Political Economy

The practice of manipulating public policy or economic conditions to increase profits without creating new wealth. Actors expend resources to gain special privileges, subsidies, or monopoly rights from government rather than engaging in productive economic activity.

A framework analyzing how institutions, defined as the formal rules (laws, constitutions) and informal constraints (norms, customs) of a society, shape economic behavior and determine long-run economic performance.

The application of economic methods, particularly rational choice and game theory, to the study of political behavior. It treats politicians, bureaucrats, and voters as self-interested actors and analyzes how their incentives shape policy outcomes.

A situation in which individuals would benefit from cooperating but face incentives to free-ride on others' efforts, leading to outcomes that are suboptimal for the group as a whole. This concept is central to understanding why public goods are underprovided and political mobilization is difficult.

The principle that nations benefit from specializing in the production of goods for which they have the lowest opportunity cost, and the political dynamics that determine whether governments adopt free trade or protectionist policies.

The theory that incumbent politicians manipulate fiscal and monetary policy to create favorable economic conditions before elections, such as boosting spending or lowering interest rates, leading to cyclical patterns in economic performance tied to electoral timing.

A framework distinguishing between liberal market economies (like the United States and United Kingdom) that rely on market mechanisms for coordination, and coordinated market economies (like Germany and Japan) that depend on strategic interaction among firms, banks, and labor unions.

A distinction drawn by Acemoglu and Robinson between institutions designed to concentrate power and wealth in the hands of a narrow elite (extractive) and those that distribute political power broadly and protect property rights for all citizens (inclusive).

The theory in international political economy that the global economic order is most stable when a single dominant power (hegemon) provides public goods such as open trade, a reserve currency, and security, and that the decline of hegemony leads to economic instability.

The paradox that countries rich in natural resources, particularly oil and minerals, often experience slower economic growth, weaker democratic institutions, and higher levels of corruption than resource-poor countries, due to the political dynamics that resource wealth creates.