Political Economy Literature Research Articles

Decarbonization and the Capitalist State

ABSTRACTDecarbonization is the most important challenge of our time. Though quite modest, states are taking more climate action. How should we approach these efforts? Sociologists have paid less attention to decarbonization overall but frameworks in political sociology can make sense of state power and climate politics. In this review, I first discuss two sets of literature. The first extends “state‐capacity” and institutionalist frameworks. The second is based on radical and Marxist state theories. Following this, I draw from Mann's concept of “infrastructural power” which combines elements of both and can situate state power in a transnational context. Using this concept and recent literature in political economy, I discuss three infrastructures—finance, trade, and energy—and consequential ways states have altered them in recent years. These actions reveal profound geoeconomic contradictions which will undermine decarbonization. Together, this review provides a wide survey of state theories and macroscopic climate politics with the hope of spurring further discussion and debate.

Calibrating Ukraine’s Growth Model: How Can Ukraine Emulate Poland’s Growth?

This study provides a comparative analysis of the economic growth paths of Ukraine and Poland from a growth‑model perspective and determines how to calibrate Ukraine’s growth model to converge with Poland’s booming economy. The methodology comprises an approach to operationalizing growth models for GDP growth decomposition into “import‑adjusted” demand components, drawing on national input‑output data from 2000 to 2019. I found that from 2000 to 2003, both European economies relied on a combination of exports and domestic consumption. Expanded trade integration and an FDI boost after Poland joined the EU in 2004 spurred the Polish growth model’s shift to a distinctively export‑led, FDI‑driven strategy with accelerated GDP growth rates. In Ukraine, in the wake of the great financial crisis, I identified a transition to a consumption‑led growth model that, along with a declining investment component of aggregate demand, led to fading growth rates. An analysis of sectoral contributions to GDP growth revealed that avoiding deindustrialization in Poland underpinned the country’s export‑led strategy, unlike Ukraine, which underwent a key sectoral shift from manufacturing to a commodities‑based orientation after 2008. Both these economies demonstrated a high level of integration into global value chains, focusing on labor‑intensive manufacturing and services, but Poland has outperformed Ukraine in terms of share of high value‑added exports, which increased after EU accession. Following the Polish pattern, I propose that Ukraine’s growth model should activate the FDI driver of economic growth, upgrading the export structure and moving up value chains to unlock the country’s growth opportunities. The study represents the first comparison of Ukraine’s and Poland’s economic growth paths that traces the changes in dominant final demand components and macro‑sectors in the two countries’ economic growth profiles. This paper contributes to the comparative political economy literature on the growth models of peripheral economies, providing insights that can inform policies for growth model transformation.

Cross-class solidarity in times of crisis: the economic impact of the COVID-19 pandemic on support for redistribution

This study investigates how the economic crisis associated with the COVID-19 pandemic impacted support for social assistance in Germany. We formulate our expectations drawing from the classical political economy literature on self-interest and the burgeoning research on the role of solidarity. On the one hand, we hypothesize that only low-income individuals impacted economically by COVID-19, who can benefit from social assistance, will support its expansion. On the other hand, we expect higher-income individuals affected economically by COVID-19 to be more supportive of social assistance, even though they do not benefit from it, and less likely to consider welfare recipients ‘undeserving’ compared to higher-income individuals not economically affected by the pandemic. We argue that first-hand crisis experiences update people’s beliefs about how luck impacts one’s economic situation in the presence of an exogenous shock. We combine observational and experimental data from an original survey collected in Germany in April 2021 to test our expectations. On average, low-income respondents appear to be the most vigorous supporters of social assistance, but their support is not conditional on their experience of the COVID-19 pandemic. Instead, we find that the support for more social assistance among affluent individuals depends on the economic impact of the pandemic. We experimentally manipulated the deservingness of welfare recipients and found that better-off respondents impacted by the pandemic were less likely to penalize even the most ‘undeserving’ welfare beneficiaries. We suggest that solidarity between classes in hard times may occur through a convergence of the deservingness perception among individuals. The article has broader implications for studying the effect of crises on solidarity and the conditional nature of class-based explanations for support for different welfare policies.

Revisiting democracy-growth nexus in Sub-Saharan Africa with macroeconomic variables modelling

PurposeA popular convention in the political-economy literature is that causality runs from democracy to economic growth. That thinking has continued to evoke significant debates among scholars. This study aims to propose a new research experiment by investigating whether macroeconomic variables cause democratisation.Design/methodology/approachThe study uses a panel data set of 48 carefully selected economies in Sub-Saharan Africa spanning 1991 to 2020 and uses the PVAR system generalised method of moment (GMM) approach.FindingsWith the application of three macroeconomic indicators: economic growth, full employment and balance of payment equilibrium, the study suggests that economic growth has a negative implication on the democratisation process and that the incentives that increase national income provide in the global South enable autocratic rulers to impede democratic growth. The Granger causality test demonstrates a unidirectional effect from economic growth to democracy. The eigenvalue stability condition, impulse response function and forecast-error variance decomposition all confirmed the validity of the findings with the PVAR system GMM. Finally, the study proposed policy and theoretical implications for the political stakeholders.Social implicationsRobust development of economic institutions (particularly the anti-corruption and rule of law) in the global South is required to tame the potential for the state actors to turn public resources into personal use to further their parochial political interest in the form of perpetuating themselves in office which negates the ideals of democracy and social norms. Strong institutions could prevent the misuse of national income and enhance a good quality of life for the citizenry, making them grow confidence in the democratisation process.Originality/valueThe research paper makes an insightful contributions from the methodological perspective and the sampling perspective. The author uses a new research method, the PVAR system GMM becoming the first attempt of such a method to be applied in determining the causal effects of macroeconomic variables on democracy in the literature. Another relevant contribution of the study relates to the sample technique of selecting economies from the Sub-Saharan Africa with notable weak or slow democratisation process.

Varieties of central banking: the Nordic Model beyond a fiscal-centric approach

ABSTRACT Since policymakers and scholars coined the term in the 1930s, the Nordic Model has often been considered to denote a homogeneous political entity in which the constituent countries are ostensibly interchangeable. As a result, seldom attention has been afforded to what fundamentally differentiates Denmark, Finland, Norway, and Sweden. By going beyond traditional ‘fiscal-centric’ accounts of the Nordic model, and instead focusing on the role of central banks and monetary policy, we show that each country bares far less similarities than has often been assumed in the literature. We trace this heterogeneity back to variegated responses to the 1970s crises of Fordist capitalism and draw on growth model theory to explain this divergent trajectory. We show how these differences shaped how each country responded to the Global Financial Crisis and the COVID-19 pandemic, where a variegated array of monetary measures was employed to uphold their own distinct growth model. By accounting for the role of central banks within the Nordic Model, we propose that it is better understood as a series of models, drawing attention to the function of monetary policy within the growth models perspective in the political economy literature.

A citizen-candidate model of party formation

There are multiple models of party formation in the political economy literature. However, most of these works consider individuals as parties and do not model parties as a group of candidates. In this paper, we follow the latter approach and assume that parties form as a result of mutually agreeable links between candidates. We consider a citizen-candidate model of electoral competition where candidates decide whether they want to participate in election alone or offer links to adjacently placed candidates on a one-dimensional policy space. We characterize one-party and two-party equilibrium and show that no multi-party equilibrium exists with three or more parties. We provide conditions on the rents of winning with respect to the cost of participating in election which also depend on the number of candidates. We provide new insights which explain party formation from the perspective of group formation. Our results confirm the Duverger’s law and are consistent with empirical evidence on plurality voting systems.

Pursuing urban sustainability through policy experimentations? Insights from the pay-as-you-throw experiment in China

Drawing on political economy literature at the nexus of urban entrepreneurialism and policy experimentation, this paper explores how policy experiments are purposely used to stage the restructuring of urban sustainability and what entrepreneurial urban experiments function in actual. This article focuses on the case of a local experimental policy, “pay-as-you-throw,” to show how urban experiments employed by the entrepreneurial municipality are not always a silver bullet, and their effectiveness is conditional. We demonstrate that entrepreneurial local governments’ efforts to enhance urban sustainability were undermined by three combined factors in the government-led approach to urban experiments: the false delegation of experimental discretion, routinized implementation of experiments, and positive selection of pilot sites.

The political economy of electricity market coupling: Comparing experiences from Europe and the United States

Advancing the integration of neighbouring power markets is widely identified in the literature as a key enabler of power system efficiency, flexibility, and variable renewable energy integration. Nonetheless, the existing economic literature offers only partial explanations of why greater market integration is difficult to achieve in the real world despite its evident advantages in terms of overall welfare, supply security, and competitiveness. It is argued that power market coupling is an inherently political process involving significant institutional contestation and adaptation, and hence requires a more nuanced political analysis to be fully understood. This paper adds to the existing literature by conducting a comparative political economy analysis of electricity market coupling processes in Britain, Italy, and California, spanning from 2013 to 2021. It seeks to unpack how differences in the political economy contexts of these jurisdictions influenced the electricity market coupling process with their respective neighbouring systems. The analysis draws on 86 key policy documents, and 53 in-depth interviews with senior power system stakeholders in the three jurisdictions. Results widely align with claims in the political economy literature that market coupling outcomes do not simply reflect the most efficient solution. While all three jurisdictions have shown a commitment to enhance regional integration of short-term wholesale energy markets, there is considerable variation in policy outcomes, particularly the extent to which different segments of the market have been coupled. These differences can largely be attributed to variations in the political economy contexts of the three jurisdictions, including multi-level governance structures, diplomatic relations with neighbouring countries, and interactions with national political priorities and contexts. The main implications for the governance of electricity market coupling are discussed in the conclusion.

The politics of pro-outsider labour market reforms: a configurational study

AbstractOver the past decades, the level of regulation of fixed-term contracts has been in flux. Many reforms deregulating these contracts were followed by a regulatory countertrend, a puzzling finding considering influential theoretical expectations like the ones developed by the dualization and liberalization literatures. This paper draws on the comparative employment relations and comparative political economy literatures to identify the drivers of pro-outsider reforms. Furthermore, it develops an innovative argument claiming that governments may rely on support from a ‘domestic coalition’ including workers in permanent contracts, or they can leverage the European link to support their intention of conducting a pro-outsider reform. Each of these paths relies on the assemblage of distinct pro-reform coalitions of policy actors. To test our argument, the paper uses fsQCA. We compare 38 reforms enacted in 16 European countries between 1985–2019. After the fsQCA analysis, we conduct a qualitative discussion of the different paths.

Measuring Political Institutions in the Long Run: A Latent Variable Analysis of Political Regimes, 1810–2018

In this article, latent variable analysis is used to construct hybrid measure of political development based on the plausible common variation between objective and subjective indicators of political institutions. For a sample of 167 countries for the period 1810–2018, we chart long-term paths of political development. Our empirical strategy attempts to overcome the existing potential bias in the measures of democracy in the long run by extracting the institutional characteristics of political regimes, voter turnout, expert-based assessments and electoral outcomes into two latent indices of political development that can be compared both across space and time. The evidence reveals the remarkable persistence of multiple peaks in the world distribution of political development and uncovers contrasting long-term trajectories across countries traditionally featured in the political economy literature. Our findings add to the current debate about measurement of democratic backsliding.

Interactions between natural resources and false democracy?

A substantial political economy literature argues that it does not support a positive relationship between natural resources and autocracy. This study introduces a theoretical model and empirically estimates the relationship between natural resource endowment, democratic electoral systems, and electoral fraud. Electoral fraud and the introduction of a democratic electoral system have opposite positive and negative implications for democratization. This study examines the possibility that the opposite conditions are going on at the same time. In previous studies, indicators of Polity, a variable of institutional quality, have been used to identify not only the relationship between natural resources and institutions but also the relationship between natural resources and democratization.Our work uses data from around the world since 1800 to examine whether the executive is autocratic but would introduce proportional representation, a more democratic electoral system than the constituency system, to gain international support. It also examines whether a false democracy is compatible with the separation of powers gained by the executive branch respecting the judiciary and the legislature. The results of the analysis show that natural resources can be used to finance the consolidation of dictatorships and promote false democracy. The higher the natural resource endowment, the more money that can be obtained from natural resources can be used by politicians for political funding. Politicians introduce democratic political institutions and acquire political power through electoral fraud. At first glance, this is not a dictatorship but essentially suggests that political authorities are not replaced, giving rise to a more robust dictatorship. These theoretical and empirical analyses show that the degree of respect of the executive branch for the judiciary and legislature, the existence of a system of unconstitutional review, and political regimes such as military regimes and authoritarianism affect electoral fraud and false democracy by analyzing by region, degree of inequality and by income.

Territory, Place, Flow, and Scale: Spatial Analysis in the IPE of Trade

ABSTRACT We assess the presence and use of the geographical concepts of territory, place, flow, and scale in the International Political Economy (IPE) literature on trade. While IPE scholars have arguably responded somewhat to earlier calls to embrace geography, the uptake remains limited. Relatively few articles incorporate such concepts explicitly and tend to ignore critical scholarship on these ideas. After summarizing the theoretical dimensions of territory, place, flow, and scale in geography, we analyze publications in six leading political science/IPE journals from 2010 to 2022 to identify articles related to trade that draw on one or more of these four concepts. Using a mix of quantitative text analysis and close qualitative readings of selected articles, we find that IPE scholars occasionally use territory, flow, and scale explicitly, but more often their use is implicit. In contrast, place is used rarely, only implicitly, but perhaps offers the greatest opportunity to frame new questions in studies of trade. More generally, we conclude that explicit attention to these four concepts and their use in critical geography scholarship, would help to develop richer, more critical IPE approaches.

‘The Economy is Rigged’: Inequality Narratives, Fairness, and Support for Redistribution in Six Countries

Do narratives about the causes of inequality influence support for redistribution? Scholarship suggests that information about levels of inequality does not easily shift redistributive attitudes. We embed information about inequality within a commentary article depicting the economy as being rigged to advantage elites, a common populist narrative of both the left and right. Drawing on the media effects and political economy literature, we expect articles employing narratives that portray inequality as the consequence of systemic unfairness to increase demands for redistribution. We test this proposition via an online survey experiment with 7426 respondents in Australia, France, Germany, Switzerland, the United Kingdom, and the United States. Our narrative treatment significantly increases attitudes favoring redistribution in five of the countries. In the US the treatment has no effect. We consider several reasons for the non-result in the US – highlighting beliefs about government inefficiency – and conclude by discussing general implications of our findings.

The contradictions of unconventional monetary policy as a post-2008 thwarting mechanism: financial dominance, shadow banking, and inequality

The global financial crisis (GFC) of 2008 has triggered profound changes in the macro-financial regulatory architecture. Ever since, the interplay between political, institutional, and macroeconomic developments has received increasing attention in political economy, as in the evolutionary macro-financial approach of institutional super-cycles with its concept of thwarting mechanisms. While these institutional structures aim to stabilise the macro-financial system, they may also contradict each other due to unintended side effects. This paper argues that the understanding of thwarting mechanisms can be enriched by further integrating it with political economy literature on finance within the post-GFC institutional setup. It conceptualises unconventional monetary policy as a novel thwarting mechanism and analyses the contradictory implications for overall macro-financial stability with a particular focus on aggregate demand. It suggests three reasons why this thwarting mechanism failed to restore sustained economic growth in the post-crisis decade: First, sustained large-scale asset purchases perpetuate the structural drivers of financial dominance in political power relations, entrenching the role of the shadow banking system within the macro-financial order and impairing the development of other thwarting mechanisms. Second, unconventional monetary policy maintains the tenets of the inflation targeting regime and thereby sustains neoliberal macroeconomic governance with restrained fiscal policy. Third, it exacerbates preexisting wealth and income inequality by redistributing wealth towards asset owners, undermines consumer demand, and thus contributes to stagnation tendencies. Thus, this paper suggests that the contradictions of this novel post-GFC thwarting mechanism contribute to weaken economic growth and thus fail to restore macro-financial stability.

Polarisation or convergence? How the economy shapes party policy positions

ABSTRACT A well-studied hypothesis in the political economy literature is that economic globalisation leads to the convergence of economic policies because of increasing international constraints. However, little is known about how parties adapt their policy positions during economic crises. This paper investigates parties’ policy shifts in economically harsh times. It highlights the important distinction between long-term trends (e.g., economic integration) and relatively short-term economic fluctuations when studying party competition. During economic downturns parties have an incentive to intensify the debate on economic policies and emphasise their distinct policy positions. In other words, parties strategically position themselves on salient issues. The empirical analysis combines party manifesto data with macro-economic indicators and survey data from 28 European countries between 1980 and 2021. The findings show that party polarisation increases when the economy is in decline, and positions converge during economic recovery. Further analyses explore the mechanism and reveal an indirect effect: parties adjust their policy positions in reaction to changing voter priorities and grievances in times of economic distress. Overall, the article contributes to a larger literature on party competition and political responsiveness by showing that external shocks, such as economic crises, influence the diversity of political offers among established parties.

Adapting to the market: leftist ideological justifications of liberal economic policies, 1977–1986

ABSTRACT Why do leftist forces accept, support and adopt free-market policies? To answer this question, we carry out a comparative study of left-wing groups (both parties and trade unions) in France, Italy and Spain during the late 1970s and the early 1980s. This period is widely acknowledged in international political economy to have represented a paradigm shift from post-war Keynesianism to neoliberal policy-making. We employ in-depth content analysis of memoirs, interviews to the press, opinion articles and policy-papers to explain actors’ positions on landmark policies implemented during such transition. In alignment with a developing literature in political economy (e.g. Mudge 2018), we find a proactive role of progressives in developing the ideological justification for the resort to liberal policies. However, we emphasise that widespread consensus among so-called progressives, rather than a leading role of technocrats or party experts, best explains such shifts. In this way, the paper casts doubts on interpretations of the liberalisation process that place excessive emphasis on the role of external constraints as well as on elite power. Drawing on Hall (1993), we argue that left-wing forces in the early 1980s have enacted a ‘second order change’, whereby policymakers use new instruments to meet existing policy objectives.

The Political Economy of Pandemics’ Influence On Hegemonic Shifts: A Comparison of the Influenza of 1918 and COVID-19

Following the World Health Organization (WHO)'s declaration of ending the public health emergency of international concern (PHEIC) for the COVID-19 pandemic in May 2023, this study seizes the opportune moment to analyze it alongside its historical precedent, the Influenza of 1918, commonly known as the Spanish flu. Amid the ongoing US-China rivalry for global leadership, the COVID-19 pandemic broke out when a century had elapsed since the Influenza of 1918. This analysis aims to test the hegemonic cycles approach of the World Systems Theory and to contribute to the literature of international political economy. The hegemonic cycles approach of the World Systems Theory calls for an analysis of the figures of industrial production, international trade, and finance to judge the changes within the international economy as a hegemonic shift, which occurs at 100-150 years in a circular nature. This study furthermore adds up the figures of GDP per capita to the analysis to provide insight into the level of welfare offered by the ascending hegemons to their citizens vis-à-vis the descending ones. Thus, changes in GDP per capita, industrial production, foreign trade, and finances of the UK vs. the US during the Influenza of 1918, and the US vs. China during COVID-19 provide insights into the political economy of pandemics in terms of their impact on changing hegemonic orders. The findings reveal that both pandemics triggered a period of hegemonic shift that was preeminent on economic terms within the international order.

In search of a growth model for Italy: the failed attempt of an export-led recovery strategy?

We analyse Italy’s growth pattern from 2001 to 2019 using the demand and growth regime categories proposed in the post-Keynesian tradition and recently adopted in the comparative political economy (CPE) literature. We argue that after the Global Financial and Economic Crisis (GFEC), Italy followed an export-led recovery strategy. In this respect, Germany’s growth model emerged as the successful model to follow. In the dominant view, Germany’s economic success since the mid-2000s was attributed to a series of painful but necessary economic reforms. The success of Germany’s export-led mercantilist regime became particularly attractive to Italy given the similar export-oriented manufacturing industry. However, Italy has followed the ‘wrong’ German model based on wage compression and restrictive budget policies while the ‘true’ German model is based on non-price competitiveness factors.

Banks as the new family: the transition from informal to formal borrowing in Turkey

This paper focuses on the impact of social reproduction patterns on borrowing experiences in everyday life, linking two lines of research within feminist and critical International Political Economy (IPE) literature of the everyday, one on social reproduction and debt, and the other on financial subjectivities. Drawing on interviews with women from indebted households in Istanbul, Turkey, it specifically explores how this impact is reflected in the meanings attached to borrowing and the perceptions of what it entails to be a debtor, thereby generating gendered implications. This article reveals that borrowing from family and friends, once seen as an expression of trust and solidarity, is now associated with financial dependence and humiliation, while borrowing from banks is perceived as a means to achieve self-reliance and self-responsibility. However, these meanings contradict women’s self-identifications as debtors, which are framed in moral terms surrounding the structural necessity of incurring credit-debt for social reproduction. This paper contributes to political economy scholarship by addressing how the everyday lives of the indebted are linked to the broader global financial system, mediated by the specific conditions of a Global South context (Turkey) characterized by subordinate financialization, the political use of credit expansion, and a neoliberal/conservative gender regime.

Economic nationalists, regional investment aid, and the stability of FDI-led growth in East Central Europe

ABSTRACT Although economic nationalist governments in East Central Europe (ECE) have strongly challenged FDI-dependence, FDI-led growth has remained stable across the region. The political economy literature explains this puzzle with enduring business-state elite interactions and the disciplining role of the EU. Instead, we show that the EU’s regional investment aid rules, which provide central governments in relatively backward member states with considerable policy space, serve as the main policy tool for reinforcing FDI-dependence. Using a unique dataset on regional investment aid granted between 2004 and 2022 in the Visegrád countries (V4), we show that each government, regardless of its ideological background, granted the vast majority of this type of aid to foreign firms. In addition, contrary to their political rhetoric, economic nationalist governments in Hungary and Poland outperformed their non-nationalist counterparts in granting aid to foreign firms. This suggests an instrumental use of this transnationally rooted policy opportunity: as their European political isolation grew, economic nationalists increasingly resorted to the promotion of foreign firms because the continued inflow of foreign capital has a legitimising effect both at home and abroad.