Why are some countries rich while others are poor? Why do some countries grow faster than others? These are the key questions that have defined the field of Political Economy.

One of the more generally accepted answers to those questions relates the varying degrees to which a country has “good” institutions to its economic performance. The assessment of the quality of the formal and informal rules respected by most individuals in a society depends on whether they create the best possible incentives for the majority of them to work more and more efficiently. The better the individual motivations to prosper, the reasoning goes, the better it tends to be the aggregate result in terms of a country’s macroeconomic and social indicators – GNP growth, GNP per capita, HDI, general happiness and so on – even if, in the end, some people are better off than the rest.

But why are some countries capable of undergoing structural reforms while others seem stuck with outdated institutions generally seen as causes for their economic decay?

In order to answer such questions, this course will bring to the attention of political science, sociology, economics, and history students the complex nature of economic reforms processes – with a special reference to the case of Latin American countries in the 1980-2000 period.

Students will be asked to consider market reforms as open-ended political processes, meaning that they are not clear-cut agendas or programs that political actors either accept or reject in their whole, or which, once ignited, those actors are able to control, stir, reverse, or stop as they want. Reforms target the existing rules, under which individuals and groups cooperate – i.e., organize and share the results of production and exchange. As such, they entail simultaneous promises and threats to different social, political and economic groups, inside and outside the country, including the government itself.

1. Describe and discuss key issues and major country case studies dealing with the political economy of economic reform, with a special emphasis on Latin American countries;
2. Define and analyse the economic nature of current account crises and the challenges for a politically neutral understanding of the options available to governments when responding to them;
3. Recognize, discuss and analyse the political constraints faced by governments when choosing stabilization and structural adjustment measures;
4. Identify how the structural propensities of concurring developmental models to cause structural current account crises and how they prompt specific government responses;
5. Design and produce a research project on an issue related to the core course material using a regional or a country as a case study

1. A 2,000 word essay assignment (40%); Learning outcome 1, 3, 5
2. Two 500 word ‘briefing memoranda’ on the course content (2x15% = 30%) Learning outcome 1, 2, 4
3. A 2,000 word Final Assessment (30%) Learning outcomes 1, 2, 3, 4

Students will be expected to spend ten hours per week working on course materials. 

Prerequisites: at least one of POLS1002 or POLS1005 or POLS1006 or POLS1007

Basic knowledge and familiarity with core concepts in economics equivalent to year 12 level.

Caves, Frankel & Jones, World Trade and Payments – an introduction

Dornbusch & Helmers, The Open Economy – tools for policymakers in developing countries

Haggard & Kauffman (Eds.), The Politics of Economic Adjustment

Nelson (Ed.), Economic Crisis and Policy Choices – the politics of Adjustment in the third world

Reinhart & Rogoff, This Time Is Different:�?�Eight Centuries of Financial Folly

Roubini & Mihm, Crisis Economics: A Crash Course in the Future of Finance

Access to a computer and the internet.