Political economy of public policy


Technical specialists (researchers, development workers, even policy advisors) often get frustrated that policies that are actually adopted and/or implemented deviate far from their technical recommendations.

In economics, this is often referred to as ‘state failure’: the state does not do what economists would like it to do to promote market development and efficiency, what those concerned with poverty would like it to do to reduce poverty, or what those concerned with the environment would like it to do to protect environmental resources. Glaring inequality may be reproduced for generations. Whilst there are technical dimensions to ‘state failure’, including imperfect information, there are clearly also other factors at play. It is rarely straightforward to talk about an undisputed ‘public interest’ that the state should be pursuing and indeed it can be quite misleading to talk about ‘the state’ as if it were a single, monolithic entity. Instead, multiple actors with competing or conflicting interests seek to influence the actions of a variety of state agencies to protect or further their own ends. The relative power of these groups is then important in determining outcomes.

This module explores the interactions between politics and policy, seeking to understand actual policies as the outcome of interaction between rational politicians and the people and groups who help them acquire and retain power. Moreover, policy-making both faces economic constraints and generates economic outcomes that affect future distributions of power within society. Thus, political economy explores the two-way interaction between economics and politics.

This module is aimed at policy-makers, policy analysts, advocates and practitioners – from academia, government departments, international development agencies, NGOs, private business or other civil society groups – who are involved in the design of policy to promote development, to combat poverty or to protect the environment. The module draws on theory from both developed and developing countries, but the application is more to the latter. In common with some other CeDEP modules, there is also an emphasis on policies affecting rural space. However, more general lessons can be drawn from the module.

As a result of studying this course, students will be equipped to understand how political processes and forces influence policy-making and to assess what needs to change if policy is more effectively to promote rural development, poverty reduction or environmental protection in the area where they work.

Topics covered

  • Part I Theoretical Foundations
  • The State, Policy-Making and Political Economy
  • Exclusive versus Inclusive Institutions
  • Democratic Political Systems and their Rules
  • Policy Processes
  • Part II Political Economy of Development
  • State Capacity
  • Inequality Dynamics
  • Developmental States?
  • Democratisation
  • Minerals and Aid
  • Part III International Political Economy
  • Policy-Making at the International Level

Learning outcomes

By completing this module, you will be able to:

  • Apply the concept of rents to the analysis of state organisations, policy and performance
  • Explain how political and economic power interact to create and perpetuate inequality, and what might be done to challenge it
  • Assess the potential for competitive electoral politics to encourage more pro-poor policy-making in countries where the majority of the electorate is poor, and to identify interventions that could reinforce this
  • Examine the influence of bureaucracies and interest groups over policy in practice, in the light of alternative theoretical models and experience in different parts of the world
  • Describe the impacts of mineral resources and aid flows on governance and policy-making
  • Explain and critically interpret how domestic political and economic considerations and power shape the outcomes of international negotiations.


  • a 500-word commentary and critical discussion on a key reading, and assessment of the commentaries of two other students (10%)
  • a 3000-word examined assignment (EA), with an element of online interaction and discussion, worth 40%
  • a two-hour written examination worth 50%.

Essential reading

  • Acemoglu, D. & Robinson, A. (2013) Why Nations Fail: The Origins of Power, Prosperity and Poverty. London, Profile Books.
  • Khan, M. & Jomo, K. (2000) Rents, Rent-Seeking and Economic Development: Theory and Evidence in Asia. Cambridge, UK, Cambridge University Press.