Magazine 2014
International Peer-Reviewed Journal  
Mukti Patel  
In today’s scenario, there are umpteen numbers of conflicting issues in the whole economic system  
of the world economy, which create chaos in the system.This paper explains the concept of “Political  
Economy” and “Political Governance”. It talks about role of political governance and the interface  
between political governance & conflict. The gist of the paper is about using Democratic Governance  
in preventing and resolving the conflict. The paper also focuses on the role of Political Governance in  
the country, the concept of Good Governance and the process of implementing Democratic  
Governance Programming.  
Experiences from many parts of the world tell us that human development is often destroyed or  
delayed by armed conflict. When violence erupts, its destructiveness spreads across actors, structures  
and processes involved in governance, all of which takes a heavy toll on the local population. Societies  
in the midst of, or emerging from, armed conflict experience a great number of simultaneous  
challenges, like high insecurity, weak state legitimacy, polarization along identity lines, social distrust  
and enmity. This also makes it difficult or impossible to achieve the Millennium Development Goals.  
We know that in these environments, democratic governance is crucial in overcoming the hurdles hindering  
peaceful and sustainable development. By promoting inclusive participationof all members of society,  
including disadvantaged and marginalized groups, and by helping tobuild up responsive governing  
institutions and respect for human rights, it is possible to mitigate conflict and promote peace.  
Keywords : Political Governance, Democratic Governance, Good Governance, Political Economy,  
The 1 principle of economics is that every agent is actuated only by self-interest. The workings of this  
principle may be viewed under two aspects, according as the agent acts without or with, the consent  
of others affected by his actions. In wide senses, the 1 species of action may be called war; the  
second, contract. -Edgeworth.  
“The efforts of men are utilized in two different ways: they are directed to the production or transformation  
of economic goods, or else to appropriation of goods produced by others. -Vilfredo Pareto.  
Preliminary definition of Political Economy  
A famous deûnition of economics is that of Lionel Robbins 1932.  
‘Economics is the science which studies human behavior as a relationship between ends and scarce  
means that have alternative uses.’’ If economics is the study of the optimal use of scarce resources,  
political economybegins with the political nature of decisionmaking and is concerned with how politics  
will affect economic choices in a society. Society should be deûned broadly to include not only countries  
or other such jurisdictions, but also ûrms, social groups, or other organization.”  
Political economy thus begins with the observation that actual policiesare often quite different from  
‘optimal’’ policies, the latter deûned as subject to technical and informational, but not political,  
constraints. Political constraints refer to the constraints due to conûict of interests and the need to  
make collective choices in the face of these conûicts. Positive political economy thus asks the question  
how political constraints may explain the choice of policies and thus economic outcomes that differ  
from optimal policies, and the outcomes those policies would imply. To putthe same point another  
way, the mechanisms that societies use in choosing policies in the face of conûicts of interest will  
imply that the result will often be quite different than what a benign social planner would choose.  
This positive view implies a normative approach as well: normative political economy would ask the  
question of how, given the existing political constraints, societies can be led to best achieve speciûc  
economic objectives. This includes not only how to ‘‘overcome’’ political constraints within the existing  
institutional framework, but also the design of political institutions to better achieve economic objectives.  
International Peer-Reviewed Journal  
Some Examples of Political Economy  
This deûnition of positive political economy may be better understood byreference to some examples  
of the questions it addresses. Some phenomena are so clearly in the realm of political economy that  
little discussion is required as to what are the political inûuences on the economic outcomes.  
For example, it is often argued that there is an opportunistic political business cycle, with pre-election  
economic policies and outcomes inûuenced by the desire of the incumbent to manipulate the economy  
in order to improve his re-election prospects. Or, even if incumbents do not, or simply cannot, manipulate  
the economy before an election, the fact of possible changes in the government after an election may  
have signiûcanteffects on policies and outcomes. If policies were made by an inûnitelylived social  
welfare-maximizing planner who was sure to retain his job it is, after all, hard to ûnd replacements  
these days, there would be no effect on policies from the possibility that the policymaker will be replaced.  
In other cases, the role of political constraints may be less in the foreground, but no less important.  
Consider an economy experiencing hyperinûation, where there is agreement that hyperinûation imposes  
very large costs on all members of society. The technical problem is how toreduce theinûation at the  
least possible cost. Experience of many countries which have suffered from hyperinûations indicates  
that a necessary component of inûation reduction is greatly reducing the government budget deûcit.  
Having this information, a welfare-maximizing policymaker would cut the government budget deûcit.  
What we observe in fact is that in many high-inûation economies, where it is agreed that deûcit reduction  
is a necessary component of an inûation stabilization program, deûcit reduction is long delayed while  
inûation accelerates. The positive political economy question is whether the political constraints on  
making budgetary decisions can explain this delay, and, furthermore, how the lengths of delay will  
reûect different political mechanisms for resolving budgetary conûicts. The normative political economy  
question is how to design policies or mechanisms for choosing policies which will hasten agreement  
on how to cut the budget deûcit.  
To take another example, consider the question of the transition of theformerly socialist countries of  
Central and Eastern Europe to market economies. Though it is generally agreed that economic efûciency  
and social welfare will be substantially higher once a market system of allocation is in place, the  
transition has been slow, far slower than observers expected at the outset on the basis of the technical  
constraints. Political opposition from groups that will be hurt in the transition and under the new regime  
has been a signiûcant factor in determining the pace of reform. Hence, crucial to understanding transition  
policies and their outcomes are the conûicts between different interest groups in the economy. The  
relative performance of different transition economies reûects not only their differing economic  
characteristics, but differing political characteristics as well.  
Governance is ‘the exercise of political, economic and administrative authority in the management of  
a country’s affairs at all levels. Governance is a neutral concept comprising the complex mechanisms,  
processes, relationships and institutions through which citizens and groups articulate their interests,  
exercise their rights and obligations and mediate their differences’.  
Concept of Political Governance  
The purpose of political governance is to strengthen the political and administrative framework of the  
country in line with the principles of democracy, transparency, accountability, integrity, respect for  
human rights and promotion of the rule of law. In order to build capacity to meet these principles and  
to make significance progress on these, we need institutional reforms on:  
i) administrative and civil services,  
ii) strengthening parliamentary oversight,  
iii) promoting participatory decision-making,  
iv) adopting effective measures to combat corruption and embezzlement,  
v) undertaking judicial reforms.  
Political governance’s priority areas identified in the government’s good governance policy include  
constitutionalism and human rights, democracy, decentralisation and strengthening of local government,  
and accountability and transparency. In a political governance system it necessitates that:  
i) the people shall have controlling influence on the decisions and affairs of government,  
ii) the people are supreme to government. In recognition of this, government should institute  
responsive mechanisms which ensure that the people are treated with equal respect and as of  
equal worth in the exercise of their controlling influence.  
International Peer-Reviewed Journal  
One challenge to governance reform programmes is when inter-connections between state and society  
are not well understood. In such cases, there can be resistance and reaction to reform, as well as little  
linkage to the wider problems such reform is meant to address. Effective programming:  
a) anticipates both intended and unintended consequences;  
b) maximizes positive effects and mitigates against worsening relations; and,  
c) reduces negative signals to both power holders and the dispossessed.  
The governance programming can be arranged for a range of purposes:  
a) to prevent conflict, to avoid relapse into violence or the mobilization for armed responses to  
future issues;  
b) to operate in times of crisis, when internal tensions and fragile situations must be managed and  
dealt with; and,  
c) to promote democratic governance in post-conflict settings, often when warring parties have  
reached a settlement or peace agreement.  
Role of Political Governance  
The debate on political governance typically revolves around how leaders are elected, and their role in  
steering the country to economic and social progress, ensuring public resources are used efficiently  
and equitably for this purpose. It also revolves around the approaches used by political leaders to  
achieve the above, and the extent to which they accomplish all aspects of their role through the free  
and active participation of all.  
In essence, political governance is about managing the state, establishing transparency and  
accountability to the people, and promoting a sense of nationhood.  
In managing the state, good political governance ensures predictable policy regimes, responsible  
fiscal management, efficient delivery of essential services, the maintenance of law and justice,  
and the sustainable custodianship of the country’s natural resources.  
In ensuring responsiveness and accountability to the people, good political governance  
institutionalises fair, equitable and transparent electoral, political and public oversight systems  
and practices. Political representatives are elected to office and held accountable for the affairs of  
the state, leaders are encouraged to adhere to a code of ethics, and oversight bodies ensure that  
the rights and interests of the people are always safeguarded.  
Good governance is ‘participatory, consensus oriented, accountable, transparent, responsive, effective  
and efficient, equitable and inclusive and follows the rule of law. It assures that corruption is minimized,  
the views of minorities are taken into account and that the voices of the most vulnerable in society are  
heard in decisionmaking. It is also responsive to the present and future needs of society’.  
Democratic governance highlights the need to ensure that all people have the opportunity to take  
part in decisions affecting their lives. Democratic governance supports countries to enhance participation  
in public dialogues and decision making by fostering inclusive participation, strengthening accountable  
and responsive governing institutions and grounding democratic governance in international principles.  
Is there an evidence base for the relationship between governance and conflict?  
Conflict is rarely, if ever, caused by a single factor, but rather by the interaction of several of them,  
usually involving a combination of long-term structural conditions with short-term proximate issues.  
Statistical studies have found some correlation between conflict and some governance indicators –  
although the presence of correlations does not necessarily prove a causal link. The Commission on  
Human Security echoed in its final report some of the key factors that may cause violent internal  
conflict, closely related to governance:  
Competition over land and resources.  
Sudden and deep political and economic transitions.  
Increasing crime, corruption and illegal activities.  
Weak and unstable political regimes and institutions.  
Identity politics and historical legacies, such as colonialism.  
Growing inequality among people and communities.  
International Peer-Reviewed Journal  
Regarding the last, studies which underestimate or neglect the linkages between inequalities and  
violent conflict have been brought into question recently: that is, inequalities between ethnic and  
cultural identity groups – shows that these frequently lie behind the outbreak of violent conflict. As  
Stewart convincingly argues, the likelihood of social unrest and violent conflict is higher in contexts  
with significant political or economic horizontal inequalities – especially when both types are  
combined. In this regard, the Commission on Human Security stressed that ‘deprivation and unequal  
treatment may not generate an immediate revolt, but they can remain in people’s memory and  
influence the course of events much later’.  
As conflict is often rooted in governance shortcomings, the promotion of democratic governance is  
essential for conflict prevention and recovery. However, not all governance interventions ‘automatically’  
prevent conflict. Rather, governance programming, if not sufficiently informed by an analysis of the  
context, may unintentionally reinforce or create tensions. Like all other kinds of external assistance,  
governance programmes become part of the context in which they are delivered – hence, in spite of  
the best intentions, they can do harm.  
Even more than other types of development interventions, governance programming goes to the  
core of issues related to identity, power dynamics, distribution of and access to services and resources.  
These are inherently political issues, and treating them as merely technical issues may be conflict  
inducing. The phrase ‘conflict-sensitive democratic governance programming’ refers to strategies  
and programmesthat are based on:  
An understanding of the possible harmful effects on building peace, and actively seek to minimize  
these risks;  
An understanding of their potential for contributing to conflict prevention and recovery, and  
actively seek to maximize this opportunity.  
How can democratic governance contribute to conflict or peace?  
Democratic governance as an approach brings with it assumptions of better models for improved  
state functioning and social resilience, but in practice there are difficult paradoxes and challenges.  
For example, technical support and organizational assistance can be brought to elections to help  
them to be a national exercise in the peaceful alternation of political power and the formation of  
legitimate governments. However, the principle of political equality expressed as ‘one person/one  
vote’ does not necessarily fit with high levels of continued poverty and inequality (‘you can’t eat  
democracy’). In societies where family or clan dynasties, elitism and/or neo-patrimonialism are  
institutionalized and deeply embedded in social structures, elections may reinforce the old status  
quo – rather than legitimizing freely chosen or genuinely representative government. This can also  
lend itself to a democratic ‘façade’, where a carefully maintained appearance of democratic  
governance belies the reality. In such cases, both immediate and long-term responses are required  
for both democratic governance and conflict/crisis prevention and recovery.  
Conflict-preventing democratic governance involves programmes and projects that identify risks,  
fragilities, and gaps in the capacities of the state, but also non-state actors and institutions for peaceful  
development. They also incorporate useful strategies for addressing these into activities suitable for  
each democratic governance programming area.  
For example, a project to strengthen the capacity of parliamentarians to do their jobs effectively and  
efficiently may impinge on the vested interests of the executive (who have no previous experience in  
being accountable), the private sector (who have no political mandate), or powerful individuals with  
political power and influence (who are neither part of the government nor elected). This could result  
in a backlash, which is obstructive or stalls parliamentary strengthening.  
A conflict-sensitive programme looks for the probable impact it will make on vested interests and  
the reactions these might provoke. It tries to build in safety valves – for example, dialogue with those  
actors, education campaigns demonstrating win-win scenarios or training for parliamentarians on  
how constructively to resist negative dynamics. In addition to identifying where programming might  
provoke unintended tensions and conflict, governance programming through a conflict-preventive  
lens also seeks to identify specific ways in which governance programming might be designed  
differently to address potential sources of conflict.  
International Peer-Reviewed Journal  
Building a peace infrastructure  
Peace is not about eliminating conflict, but rather about managing conflict in a way that is non-violent  
and constructive. In this sense, ‘peace architectures’ are understood as institutions, structures and  
processes through which a society mediates its own conflicts, by tapping into its own resources,  
social codes of conduct, cultural frameworks and ethical references, with the engagement of a broad  
range of actors.Depending on the specific context, this can take the form of formal institutions, informal/  
traditionalmechanisms, ad-hoc structures, or some sort of combination of these.  
Tackling democratic governance challenges in post-conflict contexts  
Post-conflict environments are shaped by a myriad of factors, including peace settlement terms,  
constitutional arrangements, international commitments and modes of implementation. Features of  
physical, political and economic reconstruction will therefore vary significantly from context to  
context.Government frequently lacks both skills and the ability to absorb funding after armed conflict  
and this creates a vacuum into which non-governmental actors move, offering service delivery and  
operating as conduits for international aid. The challenge for international actors is to strengthen civil  
society without weakening government structures. Communication, sharing of resources and interaction  
between governmental and non-governmental actors will promote conditions conducive to social and  
economic development and democracy. Support to multi-stakeholder processes and genuine  
engagement is therefore a critical challenge for the realization of democratic governance.  
a. Promoting multi-stakeholder processes: mechanisms and structures for effective participation  
b. Strengthening participation and engagement of civil society andcommunity-based groups  
c. Promoting gender mainstreaming and women’s empowerment  
d. Working with non-state armed actors  
e. Defining integrated approaches and strategies  
Promoting capacity development  
g. Sequencing  
h. Tackling the ‘peace vs. justice’ dilemma  
Political Economy inherits various conflicting issues, which can be solved with the help of Good Political  
Governance. Role of Democratic Governance is undoubtedly great in not only resolving conflicts but  
also settling Post-conflict situations.  
However, India has also embarked on a vast program of decentralization, instituting local elections  
and putting greater revenue and public service responsibilities in the hands of local governments. It  
has aggressively experimented with institutions to bring the disadvantaged into politics, including  
reserved seats for women and lower casts on local government councils.  
In India, growth seems to be creating political appeals, that favor more far-reaching governance reform.  
This is a slow process—certainly, redistributive appeals continue to be the main currency of political  
competition in India—but it will be an important factor contributing to continuous governance  
improvements and growth.  
United Nations Development Programme, “Governance in Conflict Prevention & Recovery: A Guidance  
Note” Published on 13 Dec. 2009.  
UN Report on “Democratic Governance And Conflict Resolution”published in Dec. 2012.  
Pranab K. Bardhan. “The Role of Governnce in Economic Development: A Political Economy  
Approach”, OECD Publishing, 1997 print.  
Annual Report of United Nations, 2012.  
Mukti Patel : Assistant Professor, P. G. Dept. of Commerce, Maniben Nanavati Women’s College, Mumbai