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POLI 214
Introduction to Comparative
Politics
Session 6 CRITERIA FOR COMPARING POLITICAL–
ECONOMIC SYSTEMS
Lecturer: Dr. Maame Adwoa A. Gyekye-Jandoh
Contact Information: [email protected]
College of Education
School of Continuing and Distance Education
2014/2015 – 2016/2017
Session Overview
– Overview
This session discusses the two major instruments
(GDP and GINI Index) commonly used by economists
in comparing political-economic systems. You will also
be taken through the United Nations Human
Development Index (HDI) as an instrument of
measuring the economic wellbeing of citizens. Your
knowledge of the GDP and Gini Index will be useful for
understanding the HDI. Finally, the session will discuss
the future of political economy. You will enjoy
learning about the historical background and potential
future of political economy.
Slide 2
Session Outline
The key topics to be covered in this session are as
follows:
• Topic One: Criteria for Comparing PoliticalEconomic Systems
• Topic Two: The United Nations Human
Development Index
• Topic Three: The Future of Political Economy
Slide 3
Reading List
• Chapter 4 of Recommended Text – Essentials of
Comparative Politics (2007) by Patrick H. O’Neil.
• United Nations Human Development Report.
undp.hdr.org
• World Bank, World Development Report, 2005-2016.
www.worldbank.org
• World Bank Poverty Net Website,
www.worldbank.org/poverty/
Slide 4
Topic One
CRITERIA FOR COMPARING
POLITICAL-ECONOMIC SYSTEMS
Slide 5
Gross Domestic Product (GDP)
• Gross Domestic Product is one of the tools that
economists use to measure economic
development of a country. The GDP is defined as
the total market value of all goods and services
within a country over a period of one year.
• The GDP is the figure that governments use to
calculate the average per capita income of citizens
and to determine whether the economy is doing
well or not.
Slide 6
Gross Domestic Product (GDP) contd.
• A country’s GDP does not truly give a correct picture
of how the economy is doing. It sometimes misleads
government into believing that the country is doing
well. It is agreed by economists that a GDP which is
calculated on the basis of a country’s purchasing
power parity (PPP) is better for analysis than a GDP
using raw data.
• The PPP is an estimate of the buying power of
income in each country. It is safe to conclude that the
GDP of a country is not a reflection of the overall well
being or happiness of the citizens.
Slide 7
Gini Index
• The Gini Index is another tool used to measure economic
development. Unlike the GDP which does not tell us how
the country’s wealth is distributed among the citizens,
the Gini Index is a mathematical formula that measures
the amount of economic inequality in a society.
• A Gini Index of zero means there is perfect equality in the
society while a Gini Index of 100 means there is perfect
inequality in the society. Thus the greater the Gini Index,
the greater the inequality within a given economy. Social
democracies and some mercantilist countries have lower
Gini Indexes, while liberal economies such as USA, have
higher Gini Indexes.
Slide 8
Measuring Economic Development
• The GDP and the Gini Index are both instruments to
measure economic development. Governments use
the GDP to determine whether the economy is doing
well or not. On the other hand, the Gini index
actually assists governments to be able to measure
the income distribution of citizens, thereby,
determining the level of inequality.
Slide 9
Topic Two
UNITED NATIONS HUMAN
DEVELOPMENT INDEX (HDI)
Slide 10
Human Development Index (HDI)
• •The HDI is an instrument developed by the UN to provide
a basis for countries to make a sense of how they are
doing in the area of poverty and inequality. It goes
beyond just looking at the total wealth of a country
(GDP) or how the wealth is distributed (GI), but
concentrates on the economic and social well being of
the citizen.
• It takes into consideration factors such as adult literacy
rate, life expectancy, school enrolment, as well as the
GDP. The HDI is by far considered the best instrument
available for measuring standard of living. It has been
established over the years by the HDI that there is a
strong correlation between standard of living and a
country’s GDP.
Slide 11
Comparing Wealth and Property
GDP Per Capital (USD)
Sweden
Canada
United States
Japan
United Kingdom
France
Germany
South Korea
Mexico
Russia
Brazil
China
Iran
South Africa
India
Nigeria
Source: O’Neil, Patrick. (2007). Essentials of
Comparative Politics.
HDI Rank
29,544
33,103
42,075
29,164
28,876
28,145
29,204
19,515
9,726
10,300
8,594
5,791
7,630
10,585
3,018
959
2
4
8
9
12
16
19
28
53
57
72
94
101
119
127
151
Slide 12
In Summary
• Economists have contested various criteria used in
measuring economic growth and development. The
UN Human Development Index (HDI) has been
generally accepted to be the best criteria in
measuring economic growth. The HDI takes into
consideration variables that other instruments do
not consider in measuring economic growth. It is a
standard instrument universally adopted by
countries in measuring standard of living.
Slide 13
Questions to Consider
• Questions to consider:
• Distinguish between the Gross Domestic Product
(GDP) and the Gini Index as instruments of
measuring economic development.
• Explain the concept of Political Economy. Critically
analyze the importance of the Human Development
Index to the political economy of countries.
Slide 14
Topic Three
THE FUTURE OF POLITICAL
ECONOMY
Slide 15
Historical Background
• The world has witnessed the predominance of one model
of political economy or the other over the years.
Mercantilism was the dominant model in the period before
the nineteenth century. The nineteenth century and early
twentieth century saw the spread of liberalism as the
favourite political economic system across Europe and
North Africa.
• However, the twentieth century saw the emergence of
communism and fascism as a strong alternative to
liberalism. This was as a result of strong performance from
countries such as Germany, Japan and the Soviet Union.
Slide 16
Historical Background (contd).
• The resurgence of communism and mercantilism
ended by the end of the Cold War. It is evident today
that the twenty first century is the century of
liberalism. Private property and free market systems
have spread across the world.
Slide 17
The Future of Economic Liberalism
• The world economies have come to accept, at least
for now, that a political economic system based on
private property, free markets and individual
freedom is better than one based on state control
and collective equality and security. More countries
than ever in the history of the world have moved
steadily towards greater economic liberalism.
Slide 18
The Future of Economic Liberalism
• Economic liberalism has grown dramatically around
the world in the last three decades. However, it will
be wrong for anyone to think that economic
liberalism will forever rule the world as the dominant
political economic system.
• Just as liberalism came close to extinction with the
rise in popularity of communism and fascism, it is
possible that in the future some other political
economic models or the defunct models could reemerge and trump economic liberalism as the
dominant model.
Slide 19
In Summary
• The world economy has gone through various
transformations since the nineteenth century. Economic
liberalism gave way briefly to a strong preference for
communism and mercantilism after the Second World
War. However, this was short-lived as market based
economies spread across the world in the latter part of
the twentieth century. It is now becoming clear that
economic liberalism is the future of global political
economy. The possibility of any other economic model
overtaking economic liberalism as the dominant
economic model in the world may be very slim.
Slide 20
Conclusion of Session 6
• In this session, you have been introduced to the GDP and
Gini Index, two criteria for comparing political-economic
systems in the world.
• You have also learned about the UN HDI used to measure
the well-being and standard of living of people globally.
• You have also been given the prospects of the liberal
economic model as the future of global economic
system.
• The next session, Session 7, will examine
Authoritarianism and Totalitarian Rule, as well as Sources
and Features of Non-Democratic Rule.
Slide 21
References
• Chapter 4 of Recommended Text – Essentials of
Comparative Politics (2007) by Patrick H. O’Neil.
• United Nations Human Development Report.
undp.hdr.org
• World Bank, World Development Report, 20052016. www.worldbank.org
• World Bank Poverty Net Website,
www.worldbank.org/poverty/
Slide 22