Paper short abstract:

A political settlement typology facilitates analyzing how social context influences development. Specific settlements types and associated distributions of power shape configurations of institutions that then condition prospects for resolving underlying developmental collective-action problems.

Paper long abstract:

This paper proposes a conceptual framework for developmental political economy based on three propositions: 1) Achieving economic and political development requires resolving underlying collective-action problems; 2) Institutions facilitate resolving complex collective-action problems; 3) Political settlements—that is, mutual understandings held among powerful parties that they will rely primarily on politics rather than violence to resolve disputes—underlie configurations of institutional systems that, in turn, arise from and shape developmental prospects. A simple typology of political settlements serves as a conceptual lens for analyzing how contours of social context influence developmental prospects. Here, two dimensions yield four basic categories. First, the breadth (broad or narrow) of a political settlement's social foundation—that is, the extent to which socially relevant groups are party to the settlement in the sense that policymakers must pay some attention to them. Second, whether its configuration of power—namely, the degree to which insiders can resolve collective-action problems associated with achieving rough agreements about allocating decision-making power and broad national purpose—is concentrated or dispersed.

Each of four basic settlement types shapes the subsequent evolution of a society's institutional system (its social order). Each type poses its own set of developmental collective-action problems whose resolution, or lack thereof, conditions prospects for development. The paper illustrates key principles with simple game-theoretic representations of rival coalitions and various proclivities for inclusion, cooptation, repression, staging a coup, or pursuing a civil war. This analytical approach should facilitate both developmental policy analysis and broad inquiry into the political economy of development.