What is rational choice?
Choice made on the basis of deliberate, systematic calculation of the maximum extent to which the ends can be met by using the inevitably scarce means.
Chang
What is ‘the economy’?
It involves money, work, technology, international trade, taxes, and other aspects related to the production, distribution, and consumption of goods and services.
Chang
What is consumption?
How people allocate money between different goods and services.
Chang
What is production?
How goods and services are made.
Chang
Who are economic actors?
Those who engage in economic activities, such as government, households, firms, banks, cooperatives, labor unions, and employer associations.
Chang
What is an economic institution?
Rules regarding how production and other economic activities are organised.
Chang
What is profit?
The difference between what you earn by selling something in the market (revenue) and the costs of the inputs required to produce that thing.
Chang
What is the division of labor?
Refers to the division of production into smaller, specialized parts, which increases productivity.
Chang on Smith
What is political economy?
More concerned with the relationships of the economic system and its institutions with the rest of society and social development, sensitive to non-economic factors.
more concerned [than mainstream economics] with the relationships of the economic system and its institutions with the rest of society and social development. It is sensitive to the influence of non-economic factors such as political and social institutions, morality and ideology in determining economic events. It thus has a much broader focus than [mainstream] economics
Sackery
What is the political economy challenge to mainstream economics?
Economic models that are narrowly conceived, quantitative, expressed in complicated mathematical terms, and depend on restrictive assumptions about human behavior.
Sackery
What are the shortcomings of mainstream economics?
i. Fails to explain and predict actual events. ii. Restrictive assumption of ‘economic man’. iii. Lack of historical context. iv. Presumes separation of economics and political power.
Sackery
What is behavioural economics?
The study of psychology as it relates to economic decision-making processes, showing that individuals often make irrational decisions.
What are the tenets of the political economy approach?
i) We believe that human nature is pliable and conditional, rather than fixed
ii) We make explicit value judgments about the way we think the world ought to be and do not pretend to be purely objective scientists
iii) A central basis of our analysis is empirical and historical (and thus inconclusive), rather than theoretical models typically aimed at being conclusive
iv) We use data and economic models when appropriate, but we pay close attention to the assumptions involved and the limitations of such data and models → Sackery
Sackery
What is the resource curse?
afflicts many countries that derive a large portion of their national income from exporting high-value extractive resources such as oil, natural gas and diamonds
These countries, which tend to be less developed, are subject to three overlapping “curses”
They are:
i. more prone to authoritarian governments
ii. are at a higher risk of civil conflict (wars and coups)
iii. exhibit lower rates of economic growth, because they are more vulnerable to resource-dependent shocks, adverse exchange rate effects and corruption → Wenar
Wenar
What are exports?
Goods and services manufactured or provided by businesses in one country and sold or traded in another.
Wenar
What is authoritarian rule?
Any form of non-democratic rule where rulers limit mass political participation to maintain control.
Wenar
What is a (property or resource) right?
Entitlements to perform certain actions or to be in certain states, with three main types: legal, moral, and customary.
Resource right: The right to legitimately sell off the resources of a territory.
What is an economic shock?
An unanticipated event that creates a sudden and significant impact on an economy.
Wenar
What is a Clean Hands trust?
When an asset (like cash, property or a security) is held in trust, it is managed by a trustee for the benefit of designated individuals
Wenar argues that the mechanism will generate strong incentives for a variety of domestic economic interests to support the property-based approach. He thinks the trust will also give the people of these low income countries an additional incentive to replace their authoritarian
What is a tariff?
A tax imposed by one country on the goods and services imported from another country.
Wenar
