Political Economy

Initially applied to refer to the discipline of economics, political economy is a branch of social science. The focus of this discipline is on the interrelationships between political and economic institutions and how the processes of one affect the other.

Political economy has two prominent facets, which are as follows:

• Analysis and explanation of the diverse ways in which laws and policies implemented by different governmental setups affect the apportioning of limited resources in society
• Effects of the economic system and behaviour of people influenced by their personal economic interests on the existent form of government and laws and policies formulated by the same.

Also known as a radical political economy, the discipline of the political economy offers alternative theories to neoclassical economics.

Principles Of A Political Economy

The principles of political economy underwent massive changes during the days of John Locke, Adam Smith and Karl Marx who adhered to the concept of the “Labor theory of value”.

Global Political Economy

Global political economy or international political economy is an interdisciplinary field concerned with global trade and finance and monetary and fiscal policies of different countries’ affecting global trade and output.

Absolute Advantage

Absolute advantage is referred to as the ability of any factor of production to produce any commodity or service with a relatively smaller input of resources. The theory of trade is an essential part of political economy and in analyzing this theory reference to absolute advantage is necessary.

Comparative Advantage

Comparative advantage is referred to as the ability of any economic factor to produce any particular good or service at a lower cost. It’s a comparison between two goods with respect to the ability of these goods to produce any commodity at the lowest opportunity cost.

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