Politics and economy
Published on: Mar 4, 2016
Transcripts - Politics and economy
POLITITICS & ECONOMY
• World economy
• Politics and Indian economy
• Politics and economy of Afghanistan
• Politics and economy of Somalia
Political economy was the original term used for studying
Production, buying, and selling, and their relations with
law, custom , and government
In its contemporary meaning, politics & economy refers to
different, but related, approaches to studying economic and
There are various ways in which politics affects the
•Formation of economic policies.
•GDP , per-capita income
•Wars and disturbances
•Choice between protectionism and free trade.
•Scams and corruption
• The world economy, or global economy, generally refers to
the economy, which is based on economies of all of the
world's countries' national economies.
Factors affecting worldeconomy
• Wars and disasters
•Famine, which affects the people and international
• Price changes for non-renewable energy, such as oil and
Factors affecting worldeconomy
Many industries are regulated by the government in one form
There are industries that are heavily regulated by
government and new laws and rules can shakeup an entire
industry and depress growth.
Toy industriesFor example :-
New child toy safety laws implemented under the
Consumer Product Safety Improvement Act in 2009
threatened to wipe out many small toy producers as the
requirements to test and certify the toys were cost-
prohibitive to all but large toy manufacturers
Environmental changes bring a huge change in economy of a
country. But Economic growth or fall in an industry can be
impacted not only by the environmental effect the products or
services have but also by consumers' perceptions of that impact.
For example :-
The market for fur apparel declined drastically over the course of
a few years in the 1990s when consumers perceived that raising
and killing small animals for their fur was both inhumane and a
poor use of land. Although the industry is once again picking up
with international demand, the number of fur farmers in the
country has substantially declined.
Wars and disasters
Wars and disasters can drastically change economy of any
Wars within a country or among other country disrupt
the economy. Other countries may choose to suspend
trade, imports of 'luxuries' will slow down as priority is
given to importing raw materials or military
equipment. Trading ships may be sunk by the enemy.
Raw materials and factories will be turned over to
manufacturing war goods like tanks, uniforms etc
The devastation caused by torrential rains that
lashed Uttarakhand earlier this month is expected to cause a loss of
Rs 12,000 crore to the state's tourism industry in the current fiscal, says
a PHDCCI (Progress, Harmony and Development Chamber of
Commerce and Industry) survey
Its obvious that economy is affected as a reason to Natural
disasters, such as earthquakes, droughts, and floods.
Factors like :-
1. loss of lives which brings in loss of man power.
2. less investors are willing to invest in the country .
3. loss of crops if disasters occur in an agricultural country.
4. loss of tourism.
Price changes for non-renewable resources.
Price change equally contributes in the fluctuation of
economy. The price of oil has more than doubled in the last
three years. By contrast, the current run-up has been a more
gradual process extended over several years, caused by
surging world demand running up against limits to what
global producers can supply.
One option available to an individual consumer or
producer facing higher oil prices is just to go about
business as before, saving or spending a little less on
other items in order to pay the energy bill.
Politics and Indian economy
Politicians have always battered India's economy, they still
• The Indian story has a paradox. In 1991 there was no other option but
to go for a drastic revision of the economic polices.
• Twenty-two years after, the Indian story is about to be running on the
same track towards the abyss.
• politicians, particularly the rulers of the day, have turned a blind eye
towards an impending disaster and busy assuring themselves that all is
• The separation of the politics from economics in the formative years
of the Indian economy is making the nation paying dearly today.
• The economy was allowed to be stifled under a welfare state
system since 1947, it eventually became a secondary pawn in the
hands of the populist politicians, who in the name of welfare,
maltreated the economy.
• Manufacturing sector in a bad state
• Obsession with food security bill
• Investors, both foreign and Indian, are disappointed
What went wrong?
A poll of 20 respondents comprising leading CEOs, bankers,
market players and economists paints quite a grim picture. An
overwhelming majority of the respondents said the Indian
economy was heading for an unprecedented crisis due to
mismanagement, lack of reforms, weak political leadership and
policy paralysis that had led to infrastructural bottlenecks and
Respondents say the Indian economy – once a darling of foreign
investors — went into a tailspin in 2012 after former finance
minister Pranab Mukherjee came out with the retrospective
taxation proposal in his Budget. “Retrospective taxation was the
biggest setback. It scared foreign as well as domestic investors,”
says Ankit Miglani, deputy managing director, Uttam Galva Steels
India can't be a ‘Jugaad’ Economy Forever
World Bank data suggest that India was ninth in the world in
terms of new businesses registered in 2011. The cost of starting
up a business is still high but it has steadily fallen from 70.1
percent of per capita gross national income in 2008 to 49.8
percent in 2012.
• The time taken to start a business in India has fallen from 33
days four years ago to 27 days in 2012.
• A Bain & Company report on luxury has been quoted as
estimating the number of people with disposable incomes of
over $100,000 to top 132,000 in 2013, up 60 percent since 2006.
• Despite all the improvements mentioned above, India ranks a
lowly 132 in the World Bank’s list of countries for ‘Ease of Doing
• According to Reserve Bank data, private listed non-finance
companies’ sales grew just 4.1 percent in the March quarter.
These companies are slowing production and cutting costs.
• India has the largest number of young people among major
economies but does not have the mechanisms in place to train
them or find decent jobs for them .
Politics helping out Indianeconomy
Information technology (IT).
Andhra Pradesh has a significant amount of Software export
Hyderabad's IT exports exceeded $1 billion in 2004. There have
been extensive investments in digital infrastructure.
In 2007,"Fab City", a silicon chip
manufacturing facility, was finalized to be set
up in Hyderabad with an investment
of 13,300 crore ($3 billion) by the AMD-
Agriculture and trade
Politics contribute a lot towards the agriculture and trade of India.
Although agriculture contributes only 21% of India’s GDP, its
importance in the country’s economic, social, and political fabric
goes well beyond this indicator. The rural areas are still home to
some 72 percent of the India’s 1.1 billion people, a large number
of whom are poor. Most of the rural poor depend on rain-fed
agriculture and fragile forests for their livelihoods
• Enhancing productivity
• Improving Water Resource and Irrigation/Drainage
• Balancing poverty reduction and conservation
• Strengthening Accountability for Service Delivery
• Improving access to land
Politics and the corporate world
Politics has helped in growth of corporate world which leads in
growth of Indian economy.
• SEZ (special economic zones) & EPZ (export processing
• SEZ: special economic zones is a geographical region that
is designed to export goods and provide employment
• EPZ: A free trade zone (FTZ) or export processing zone
(EPZ), also called foreign-trade zone, formerly free port is
an area within which goods may be landed, handled,
manufactured or reconfigured, and re-exported without
the intervention of the customs authorities.
Measures to be undertaken…
• Improve its governance.
• Improve colleges and universities.
• Innovate in farming.
• Build more infrastructure.
• Sustainable development.
Politics and economy of Afghanistan
• The economy of pre-soviet Afghanistan
• Damage to traditional economic basis (1978-1989)
• Rise of war economy (1989-2001)
• Selected economic developments since 2001
• Afghanistan Landlocked yet situated at the crossroads of Asia,
Afghanistan could serve as a trade crossroads and a major supplier
of natural resources for the global economy. However, in recent
decades, the nation’s vast economic potential has failed to take
• Local economic developments have fed into national and regional
economic processes which, conversely, have influenced Afghan
politics and economics at even the lowest levels.
• The rapidly-changing nature of these processes has led to a
profoundly unstable and volatile “political economy” (that is, the
two-way interaction between politics and economics).
The Economyof Pre-Soviet Afghanistan
• The British invasion of Afghanistan in 1838 marked the first of
three Anglo-Afghan wars that would frame Afghanistan’s role as
buffer state in the 19th century and later as protectorate of the
United Kingdom (UK) in the 20th century.
For example: King Zahir Shah, who utilized the national bank and
state cartels in pursuit of a “tightly controlled” economic
modernization which included industrialization and the spread of
education and other social measures.
• Afghanistan’s economy from the 1950s onward became closely
intertwined with the Cold War.
• In the early 1970s, however, the economic situation markedly
• By 1978 approximately 80% of the Afghan population was
dependant on the rural economy agriculture accounted for 60% of
GDP ( figures remain constant)
Damage to the Traditional Economic Basis
(1978 – 1989)
• In 1978 the World Bank recommended that Afghanistan, with its
comparative advantage vested in Small-scale agricultural
production should focus its economy on horticulture and livestock.
• Subsequent Soviet involvement would inhibit this economic
strategy as the already bleak economy Deteriorated further in the
face of mounting conflict.
FOR Example:- Soviet period shortages of critical energy
supplies led to Afghan industry coming to a virtual standstill and a
marked reduction in processed goods.
Rise of the War Economy (1989-2001)
• The Soviet withdrawal and ensuing civil conflict between the
government and various Afghan factions led to a rapid
increase in money supply (as competing governments printed
their own Currencies), the depreciation of the Afghan
currency and a resulting rise in food prices.
• The war economy was overwhelmingly informal and highly
decentralized. With no central economic authority, provincial
capitals and major cities within Afghanistan became
integrated into the economies of neighboring countries,
turning the borderlands – from Herat in the West, Kandahar in
the South or Mazar-e Sharif in the North – into self-regulating
• Further changes were on the horizon with the emergence of
the Taliban in 1994 and their subsequent takeover of Kabul in
Selected economic developments since 2001
• Afghanistan's economy is recovering from decades of
conflict. The economy has improved significantly since the
fall of the Taliban regime in 2001 largely because of the
infusion of international assistance the recovery of the
agricultural sector, and service sector growth.
• Afghanistan's living standards are among the lowest in the
world. The international community remains committed to
Afghanistan's development, pledging over $67 billion at nine
donors' conferences between 2003-10. In July 2012, the
donors at the Tokyo conference pledged an additional $16
billion in civilian aid through 2016
• Most international aid since the fall of the Taliban regime
in Afghanistan. Unconditional and open nearly thirty billion
dollars is estimated
• From donor countries to Afghanistan, (United States of
America the greatest, Europe and Great Britain, respectively
the second and third categories are)
Politics and economy of Somalia
• Famine is the largest factor affecting Somalia.
• About 2000 people die every year due to famine.
• like all the other countries Somalia also has politics
that affect the economy of the country.
Political factors affecting Somalia
1) West’s desire to resist the spread of Islamic fundamentalists
2) Effects of civil war.
3) Absence of law and order.
5) Political instability.
West’s desire to resist the spread of
• Westerners generally don’t like Islam but are attracted
towards the rich resources available in the country .
• Westerners utilize these resources for their own good and
also stop the spread of Islam just because of their dislike
towards the religion.
• It is because of this desire that the US has been supporting
the Somali government in their fight against the Shabab.
War and immigration.
• A civil war occurred during 1991 due to political instability
• Every one’s DESIRE TO RULE.
• Many people flew abroad which lead to lack of labour.
• Eventually leading towards drastic fall of economy.
Effects of civil war.
I. Many people died and are still dying as the war continues.
II. Following are few factors that effect economy of Somalia.
(a) Loss of infrastructure
(b) Loss of livelihood
(c) Loss of labour
(d) Loss of courtiers image
Hike in petrol prices
Downfall of Indian
Shortage of power
Scarcity of water recourses.
Economic survey 2012-2013
University of Pennsylvania
World bank report
Telugu academy text book
WE CAN AND WE WILL