Political Economy II:
Core Topics and Methods in Political Economy
Mandatory elective course
Winter semester, 2015-2016 academic year
4 credits – 8 ECTS
Instructor:
Dr. Borbála Kovács
kovacsb@ceu.edu
Office: FT906
Office hours:
By appointment
Mondays, 15.30-17.30
Tuesdays, 11.00-12.30
Thursdays, 15.30-17.30
Class: Tuesdays, 13.30-15.10
Thursdays, 13.30-15.10
Classroom: FT908
Course webpage: http://courses.ceu.edu/courses/political-economy-ii-core-topics-andmethods-political-economy
Course description
This course introduces political economy as a particular approach to the study of politics and
explores foundational theoretical concepts, explanatory traditions and methodological
approaches common in political economy. As a continuation to the introductory political
economy course in the fall semester (Political Economy I), the discussions in this course
engage with generic, macro-level questions about the relationship between political and
economic institutions, that between economic development and authoritarian government
as well as the economic foundations of democratic and authoritarian governance. At the
same time, the course incorporates discussions about key theoretical approaches central to
explaining political behaviour and institutional change in political economy, especially
rational choice theory, game theory and historical institutionalism. The course asks the
following and other questions: What is the ‘stuff’ of political economy? What key concepts
and conceptual assumptions does political economy as an approach in political science
research rely on? What competing explanations are there for the development and
consolidation of democracy and of authoritarian rule? What theoretical frameworks are
common in political economic research and what are they for?
The course is structured into three main parts:
 The ‘stuff’ of political economy, focusing on what political economy as an approach
to the study of politics is and on the types of questions political economist usually
ask;


Key themes of political economy, bringing together political economic studies about
the origins of democracy, the origins and endurance of autocratic rule and the
political basis of economic growth across the world among others.
The conceptual frameworks of political economy, honing in on rational choice and
especially game theory and, not least, on historical institutionalism.
Most weeks bring into focus one topic. Most topics comprise two related discussions, one
usually focusing on key concepts and the theorisation of behaviour or institutional change
and the other on the methods and data underpinning conceptual discussions and theory
building.
Learning outcomes
The organisation of classes is aimed to help students develop a good understanding of the
subject matter, with a focus on concepts, theoretical and methodological approaches to
explaining causal relationships as well as their analytical relevance and value. In addition,
however, classroom activities are aimed to help students develop a range of:
 transferable skills: especially making conference-type presentations; developing
effective visual presentation tools, e.g. handouts; presenting scholarly work by
others; peer listening; oral participation in large group settings; articulating informed
judgements in a concise manner;
 study skills: especially note taking, summarising (orally and in written form), critical
reading comprehension, metacomprehension; constructive feedback and team work;
defining one’s own learning needs, planning progress and incorporating constructive
feedback received; manage a semester-long project in a successful way;
 critical thinking skills: especially deductive reasoning; hypothesising; critical
listening; structured argumentation; the application of newly acquired knowledge to
discussions on related issues.
Class structure
Most meetings consists of a 15-minute instructor- or student-led presentation and/or
discussant’s presentation of a key reading, followed by a structured discussion of key
concepts; key arguments; key theoretical and methodological approaches; puzzles &
questions; the relevance of the subject matter.
Meetings with a different structure will be announced in due course.
Structured discussions follow the results of reading key readings using the I.N.S.E.R.T.
technique (Estes and Vaughn, 1986). As such, discussions will focus on what students
already knew when reading the text; what they knew differently; what they did not know;
and the issues they want to find out more about.

–
+
?
indicates a passage that confirms what students thought was true;
indicates a passage that disconfirms something students thought was true;
indicates a passage that contains important information students had not anticipated;
marks a passage containing something students want to know more about.
Estes, T. H. and Vaughn, J. L. (1986) Reading and Reasoning beyond the Primary Grades, Boston,
MA: Allyn & Bacon.
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Class requirements and assessment
Students are expected to attend meetings regularly, to participate in class discussions and
submit independent work according to assignment descriptions. Furthermore, students will
have to (1) present a key reading and, depending on class size, (2) act as discussant. Students
will also submit a final assignment.
Students’ final grade will consist of the following assignments:
1. class participation in structured discussions and in-class group activities during
minimum 75% (i.e. 18) sessions – 30% of the final grade;
2. acting as presenter with mandatory handouts uploaded to e-learning 24 hours before
class, in .docx format – 30% of the final grade;
3. final assignment – 40% of the final grade:
 a written exam drawing on the studied subject matter (details TBA)
OR
 the making of a conference style presentation based on an original
piece of research in line with the topics and themes of the course
(details TBA)
OR
 the preparation of three argumentative essays (2,500 words each)
based on readings from section II of the coursework (including
additional readings).
Nota bene: You may not present a text and also write an
argumentative essay in connection to it.
Note on Citing and Referencing
You will be expected to use Harvard style referencing. Please find an extensive citation and
referencing guide on this course’s e-learning page: See http://ceulearning.ceu.edu/
Key texts of the course
Acemoglu, D. and Robinson, J. A. (2005) Economic Origins of Dictatorship and Democracy,
Cambridge: Cambridge University Press.
Mahoney, J. and Thelen, K. (eds.) Explaining Institutional Change: Ambiguity, Agency, and
Power, Cambridge: Cambridge University Press.
Williams, M. (ed.) The End of the Developmental State?, London: Routledge
Wittman, D. A. and Weingast, B. R. (eds.) The Oxford Handbook of Political Economy, Oxford:
Oxford University Press.
****************************************************************
Penalties: in case of late submissions of independent work and plagiarism.
Departmental rules on plagiarism apply.
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I. INTRODUCTION: KEY CONCEPTS & QUESTIONS OF POLITICAL
ECONOMY
Session 1. What do we know about political economy?
This session introduces the course, its requirements and its resources. The session then goes
on to chart what students know about topics and methodological approaches common in
political economy.
No readings assigned.
Session 2. Introducing key concepts: Institutions
This introductory discussion introduces some of the key concepts of political economy,
namely institutions and self-interested (political) actors.
Key reading:
North, D. C. (2002) Institutions, Institutional Change, and Economic Performance, Cambridge:
Cambridge University Press. Specifically Chapter I.
Session 3. Introducing key conceptual frameworks: three institutionalisms
Building on the previous discussion, this session hones in on three different approaches to
thinking about and analysing institutional continuity and change, i.e. three competing
theoretical traditions in political economy.
Key reading:
Hall, P. A. (2010) ‘Historical Institutionalism in Rationalist and Sociological Perspective’, in
Mahoney, J. and Thelen, K. (eds.) Explaining Institutional Change: Ambiguity, Agency, and
Power, Cambridge: Cambridge University Press, pp. 204-223.
Additional reading:
Hall, P. A. and Taylor, R. C. R. (1996) ‘Political Science and the Three New Institutionalisms’,
Political Studies, XLIV: 936-957.
Session 4. The scope of political economy
Building on discussions of the range of concepts that political economists frequently rely on,
this session brings into focus a variety of generic research questions that political economists
frequently ask.
Key reading:
Weingast, B. R. and Wittman, D. A. (2009) ‘The Reach of Political Economy’, in Wittman, D.
A. and Weingast, B. R. (eds.) The Oxford Handbook of Political Economy, Oxford: Oxford
University Press.
Additional readings:
Alt, J. E. and Alesina, A. (1996) ‘Political Economy: An Overview’, in Goodin, R. E. and
Klingemann, H. D. (eds.) A New Handbook of Political Science, Oxford: Oxford University
Press.
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Levi, M. (2000) ‘The Economic Turn in Comparative Politics’, Comparative Political Studies,
33(6-7): 822-844.
Session 5. International political economy
Building on the distinctions articulated in week 1, this discussion focuses on a particular
branch of political economy: international political economy and its scope.
Key reading:
Lake, D. A. (2009) ‘International Political Economy’, in Wittman, D. A. and Weingast, B. R.
(eds.) The Oxford Handbook of Political Economy, Oxford: Oxford University Press.
Additional reading:
Underhill, G. (2000) ‘State, Market, and Global Political Economy: Genealogy of an (Inter-?)
Discipline’, International Affairs, 76(4): 805-824.
Session 6. Institutions in international political economy
This session focuses on a key reading in (international) political economy, namely
Katzenstein’s seminal work on small states in the context of a global (and further globalising)
world economy.
Key reading:
Katzenstein, P. J. (1985) Small States in World Markets: Industrial Policy in Europe. Ithaca,
NY: Cornell University Press. Specifically pp. 39-70.
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II. CENTRAL ISSUES IN POLITICAL ECONOMY
The following four topics cover key concerns of political economists: the origins and
endurance of authoritarian regimes, theories of democratisation, the relationship between
type of governance and redistribution and the puzzling question of uneven economic
development around the world.
1. THE POLITICAL ECONOMY OF AUTHORITARIAN GOVERNANCE AND ITS
DURABILITY
Session 7. A rational choice argument for government
This session engages with simple conceptual models to explain the emergence of modern
government and the endurance of authoritarian governance. It foregrounds more refined
political economic theories of autocratic rule and authoritarian regimes’ endurance.
Key reading:
Bates, R. H. (2009) ‘The Role of the State in Development’, in Wittman, D. A. and Weingast,
B. R. (eds.) The Oxford Handbook of Political Economy, Oxford: Oxford University Press.
Session 8. Dictators as rational actors
Building on the previous discussion, this session presents a more sophisticated explanation
for how autocratic rulers come to power and the conditions for their staying in power for
long periods of time.
Key reading:
Haber, S. (2009) ‘Authoritarian Government’, in Wittman, D. A. and Weingast, B. R. (eds.)
The Oxford Handbook of Political Economy, Oxford: Oxford University Press.
Additional reading:
Slater, D. (2010) ‘Altering Authoritarianism: Institutional Complexity and Autocratic Agency
in Indonesia’, in Mahoney, J. and Thelen, K. (eds.) Explaining Institutional Change: Ambiguity,
Agency, and Power, Cambridge: Cambridge University Press, pp. 132-167.
Session 9. Dictators, launching organsiations and selectorates: a refined theory of
authoritarian rule
Reflecting on the previous week’s increasingly more refined models of autocratic rule and
durability, this session presents perhaps the most sophisticated theory of autocratic rulers’
political survival.
Key readings:
Bueno de Mesquita, B., Smith, A., Siverson, R., & Morrow, J. (2003) The logic of political
survival. Cambridge, MA: MIT Press. Specifically Chapters 2 & 3.
Additional reading:
Bueno de Mesquita, B. and Smith, A. (2009) ‘Political Survival and Endogenous Institutional
Change’, Comparative Political Studies, 42(2): 167-197.
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2. THE POLITICAL ECONOMY OF DEMOCRATISATION
Session 10. The role of the state in theories of democratisation
The focus of this session is a discussion about ‘the state’ as a key theoretical concept in the
study of democratisation and theories of democratisation.
Key reading:
Fortin, J. (2012) ‘Is There a Necessary Condition for Democracy? The Role of State Capacity in
Postcommunist Countries’, Comparative Political Studies, 45(7): 903-930.
Session 11. The emergence of democratic institutions in Europe
This discussion centres on a particular political economic theory of democratisation.
Key reading:
Acemoglu, D. and Robinson, J. A. (2005) Economic Origins of Dictatorship and Democracy,
Cambridge: Cambridge University Press. Specifically pp. 15-46 (Chapter 2. Our Argument)
Additional reading:
Acemoglu, D., Johnson, S. and Robinson, J. (2005) ‘6. Institutions as the fundamental cause
of long-run growth’, in Aghion, P. and Durlauf, S. N. (eds.) Handbook of Economic Growth,
Amsterdam: North-Holland / Elsevier. Specifically pp. 439-462. [also available online
through CEU Library’s e-books collection]
Session 12. The use of history and historical analysis in political theory
Theories of democracy have often drawn on historical examples to articulate and illustrate
causation for the purpose of theory building. However, reliance on historical examples has
its pitfalls. This discussion focuses on the (mis)use of historical examples in building theories
of democracy.
Key reading:
Capoccia, G. and Ziblatt, D. (2010) ‘The Historical Turn in Democratization Studies: A New
Research Agenda for Europe and Beyond’, Comparative Political Studies, 43(8-9): 931-968.
Additional reading:
Mares, I. (2015) From Open Secrets to Secret Ballots: Democratic Electoral Reforms and Voter
Autonomy, New York: Cambridge University Press. Especially Chapter 10: ‘From Macro- to
Micro-Historical Analysis in Comparative Research’, pp. 231-242.
3. GOVERNANCE AND REDISTRIBUTION
Acemoglu et al. (2005: 446) have argued that “economic institutions are chosen for their
distributional consequences. Which specific economic institutions emerge depends on who
is able to get their way – who has political power.” The implication of this statement is that
democracies, where a majority govern, will be more redistributive that non-democracies,
where a minority govern. This week’s discussions engage with literature that tests this
assumption and proposes some political economic explanations for why this assumption
might be valid or, indeed, not.
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Session 13. A political economic model of redistribution under different political regimes
The session engages with explanations about (1) why democracies and non-democracies will
(re)distribute collective resources differently; (2) why non-democratic regimes also engage
in redistribution, although with different outcomes. This session also draws on previous
discussions about theories of autocratic rule and theories of democracy.
Key reading:
Mares, I. and Carnes, M. E. (2009) ‘Social Policy in Developing Countries’, Annual Review of
Political Science, 12(1): 93-113.
Additional reading:
Mulligan, C. B., Gil, R. and Sala-i-Martin, X. (2004) ‘Do democracies have different public
policies than nondemocracies?’, Journal of Economic Perspectives, 18(1): 51-74.
Session 14. The politics of redistribution in democracies: reviewing the literature
This session engages with empirical literature focusing on redstribution in democratic
nations over recent decades.
Key reading:
Iversen, T. (2009) ‘Capitalism and Democracy’, in Wittman, D. A. and Weingast, B. R. (eds.)
The Oxford Handbook of Political Economy, Oxford: Oxford University Press.
Additional reading:
Hall, P. A. and Soskice, D. (2001) ‘An Introduction to Varieties of Capitalism’, in Hall, P. A. and
Soskice, D. (eds.) Varieties of Capitalism: The Institutional Foundations of Competitive
Advantage, Oxford: Oxford University Press, pp. 1-68.
4. UNEVEN GROWTH AND WEALTH AROUND THE WORLD
Session 15. Uneven economic development: an endogenous model
Why is it that some countries are wealthier than others? The focus of this session is
economist Daron Acemoglu and colleagues’ influential institutionalist explanation about
cross-national variations in levels of economic development.
Key reading:
Acemoglu, D., Johnson, S. and Robinson, J. (2005) ‘6. Institutions as the fundamental cause
of long-run growth’, in Aghion, P. and Durlauf, S. N. (eds.) Handbook of Economic Growth,
Amsterdam: North-Holland / Elsevier. Specifically pp. 396-427 [also available online through
CEU Library’s e-books collection]
Additional reading:
Acemoglu, D. and Robinson, J. A. (2012) Why Nations Fail: The Origins of Power, Prosperity
and Poverty, New York: Crown Publishers. Especially Chapter 2.
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Session 16. Uneven economic development: the developmental state perspective
The question remains: why is it that some countries are wealthier than others? By drawing
on arguments from the developmental state literature, this session engages with the role of
state structure and state-society relations in explaining growth. It discusses 20th century
developmental state conceptualizations.
Key readings:
Chibber, V. (2014), ‘The Developmental State in Retrospect and Prospect: Lessons from India
and South Korea’, in Williams, M. (ed.) The End of the Developmental State?, London:
Routledge, pp. 30-54.
Additional reading:
Evans, P. (2014) ‘The Developmental State: Divergent Responses to Modern Economic
Theory and the Twenty-First-Century Economy’, in Williams, M. (ed.) The End of the
Developmental State?, London: Routledge.
Session 17. Uneven economic development: an international political economic
perspective
This final session about uneven economic development, by drawing on previous discussions
in international political economy (week 2), engages with the role of trade openness and
poverty alleviation through global economic integration in explaining growth.
Key reading:
Sala-i-Martin, X. (2007) ‘Economic Integration, Growth and Poverty’, Inter-American
development Bank, Integration and Trade Sector. Available online
<http://www10.iadb.org/intal/intalcdi/PE/2008/01208.pdf>.
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III. THEORETICAL FRAMEWORKS AND APROACHES IN POLITICAL
ECONOMY
Building on the readings from previous weeks, the following four discussions reflect on a
range of theoretical and methodological approaches common in explaining behaviour and
institutional continuity and change in political research. The section starts with game theory,
going on to discuss historical institutionalism as a particular approach to the study of politics.
Sessions present these approaches in more general terms, moving onto key concepts and
their application in empirical research.
1. RATIONAL CHOICE THEORY
Session 18. Rational Choice Theory and Its Applications
Building on the definition of institutions, this session introduces one of the fundamental
conceptual approaches in political economy: rational choice theory and its applications.
Key reading:
Weingast, B. R. (1996) ‘Political Institutions: Rational Choice Perspectives’, in Goodin, R. E.
and Klingemann, H. D. (eds.) A New Handbook of Political Science, Oxford: Oxford University
Press.
Additional readings:
Driscoll, A. and Krook, M. L. (2012) ‘Feminism and Rational Choice Theory’, European
Political Science Review, 4(2): 195-216.
2. GAME THEORY
Session 19. What is game theory?
This discussion focuses on a particular approach in rational choice theory: game theory. This
discussion outlines the key assumptions and conceptual toolkit of game theory.
Key reading:
Schelling, T. C. (2010) ‘Game Theory: A Practitioner’s Approach’, Economics and Philosophy,
26(1): 27-46.
Additional reading:
Austen-Smith, D. (2009) ‘Economic Methods in Positive Political Theory’, in Wittman, D. A.
and Weingast, B. R. (eds.) The Oxford Handbook of Political Economy, Oxford: Oxford
University Press.
Osborne, M. J. (2004) An introduction to game theory, Oxford: Oxford University Press.
Specifically pp. 1-9; 13-35.
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3. HISTORICAL INSTITUTIONALISM
Session 20. What historical institutionalism is
This session revisits what we already know about institutional analysis that takes history
seriously and asks: what is historical institutionalism as a particular theoretical approach?
No key reading assigned.
Additional reading:
Steinmo, S. (2008) ‘What is Historical Institutionalism?’, in Della Porta, D. and Keating, M.
(eds.) Approaches in the Social Sciences, Cambridge: Cambridge University Press.
Session 21. Critical junctures
A key concept in theorising institutional continuity and change using history is critical
junctures.
Key reading:
Capoccia, G. and Kelemen, R. D. (2007) ‘The Study of Critical Junctures: Theory, Narrative,
and Counterfactuals in Historical Institutionalism’, World Politics, 59(3): 341-369.
IV. CONCLUDING SECTION
Session 22. Closing discussion: topics and methods in political economy
Sessions 23 & 24. Final assignments
The purpose of these two final student-led meetings is to provide, through student
presentations, a structured review and analytical clarifications regarding some of the
fundamental concepts that political economy operates with and, in a similar vein, of key
explanatory models regarding a range of student-identified issues based on course readings.
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