Political Economy at the Ford Center
The Ford Center’s Political Economy area is based on the premise that all organizations exist within some governmental landscape that shapes the rules of the game and defines mechanisms for changing the game. Businesses, for example, are established in accordance with the laws and norms of the states in which they operate.
That means organizational leaders must understand:
- How the governmental landscape shapes their strategic environment
- How change in that environment may be effected and anticipated
Our Areas of Focus
While our faculty produce courses and case studies with content that leaders may apply immediately, much of our work is more foundational. For example, we study questions including:
- How do divergent voting systems affect outcomes?
- What are the dynamics of constitutional transitions?
- How do activists leverage the media and governmental regulatory systems to influence business behavior?
Three Examples
Below are three examples of areas in which Ford Center Political Economy faculty have developed research-based insights.
Private Information, Collective Decisions: A foundational issue in political economy centers on how societies aggregate private information to make collective decisions. For example, Kellogg researchers have developed and extended a central insight about market mechanisms based on how auctions might be designed to extract private information from bidders. Scholars here and elsewhere showed that the structure of auctions could create incentive effects that might lead to inefficient outcomes due to strategic behavior by bidders. The Center’s Political Economy group researchers were among the first to recognize that problems similar to those with auctions might also arise in elections. Perhaps surprisingly, where private information can lead to inefficient strategic behavior, similar strategic behavior in elections may actually
improve their performance.
Democratic Transitions: How do democracies emerge and become stable? To answer this question, scholars have developed models that shed light on the factors that underlie democratic transitions. Our work here involves not only substantive new insights but novel technical theoretic work. One of the more interesting insights involves the conditions under which existing political elites are willing to expand the franchise and allow others to influence future political outcomes. On the theoretical side, this requires elites to consider what comes
after the expansion. For example, democratic transitions may stall because elites anticipate that a slight expansion of the franchise today may cascade into a subsequent comprehensive dilution of political influence. On the empirical side, it has been shown that an expansion of suffrage may be used to move electoral politics away from simple wealth transfers to the ability to support large public goods projects that are the signature of developed countries.
Politics and Economic Development: Recently we have developed a new focus on the link between politics and economic development. For example, China’s great famine occurred in a context where there should have been adequate food supplies. But the confluence of acts of nature and incentive systems designed by centralized planning that made it difficult to distribute food supplies properly to the areas most in need contributed to the famine. Our ongoing research also examines how markets function with poor enforcement of contracts, an urgent problem in the developing world.
