New cycle of political economy after polls

Today’s General Election has four presidential candidates. The Kenyan economy is at the centre stage of their manifestos. With the rising inflation and high cost of survival at a time when the economy is yet to emerge from the blow dealt by the Covid-19 pandemic, the concerns for the voters are plenty.

These concerns are related to their incomes, job, food security, shelter, healthcare and access to essential services.  Each candidate made numerous promises including stipends, farm subsidies, access to cheaper credit, land reform and much more.

However, the economic challenges will be difficult to overcome all in one go. With all the project proposals being made, it is important to prioritise based on need and proposed with clear structured details. A project has a certain set of defined objectives and a specific beginning and end. It has to operate within geographical and organisational boundaries. A project involves the investment of scarce resources and anticipation of future benefits. 

How much thought has been put into taking actions for the overall benefit of the economy? This is where it is important to think about the political economy. Political economy according to economist David Balaam can be understood as “the study of how a country, the public’s household, is managed or governed, taking into account both political and economic factors”.

Local partners

There are many examples of how political economic analysis has led to operationally useful findings, which can help the project employees in understanding the significance of the existing knowledge and articulate and legitimise it in ways that make it useful for decision-makers.

Political economy aspects related to programmes and projects can help ensure that it is fully based on the experience and understanding of the local partners. It also helps preserve and build on the institutional memory of delegations and can provide good induction of material for the project-related activities.

Economist Thomas Mayer suggested an approach that interrogates economic doctrine to disclose the sociological and political purposes with regards to economic ideas, and behaviour and not just as a framework for analysis but also as beliefs and actions.

Political economy refers to the study of production, trade operations and activities in relation to the government and its applicable laws. It was developed in the 18th century as a study of economies, states and their policies related to projects undertaken by them.

In the late 19th century the term economics replaced political economy by further application of mathematical methods to make it recognisable as a science.

By the 1970s, the model of economic policy focused more on examining how political forces affect the choice of economic policies and emphasised the distribution of conflicts and political institutions related to the project selected. Some major contributors to the political economy have been Antoine Du Montchretien. Adam Smith, John Stewart Mill, David Ricardo, Henry George, Karl Marx.

The projects must be implemented considering not just economic aspects but also the political. Therefore, an appraisal of the selected project is not only concerned with financial and economic benefits but the reasons behind undertaking a project may also relate to social, political, technological, environmental and aesthetic criteria.

A project appraisal can provide information related to financial and economic factors as they can be assessed against economic factors. Project evaluation accesses the economic, political, social, environmental and financial impact of a project and combined these to provide an overall assessment of the project.

Political economics refers to studying the production and trade operations of activities in the chosen project and the relationships with law, custom, government and utilisation of the available natural resources and the distribution of national income and wealth.

Political processes

Global political economy tries to study the economic impacts of international relations, and economic models of political processes. It is an interdisciplinary approach and consists of different factions of related factors.  Today, apart from economists and project managers it not only concerns anthropologists, sociologists, and geographers at state and regional as well as international levels but it also functions within smaller social groups and social networks.

According to Frank and Wallerstein, “persons and groups — the common economic interest have used politics to effect changes beneficial to their interests”. There are different aspects of the political economy. A chosen project has to operate in a complex mix of different aspects which are interdependent upon each other such as political aspects, social, economic, environmental aspects, and so on.

On one side we have a list of the political environment, public sector development, and fiscal policy. On the other hand, we are talking about economic aspects related to trade liberalisation, exploitation of available resources, and national budget expenditures.

Still, on the other hand, we are talking about the social, heterogeneous, vulnerable groups’ participation. Then we have the environmental aspect as well as the cultural aspect of the organisational development and social community. So these represent different aspects of political economy.

The different political aspects that need to be checked and considered in relation to a project are as follows; government type and stability, regulations and deregulation trends, trade and tariffs controls, freedom of the press, bureaucracy set up and corruption, and also, likely changes in the political set up. Social aspects are also of importance when considering the project, such as the thought and value system of the society and community where the project has to be located, among others.

As we look at the economic aspect we have to consider the stages of the business cycle. Trade patterns, current projected economic growth, liberalisation and impact of globalisation, exploitation of available resources, inflation and interest rates and budget expenditure in the particular country, among others. In the immediate focus, the population must have ease of access to essentials, including regular water supply, electricity, affordable food and healthcare. As we vote today, we all await the start of another cycle of political economy.

Barot is a business and financial analyst. Email: [email protected]