric 2)

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LEARNING GUIDE 7

ECONOMIC POLITICAL COMPROMISE

LEARNING OUTCOMES:
At the end of this module, the students are expected to:
-Explain the dynamics of political compromise.
-Discuss the concept of economic compromise.
-Analyze a primary source/article on political economy.
-Create a political slogan on economic compromise.

Introduction
Economic compromise is oftentimes misconstrued in a political perspective. In this
learning guide, a win-lose and win-win imagery of an economic political compromise
process will be presented for a clearer understanding in the study of Political
Economy.
Market Compromise
There is a symbiotic relationship between the rise in market price against the wishes
of the buyers and vice versa. Buyers and sellers can agree on a common objective-
joint gains.
The Necessity of Property
Property rights which is also an economic right is a basis of market exchange. Property
rights allow helps us avoid a costly process of reaching compromise if unnecessary.

*for full discussion on the topics, read:

Appendix G- Excerpt of the discussion on Economic Political Compromise, Political
Economy Lecture Notes by Daron Acemoglu (Political Economy Open Educational
Resource, 2010)

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Activity for the Week

Learning Activity 7. 1

Document Analysis

Instructions:

1. Look for a newspaper.

2. Choose an article on political economy.
3. Answer the following questions:
a. Who wrote the document? Was the author a political or private individual? Was
he educated or not? Was it a joint author? Was there no single author, but is the
document something that evolved over time?
b. Who was the intended audience? What is the story line? What is going on in the
document? What is the information in the document?
c. Why was the document written? What type of document is this, or what is its
purpose?
d. What are the basic assumptions made by the author?
e. Can you believe this document? Is it reliable? Is the information likely or reliable?
f. What can you learn about political economy from this document?

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Assessment Tool
Document Analysis Rubric (Appendix I- Rubric 4)

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Dynamics of Political Compromise

Better understanding of Political Economy helps sustain political compromise in a

political system. Political compromise is useful for understanding economic politics.

*for full discussion on the topic, read:

Appendix G- Excerpt of the discussion on Economic Political Compromise, Political
Economy Lecture Notes by Daron Acemoglu (Political Economy Open Educational
Resource, 2010)

Activity for the Week

Learning Activity 7. 2
Create a political slogan on the positive effect of economic compromise.

Assessment Tool
Political Slogan Rubric (Appendix I- Rubric 5)

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LEARNING GUIDE 8

DIFFERENCES IN ECONOMIC INSTITUTIONS

LEARNING OUTCOMES:

At the end of this module, the students are expected to:

-Explain key concepts in exogenous differences in economic institutions.

-Create a position paper on good governance and its impact on economy.
- Formulate ways to achieve economic thru vlog making.

Introduction

The interrelationship institutions and good governance has effects on the economy.
Investment and potential determinants of growth also relies on political institutions.
This learning guide will show the relationship between incomes, property rights and
economics.

Correlation between Institutions and Good Governance

There is a large literature documenting a positive correlation between measures of

institutions and good governance on the one hand, and economic performance on
the other. They use measures of property rights, and find them to be strongly
correlated with investment and growth (even after controlling for other potential
determinants of growth). There is also a relationship between income per capita and
one measure of property rights enforcement.

*for full discussion on the topic, read:

Appendix H- Excerpt of the discussion on Differences in Economic Institutions,
Political Economy Lecture Notes by Daron Acemoglu (Political Economy Open
Educational Resource, 2010)

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Activity for the Week

Learning Activity 8.1

Write a position paper on politics and governance and its impact on economy.

Assessment Tool
Critical Thinking Rubric (Appendix I- Rubric 2)

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Differences in Economic Institutions

Developed countries in one way or another ended up with good economic and
political institutions. However, there are also countries who are economically poor in
terms of economic history that affected their economic status in the present global
era.

*for full discussion on the topic, read:

Appendix H- Excerpt of the discussion on Differences in Economic Institutions,
Political Economy Lecture Notes by Daron Acemoglu (Political Economy Open
Educational Resource, 2010)

Activity for the Week

Learning Activity 8.2

Create a vlog on how to achieve economic recovery amidst the Corona virus
pandemic on a global perspective.

Assessment Tool
Vlog Rubric (Appendix I- Rubric 6)

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