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{Excerpt} Political economy embraces the complex political nature of decision making to investigate how power and authority affect economic choices in a society. Political economy analysis offers no quick fixes but leads to smarter engagement.

Economics—the social science that deals with the production, distribution, and consumption of material wealth and with the theory and management of economic systems or economies—was once called political economy. Anchored in moral philosophy, thence the art and science of government, this articulated the belief in the 18th–19th centuries that political considerations—and the interest groups that drive them—have primacy in determining influence and thus economic outcomes at (almost) any level of investigation. However, with the division of economics and political science into distinct disciplines from the 1890s, neoclassical economists turned from analyses of power and authority to models that, inherently, remove much complexity from the issues they look into.


Suggested Citation

Serrat, O. (2010). Political economy analysis for development effectiveness. Washington, DC: Asian Development Bank.

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This article was first published by the Asian Development Bank (