The First case study will focus on what types of regimes are the most effective when it comes to economic development. Each of the countries varies in how much the public is allowed a say in what goes be it politically or economically. We will be looking at a democracy (US), an oligarchy (China), and a dictatorship (Sudan) to understand how the different regime types influence growth. When it comes to political regimes, one should look at the political situation as it stands. One factor of this is the fact that certain regime types are limiting to the people while others are inclusive. For example, “unlike dictatorships, democracies limit sovereign discretion and thereby more effectively promote economic growth”. (Pinho) When looking at countries that have a more democratic view they are more likely to be linked with high levels of economic development while those that are non-democratic tend to lye lower on the scale. This is because representative institutions have a positive impact on economic activity, much like that of democracies. It is suggested that countries with better political institutions, more secure property rights and a highly operational system of regulating the government’s power will devote more in both physical and human capital and will use these features resourcefully to produce a greater level of income.(Pereira) In democratic regimes, the longer political power is held by a particular political leader, the greater economic growth will be; however, when dealing with autocracies such effect is reversed, this is because there is a less input from the governed in an autocracy versus more input from the governed in a democracy.
The United States of America is a constitutional federal republic and is broken down into three branches with much involvement of the constituents. Under this system of government, there is an executive branch that consists of the chief of state and head of government who are one in the same. The United States has a primary and a vice leader, the primary being President Donald Trump, and the Vice President being Michael Pence. The primary leader supplies his own cabinet by appointment, of which these individuals are confirmed by the Senate. (CIA) The president is voted on by those that reside in the states and some territories of the united states. The vise president is automatically voted in by being on the ballot with the person running for president. Each serves for four years and may be elected to serve only one additional term of four years in those positions. Votes are tallied as an electoral vote and a popular vote and these votes may not always coincide. Within this system of government, there is also a legislative branch that is bicameral. (CIA) This legislative body includes the two units of Congress; the Senate and the house of representatives. The Senate consists of “100 seats; two members directly elected in each of the 50 state constituencies by simple majority vote except in Georgia and Louisiana which require an absolute majority vote with a second round if needed”. In the Senate members serve term length of six years, and every two years about one-third of membership is renewed. The House of Representatives is made up of 435 seats; members are elected directly in “single-seat constituencies by simple majority vote except in Georgia which requires an absolute majority vote with a second round if needed”. (CIA) Members in the house of representatives serve two-year terms) Aside from the main 435 seats in the house of representative, there are six non-voting delegates elected from the District of Columbia and the US territories of American Samoa, Guam, Puerto Rico, the Northern Mariana Islands, and the Virgin Islands. The six seats are single-seat constituencies that serve a two-year term, aside from Puerto Rico’s resident commissioner who serves a four-year term. They are directly elected by simple majority, can only “vote when serving on a committee and when the House meets as the Committee of the Whole House, but not when legislation is submitted for a “full floor” House vote”. (CIA) The judicial branch is also held under this form of government, this deals with court and the justice systems interworking in the united states. Though the United States is a constitutional federal republic it is also a (representative democracy) democratic regime. This is clear when looking at the way in which those who represent the citizens are selected and how long they serve. This is a regime with much influence from constituents and representation than ruling.
China is a communist party-led state, that similar to the US has three branches of government though set up differently. The Executive branch in China has both a chief of state and head of government, though they are not the same person or position. The chief of state or president is XI Jinping and the Vice President is LI Yuanchao. While the head of government is premier LI Keqiang followed by the four executive vice premiers under him, which consists of ZHANG Gaoli, LIU Yandong, MA Kai, and WANG Yang. (CIA) Also, different from the US the cabinet or in China’s case the State Council is appointed by National People’s Congress, and not by the president or the head of state. The president and vice president are indirectly elected by National People’s Congress for a five-year term, while the premier is nominated by the president and confirmed by National People’s Congress. In China, the Legislative branch is unicameral, unlike the US that is bicameral. The National People’s Congress or Quanguo Renmin Daibiao Dahui seats 2987 members that are indirectly elected by municipal, regional, and provincial people’s congresses, and the People’s Liberation Army. Members serve five-year terms and, only members of the Chinese Communist Party (CCP), its eight allied parties, and CCP-approved independent candidates are able to be elected. Dissimilar to the US were anyone can run and be elected if they meet certain requirements. (CIA) China’s Judicial branch also included the inner workings of the court system. China is under an oligarchy regime, this is shown not only in the way things are run but how officials are placed in office. Unlike in the US, officials in China a not voted in directly by the people, but by other officials, or smaller representative bodies. This type of government shows a decrease in the abilities of the governed.
Sudan is a presidential republic that also has a three-branch government that is somewhat similar to the US. Much like that of the US, the Executive branch of Sudan has a chief of state and a head of government that are one in the same, this also can be said for the secondary leader. President Umar Hassan al-BASHIR is both the chief of state and head of government, followed by vice president BAKRI Hassan Salih who also serves the prime minister. Unlike the US Sudan has a Second Vice President named Hasabu Mohamed ABDEL RAHMIN. (CIA) The cabinet or Council of Ministers appointed by the president. In Sudan the president is directly elected by a complete majority popular vote, there can be two rounds if needed. The prime minister much like the cabinet is appointed by the president. Similar to the US, Sudan’s Legislative branch is bicameral National Legislature consists of the Council of States or Majlis al-Wilayat. This legislative body seats fifty members, and each member is indirectly elected – each of the 25 state legislators selects two to serve a six-year term. Then there is the National Assembly or Majlis Watani in which there are 426 seats. Of members in this legislative body, only 21 members are directly elected in single-seat constituencies by simple majority vote, while 128 are for women only directly elected by proportional representation vote, and 85 are directly elected by proportional representation vote; though all members serve six-year terms.(CIA) Sudan’s Judicial branch includes is similar to the purpose of the US, though set up differently. Though Sudan is a presidential republic it is currently under a dictatorship regime. Though the way in which officials are chosen and voted into office is still done, there is corruption which makes these processes invalid, as some of the same officials remain in office. Under this type of fraud and corruption riddle regime, the governed had become nothing more than bystanders and have essentially no say.
The second case study is viewing the effect that education has on the growth and development of the economy. This study will look at what things are put into the economy that fuels its growth such as human capital (skills, knowledge, labor). When you think of educations role in economic development, you think of the aspects that influence its growth such as skills learned for certain jobs, general knowledge to enter the workforce, and literacy and understanding in workers. When it comes to human educational developments impact on economic development, there is “ample evidence suggests that as people become better educated they contribute more to economic growth.” (Alejandro) Both primary and secondary education among other things raises the productivity of workers, in both rural and urban settings. In terms of “secondary education, including vocational studies, this type of education facilitates an acquisition of skills and managerial capacity.” (Alejandro) Tertiary education is where the development of basic science knowledge is gained, and this level of education has great impact on the appropriate selection of technology imports and the domestic adaptation and development of technologies. “secondary and tertiary education also represent critical elements in the development of key institutions, of government, the law, the financial system, among others, all essential for economic growth.” (Alejandro) Not to mention, “There is also a positive feedback from improved education to greater income equality which, in turn, is likely to favor higher rates of growth. As education becomes more broadly based, low-income people are better able to seek out economic opportunities.” (Alejandro) With this information, one must also take into account one’s access to education, and the quality of said education. Attainment of proper education is where an effective return is seen. (Hanushek) To figure out if a person is in a position to get the proper education, one could look at the literacy and skill set of those around that person. Then look at how those others have impacted the economy in whatever small way. We should also see the level at which most people in that environment reach in schooling and what skills are gained from that level of education.
In the United States, about 4.9% of the gross domestic product is spent on education expenditures. When it comes to the level of education reached from primary to tertiary education most people spend an average of 17 years in school. The level of unemployment in this country is very low, sitting at 4.4% of the population. The rest of the population that is employed is made up by the, 0.9% in agriculture, the 18.69% in industry, and the 80.2% services, in which learned skills and education play a big part. The rate at which the GDP is growing is increasing, and factors such as education have a lot to do with it. (CIA) Of China’s gross domestic product, it is unknown how much is actually spent on education expenditures. Though education reach comes to about 14 years on average, from primary to tertiary education. The literacy rate in China is about 96.4% of the total population and from age 15 and over. The unemployment in China is also low, standing at a 4% level of the population. Of the population that is employed, 28.3% work in agriculture, 29.3% work in industry, and 42.4% work in services, all of which have skills and knowledge that are essential to the job. When it comes to the rate at which the GDP is growing is steady and is not standing still. (CIA) Sudan, on the other hand, has a 2.2% of their gross domestic product that is spent on education expenditures which in comparison to the US is very low. They are also on the lower end of education levels reached, the average years spent in school is 7 and that is measured from primary to tertiary education. Though surprisingly about 75.9% of the population is literate, looking at those ages 15 and above. The unemployment rate in Sudan is very high, sitting at a 19.6% level (essentially a fifth of the population). Though of the working population 80% are in agriculture, 7% are in the industry, and 13% are in services. Compared to others in China the industry and services occupations are less employed. The GDP real growth rate is still quite high though sitting at a level of 3.7 percent, which may be due to the large influence of agriculture. (CIA) It seems that one thing is quite clear when looking at this data. The higher the education rate and the more time spent in school, the more the economy is involved in jobs in the industry and services field.
The third case study surrounds what it means for an economy to be stable, by evaluating a countries likely-hood to be unstable. We will evaluate both future and past examples of each of the three countries relationship to currency fluctuations, then we will evaluate an example of market fluctuations that can lead to depressions and recessions. When it comes to currency the ability to deal with an economic crisis is complicated. When it comes to the failure of a fixed exchange rate caused by unstable fiscal policy, the government is tasked with fixing the money supply. But, with this comes limits on the government’s capability to increase seigniorage revenue (or money valued more than it cost to make). This may lead to a primary deficit, that could include the government depleting assets (foreign reserves or borrowing). (Burnside) Though, since this isn’t a long-term fix the government must then print money to increase seigniorage revenue. These fixes are not compatible with the view of a fixed exchange rate and will eventually cause a collapse. The situation of currency fluctuations it a problem that often leads to the devaluing of currency or total currency collapse. When it comes to depressions, there is inflation, caused by excessive spending from the people, and one way in which to combat this and stabilize the economy is to increase taxation. This causes people to spend less and is essentially an extreme form of recession. With recessions, on the other hand, is caused by the public tendency to spend less and the fix for this situation would be for the government to spend more through deficits in order to add to the spending stream.(Rothbard) Most countries have had unstable economic times, but it is their ability to snap back that makes them stable or not.
The United States has not had much in the way of currency fluctuations or failure, though they have seen both depressions and recessions. When it comes to depressions one of the most well-known cases in the US is the great depression that took place in the 1930s. The economy in the US went from one of its highest points to its very lowest. At the point in time before the great depression hit, “Spending by consumers, business firms, and state and local governments created plentiful, high-paying jobs”. (Caldwell) Then in the late 1920s the, “total spending in the American economy was falling, and business firms began to cut production” (Caldwell) which lead to an imbalance in the economy. The depression was caused by not only a fall in demand and spending but by the failure to back banks and prevent their failure by maintaining an adequate supply of funds. (Caldwell) A similar situation can be said for the 2008 recession, a period of economic boom in the US, followed by a period of the economy slowing down. But the United States has been able to bounce back every time. China, on the other hand, has been a lot more stable, as far as extreme economic situations. Sudan is a country that faces major inflation that sits at about 37 percent and current and past currency issues. Since the separation of Sudan from South Sudan there has been an introduction of a new Sudanese pound. Even with this new currency the values still fell and economic factors still lead to it being devalued. (CIA) The country is still struggling with currency now.
These case studies serve to try and prove the following hypothesis true. Regime type, education, and economic stability will all serve to show the impact they have on the development and growth of industries, not to mention the cumulative growth of per capita income, that comes with structural and institutional changes. It is my hypothesis that in a regime type where a larger group has more a say so in the countries decisions, there is a greater chance of economic development. Education is something that can advance certain industries and make for a more productive economy. And when there is economic stability, it is easier for growth and development. When it comes to regimes and economic growth, regimes with a larger input of the governed makes for a country with the ability to have greater economic development. This may be due to the fact that more people a represented in certain types of regimes. When it comes to education the hypothesis is correct in that it shows that education can influence economic growth, but it is not a deciding factor. Education levels seem to affect the economy in sectors such as industry and services, so when a country relies more on aspects like agriculture education does not play such a big role. Lastly, the ability for a country to be economically stable has much to do with economic growth, but even with situations of economic instability if a country is able to bounce back there is still room for economic growth and development.
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Works Cited
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Burnside, Craig, et al. “Currency Crises Models.” SpringerLink, Palgrave Macmillan, London, 1 Jan. 1970, link.springer.com/chapter/10.1057/9781137553799_11.
Caldwell, et al. “What Caused the Great Depression?.” Social Education, National Council for the Social Studies. 8555 Sixteenth Street 500, Silver Spring, MD 20910. Tel: 800-683-0812; Tel: 301-588-1800; Fax: 301-588-2049; e-mail: [email protected]; Web Site: Http://Www.socialstudies.org, 28 Feb. 2007, eric.ed.gov/?id=EJ766577.
Hanushek, Eric A., and Woessmann, Ludger, The Role of Education Quality for Economic Growth (February 1, 2007). World Bank Policy Research Working Paper No. 4122. https://ssrn.com/abstract=960379
Pereira, Carlos, and Vladimir Teles. “Political Institutions, Economic Growth, and Democracy: The Substitute Effect.” Brookings, Brookings, 28 July 2016, www.brookings.edu/opinions/political-institutions-economic-growth-and-democracy-the-substitute-effect/.
Pinho, Carlos, and Mara Madaleno. “Political Regimes and Economic Growth.” Research Gate, Dec. 2009, www.researchgate.net/publication/40496943_Political_Regimes_and_Economic_Growth
Rothbard, Murray N. Economic Depressions: Their Cause & Cure. Mises Institute, 2009.
“The World Factbook: CHINA.” Central Intelligence Agency, Central Intelligence Agency, 22 Feb. 2018, www.cia.gov/library/publications/the-world-factbook/geos/ch.html.
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