A fundamental question in new political economy is which factors determine the institutions of collective decision making. Why some countries are democracies with regular elections and where politicians are accountable to citizens, while other countries are not. The framework of the new political economy is ‘economic-based’; it stresses the individual economic incentives determining political preferences. The new political economy assumes that people behave strategically and their behavior can be modeled by the means of the game theory. Different groups have opposing interests over political outcomes and these translate into opposing interests over the form of politi-cal institution which determine the political outcome. The lecture will also discuss the importance of culture, religion and geography on the economic development.
The students should improve and deepen their knowledge and analytical capabilities in the areas of political economy, macroeconomics and empirical economics.