The Relationship between Political Ideology and Economic
(Wealth of a Country)
Introduction
The world has become a global village, still there is a wide array of political, economic and sociological differences among them. These differences has resulted in the lack or dominance of power in international relations between them. These differences has contributed towards the wealth gap between countries, which is directly related to the quality of life, standard of living and other social benefits. People residing in modern and wealthier countries tend to feel much satisfied, secure and content with their lives as opposed to people living in third world and underdeveloped economies (Jost, 2006). A significant role is played by the economic policies, public policy, public administration, and government actions of a country, which determines the financial, economic and social status of the people residing in a particular region. All of these factors that fall under the domain of government actions, public policy and public administration are determined by the political ideology of a country. A political ideology is a much broader subject that is not limited to the type of government, the relationship between the government and its people, the power bestowed to the government, the power of the people over the government servants and officials, and the approach of the ruling party towards their responsibility and accountability as a political force. Accordingly, the comparison of the political ideologies of different countries is essential for analyzing different factors and public policy approach of the government that contributes towards the international and national economic stature of a country, which in fact is a viscous cycle that puts a country on a path of economic success or restricts its economic growth in the longer run.
Research Question and Objectives
The advent of globalization and dawn of the 21st century has further contributed towards the wealth gap between different countries in the world. The already rich countries are becoming richer with the passage of time due to their advanced political ideology, which helps rich countries to place technology advanced systems and methods that increases the efficiency of the economic, social and legal systems. Accordingly, this paper delves into the relationship between the political ideology of a country and its economic, social, and tax system, which through international relations and public policy affect the wealth of a country.
Significance of the Study
With the advent of globalization and internationalization, the world has transformed into a global village, despite the differences in the political ideologies and political systems that are being practiced in different countries. The political systems of different countries is the only thing that differentiate different societies as the ultimate economic, financial and social goals are the same all over the world. Every single country wants to get richer, increase its international significance, and acquire more power, but the difference lies within the political approach that has been adapted by different countries and their governments to achieve their ultimate goal. It is essential to understand the concept of comparative politics that can be used to analyze the different political ideologies being practiced in different parts of the world.
Comparative politics is a method of research in political science that takes into account political institutions, domestic and international politics, public policies, international relations between countries, and conflict of interest between different nations. Taking into consideration such factors to compare the political ideologies of the world makes it easier to assess the wealth difference between countries (Jost, Federico & Napier, 2009). The reasons underlying the wealth gap between countries is significant for underdeveloped, developing and newly institutionalized economies as they can learn from these differences to incorporate improvements in their political systems. The political system overlap the economic, financial, and social systems of a country because the political system is responsible for adapting a particular approach for public policy, which determines the economic policies, financial structure, and social systems. Accordingly, the findings of this research can be used by academic scholars to conduct further research in the field of political science and comparative politics, whereas the primary audience is the public officials, government agents and administrative employees who can use the findings of this paper to improve their political ideologies and strategies. This will enable poverty ridden countries, and other countries that lack monetary and human resources to overcome their national challenges, and compete with modernized nations that are much advance in technology, social systems, and infrastructural development, all of which originates from their advanced political ideology and system.
Literature Review
Introduction
A lot of literature has been conducted on the political systems, economic systems and social systems of countries, which reveal significant conclusions and theories that will be included in this research paper. This literature review is based on a large number of research papers that evaluate different political and economic systems in the world (Mian, Sufi & Trebbi, 2008). Accordingly, in order to reflect on the superiority of these systems over one another, an in-depth analysis of these systems is required. A compare and contrast analysis will also be part of this research, which will be based on the evidence collected through this literature review.
Most of the western countries portray some of the best political systems in the world, which can be assessed by the economic performance of these countries as well as by the social structure and security vested in those countries. On the other hand, it can also be observed that some of the western countries has economically collapsed over the last few decades during global financial crisis, despite the fact that they have adapted the most advanced political systems and have implemented the well-researched and already proven economic strategies (Jost, Federico & Napier, 2009). Likewise, some of the Asian or Middle Eastern countries are in consistent economic and political turmoil over the last few decades, whereas other countries in these regions rank among the most successful economies in the world. The differences are many at the operational level whereas the there is only one difference at the governance level, which is the difference in political ideology that supersedes and overcome all other prevailing factors.
There are examples of countries that have none of the national comparative advantages in the world such as natural resources or cheap labor, despite which these countries are ranked among the top economies of the world (Jost, Federico & Napier, 2009). On the other hand, there are countries with abundant resources and other national comparative advantages, but are still struggling and surviving on loans from international organizations like the World Bank or the International Monetary Fund. This shows that the political system and ideology of a country has a significant impact on its economic and social condition, which determines its international image. There are more to the political system and ideologies of countries than the establishment of a stable economic system, or providing social security to its people (Mian, Sufi & Trebbi, 2008). The tax system, public policies, human rights, law and order, the establishment of law and order, corruption rate, national culture, religious values and social values of the people, all play a vital role towards devising a political ideology of a country. The political ideology backed up by these factors also affect these factors in return over a period of time, so all of these systems become interdependent on each other.
A good example can be of the tax system, which affects government spending and expenditure, whereas the tax system is itself devised by the government on the basis of political approach adapted by a country (Kraus, Piff & Keltner, 2009). The amount of tax collected is also a reflection of the social values of the people, as most of the people among the wealthier class of the society are against the progressive tax system that is being used in most countries. In addition, the tax system also affects the ability of the government to provide social security to its citizens, which shows that the people are paying for their own social security and protection through government. This reveals that the political system of the government is important as it determines the efficiency and effectiveness with which the government can play its role as the regulatory authority that imposes the taxes, collects them, and utilizes them for the benefit of the people (Mian, Sufi & Trebbi, 2008). This whole economic cycle from collection to utilization of taxes involve economic policy, legal policy, social policy, and government policy, all of which fall under the domain of political ideology and system of a country. For this reason, it is essential to compare the political ideologies of different countries on the basis of these sub-systems that reveal the consequences of political approach adapted by a government.
Political Ideology and the Tax System
The tax system of a region is one of the most salient features of the political ideology of a country. Most of the democratic governments in the world believe in equality and fair policy that benefit all the social classes of the society, as it is the primary belief through which a democratic government is elected, which is free and fair election where every individual of the society has is considered equal to given opinion (Alesina, Cozzi & Mantovan, 2012). Accordingly, the progressive tax system is the most common and powerful tool that is used by a democratic government, in order to maximize the collection of taxes (Kraus, Piff & Keltner, 2009). The tax collected are then passed on to the lower classes of the society in order to promote equality. This is in accordance with the ultimate goal of a democratic type of government, which is to promote equality and equal opportunity for every individual in the society (Alesina, Cozzi & Mantovan, 2012). In order to assess the impact of a tax system on the society, its different types have to be analyzed in detail with practical examples of countries. The tax system is a strong reflection of the political ideology that has been adapted by the government, so it is important to compare and contrast the benefits of different tax systems that are being used by different countries.
The progressive tax system is one of the most common tax systems in the world. A progressive tax system means that the tax rate will increase with the increase in the income of the tax payer (Alesina, Cozzi & Mantovan, 2012). This reveals that the richer class of the society is not only going to pay more taxes because of their high income level but is also going to pay taxes at a larger rate than the middle and lower classes. This tax system is beneficial for the maximization of tax collection, and is also efficient in reducing the income inequality gap in a region, which is healthy for the economy in the longer run (Bartels, 2009). A progressive tax system has always been a debatable topic in the modern societies as it tends to favor the middle and lower classes whereas the biggest contributor towards the annual tax revenue is the richer class of the society. Moreover, the richer class is least interested in using public services such as the public transport, universal healthcare services, public education, social security, and pension plans (Mian, Sufi & Trebbi, 2008). The richer class uses privatized services that are expensive but are higher in quality such as private education, expensive insurance plans, and private luxury vehicles. For this reason, a progressive tax system imposed by a democratic government fails to justify its primary objective, which is to satisfy the interests of everyone in the modern society. Furthermore, a progressive tax system does not promote equality as different social classes are being taxed at different rates, which is against the basic fundamental of a democratic society.
Taking into account the consequences of a progressive tax system reveals that it does not have the desired economic outcomes as proposed by a democratic government. The United States government is a true reflection of the democracy, which has imposed a progressive tax system in the country (Kraus, Piff & Keltner, 2009). Most of the Americans pay their taxes honestly because of the strict law and order situation in the country that treats all individuals fairly regardless of their color, wealth, power and social class (Kraus, Piff & Keltner, 2009). The United States is also the biggest economy in the world with an annual GDP, which is about to exceed the benchmark of $17 trillion. Despite this the income inequality gap in the United States has been continuously rising over the last 5 decades since the 1970’s. Reduction in the income inequality gap is the primary objective of a progressive tax system, but the progressive tax system in the United States has failed to achieve its primary objective since the last 50 years (Bartels, 2009).
On the other hand, it can be observed that the progressive tax system of the United States and of other western countries like the United Kingdom, Australia and Canada has greatly contributed towards their economic prosperity and social development (Alesina, Cozzi & Mantovan, 2012). Australia has one of the greatest universal healthcare systems in the world, whereas New Zealand tops the list in providing free and high quality healthcare services to all of its citizens (Feldman & Johnston, 2014). In addition, the infrastructural development and public services in these countries reflect state of the art services and technology that promotes the idea of equal opportunity and that all humans are equal (Norton & Ariely, 2011). Moreover, the increased collection of taxes through the implementation of a progressive tax system is primarily responsible for the increased social security of the people and for the high quality of law enforcement agencies. All of these factors fall under the domain of public policy that reflect the democratic ideology of the United States political system (Huddy & Khatib, 2007).
In comparison to this, other countries in the Asian region have also deployed a progressive tax system such as India, Pakistan and Bangladesh (Balassa, 2013). These countries are ridden by poverty since ages and have the highest amount of people that live under the poverty line. These countries have also democratic political structures, despite the fact that the strength of their democratic structures is extremely weak (Norton & Ariely, 2011). The last government of Pakistan was the first government in the history of the country since its independence in 1947, which was able to complete its democratic tenure. Otherwise every time a government was formed it was dissolved or taken over by the military rule through imposing a martial law (Balassa, 2013). On the other hand, the political history of Bangladesh also reflects similar democratic structure that has been frequently challenged by the military rule in the past. In addition, the Indian government has shown strong history of democratic governments that have been part of its political system since the independence (Norton & Ariely, 2011). Still, India is one of those countries that has the highest amount of population living under the poverty line. Accordingly, it can be assessed that there is an evident disconnect between the imposition of a progressive tax system, and the economic wellbeing of a country.
Similarly, there are other countries in the world, which are tax free zones for their residents as well as for immigrants. Good examples are the United Arab Emirates and the Kingdom of Saudi Arabia, which do not charge any amount of tax on individual income as well as on the business income (Norton & Ariely, 2011). These two countries fall under the domain of newly industrialized economies but some of their services are better than first world countries. It is interesting to discover that these countries do not have democratic government, but instead follow a monarchy system, where the King is the head of the state as well as the head of the government. There is an executive council and a government that devises public policies and governs other issues related to public administration, and law and order in the country (Bartels, 2009). Likewise, there is no concept of democracy in the United Arab Emirates and it is one of the most economically stable country in the world, with all the multinationals operating in the country, and the tourism attracts all types of tourists from different corners of the world (Alkaabi, et al., 2013). The law and order situation is extremely good for the residents to live a secure life with no psychological fear and tensions. Still, there is no sign of a democratic government in these countries. This shows that the effectiveness of a particular type of government and the efficiency of a certain political ideology is dependent on other economic and social factors, which include national comparative advantages and social values of the people, which boost up the effectiveness of a particular political ideology (Kraus, Piff & Keltner, 2009).
Political Ideology and the Economic System
The economic system is set of different economic variables and indicators that are used by the government to devise economic policies. The economic policies have the ability to reflect the political ideology of a country as efficient economic policies reveal an efficient government whereas ineffective economic policies refers to a corrupt government that is inclined towards satisfying the personal interests of government officials, instead of economically stabilizing the country (Milner & Tingley, 2010). It has been observed that the same economic policy of different countries have resulted in different outcomes. This shows that there are numerous other factors that has to be considered by a political system in order to devise new economic policies.
Considering the example of the United States, it can be assessed that the Federal Reserve Bank is primarily responsible for controlling and managing its economy. In addition, it can also be observed that the operations of the Federal Reserve are not free from the political influence of the government of the United States (Flew & Cunningham, 2010). The Congress plays a vital role in devising the rules and regulations that define the authority, power and regulations of the Federal Reserve Bank. In furtherance to this, the Federal Reserve Bank has to generate enough funds through economic activity that the political objectives of the country are met, which include its military operations, the behavior of the United States government as the policemen of the world, and its international relations with other countries, which also involves international funding and loans to other countries (Mian, Sufi & Trebbi, 2008). Accordingly, the objectives of the political ideology of the United States are partially dependent on the economic system of the country, which is completely relying on the political system of the country (Huddy & Khatib, 2007).
One of the most common and significant economic policies are the fiscal and monetary policies of a country, through which the government is able to set interest rates, inflation rests, government spending, trade budgets, and controls international relations through international trade. The type of government is also crucial in developing an efficient and effective economic policy (Flew & Cunningham, 2010). A democratic government is more inclined towards setting up an economic policy that facilitates the cycle of economy through increased consumer spending, increased production and increased employment rate. This benefits all the financial markets in the country, increases average household income, decreased unemployment rate, increases tax collection, and generates higher economic output by contributing towards the overall GDP (Mian, Sufi & Trebbi, 2008).
On the other hand, a monarchy is also inclined towards devising efficient and effective economic policies in a country as greater economic output means less government spending in the form of subsidies or in the form of government aids. Still, a monarchy is more inclined towards devising economic policies that benefits the wealthier class of the society because of the lack of equality between the government officials and the general public (Mian, Sufi & Trebbi, 2008). Moreover, this type of government is not in a hurry as the government rule of the King comes to an end only with the death of the King, after which the throne is passed to the heir. A very good example of a monarchy is the government of the United Kingdom, where the Royal Family is ruling the country since many centuries (Flew & Cunningham, 2010). The government of the United Kingdom also contains an essence of a democratic structure but still a common man does not have the power to question the authority, power and wealth of the Royal family, which is only possible in a true democratic type of government.
The economic policies reflected by a military rule or a dictatorship are also in line with the economic growth of the country. But a closer look on the economy reveals that the economic output is deteriorating in the longer run. This is because of the lack of equality that is absent in a
Dictatorship type of government or in the military rule (Milner & Tingley, 2010). The administrative powers and efficiency of military rulers are often quite appreciable because of the military training which refines the analytical ability as well as the leadership style of the military officers. For this reason, it has been observed that military rulers are extremely efficient in implementing economic policies but fail to devise such economic policies that are efficient in the shorter as well as in the linger run (Mian, Sufi & Trebbi, 2008). This is because of the limited amount of people with limited powers that are incorporated in policy making, as the supreme authority of a dictator cannot be challenged by anyone. There is an absence of the parliament or congress, which allows majority of the people to vote for the approval and implementation of public policy (Norton & Ariely, 2011). This way a democratic government automatically scrutinizes and screens different proposed bills and policies before they are implemented.
This shows that there is a close relationship between the political ideologies and economic system of a country. A quality of the political system is equally important as the type of a political system. A good example is that of the Chinese government, which reflects a communist type of government where the state is responsible for controlling the economy and a single party holds the majority of the government power (Mian, Sufi & Trebbi, 2008). The Communist party of China has been ruling the country since decades and has the ultimate authority over the country’s economic policy and other public policy issues (Kissinger, 2012). Decades ago in the 1960’s and 1970’s, the Chinese government devised an economic policy that shifted the focus of the economy towards the upgrading of the manufacturing and production systems in the country. Gradually, the manufacturing systems in the country became so refined that the cost of production decreased immensely (Milner & Tingley, 2010). In addition, the economic policy of the government also supports the local manufacturers by providing free electricity and other subsidies that promotes production. This increased the economic output of China, which allowed it to become the second largest economy of the world within a few decades, and its overall GDP has just crossed the benchmark of $10 trillion (Milner & Tingley, 2010). Accordingly, it can be observed that the Chinese government has a strong influence in the growth of the Chinese economy.
The economy of country with a ruling monarchy is also dependent on the political structure of the country. This can be analyzed by considering the Kingdom of Saudi Arabia and the United Arab Emirates, which are among the strongest monarchies in the world (Alkaabi, et al., 2013). There is no tax collection in the country, which means that the government cannot generate any funds through tax collection (Milner & Tingley, 2010). This increases the income as well as the purchasing power of the people but the responsibility of infrastructural development and social services still lies with the government. One of the primary sources of income for the United Arab Emirates and Saudi Arabia are their natural resources that are present in the form of oil reserves (Alkaabi, et al., 2013). The majority of the oil reserves are owned by the Royal families of these countries. Also, the income being generated through tourism and different types of fees charged by the government are the additional sources of revenue for the government (Alkaabi, et al., 2013). Accordingly, it can be observed that the national comparative advantages of these countries are enough to support their economies, while there is minimum burden on the general public in the form of taxes.
In comparison to this, other poverty ridden countries that are inclined towards technological advancements and modifications too such as India and Pakistan are still economically struggling, despite the implementation of a democratic political system (Balassa, 2013). Moreover, Pakistan has a high abundance of natural resources, which includes Sui gas, coal reserves (the second largest coal mine in the world, gold reserves, one of the most advantageous deep sea ports in the Asian region (Gwadar sea port), irrigated land, and cheap labor. Pakistan is still under a debt of more than $70 billion whereas its GDP is $232 billion (Balassa, 2013). Still, a majority of the population does not have the economic resources to eat a balanced diet and a significant amount of population lives under the poverty line. Likewise, India has a GDP of $1.88 trillion but also has an external debt of more than $500 billion. The external debt is not the only indicator of a poor economy as lack of social security features in a country is a true reflection of the efficiency of a political system to provide the economic resources to satisfy the needs and wants of the people (Kraus, Piff & Keltner, 2009). The economic policy of these countries has failed to control the interest rates, inflation rate or the unemployment rate. The interest rates in Pakistan are more than 12% to 15%, which restricts business growth and induces inflation (Balassa, 2013). The inflation rate in the country is in double figures. Such inefficient political system of democracy fails to achieve its primary objectives of economic growth through equality.
In most of the European countries, like Germany and France, the interest rates have been dropped to the value of zero, in order to maximize economic growth (Milner & Tingley, 2010). Lower interest rates are beneficial for the economy as it makes it easier for the businesses to acquire loans, which are essential for increasing the production and output of the business. Increased business productivity requires greater number of employees, which reduces unemployment and also increases the average household income of the country (Milner & Tingley, 2010). This has a positive impact on the consumer spending because of the increased purchasing power of the people. The increased consumer spending creates an additional demand for the products and services that are being produced by businesses. This creates a vicious cycle that boosts up economic growth and increases business as well as individual productivity. Such economic systems are being implemented in most of the first world countries like the United States, the United Kingdom, and Australia (Huddy & Khatib, 2007).
In comparison to such efficient economic systems, some of the other countries try to increases the generation of revenue by increasing the tax rates, devising a monetary policy with an increased interest rate in order to generate economic growth in the short run, and by imposing trade barriers and import quotas to protect the local economy (Potrafke, 2009). Such economic policies further deteriorate the economic position of a country as the government officials are not qualified enough or educated enough to devise an economic policy that is efficient in the longer run. Such economic policies only induces corruption, fraud and tax evasion in countries. There are many tax havens in the world, which are filled with shell companies and fake accounts of companies that do not exist, which is because of the weak political systems in majority of the countries in the world that fail to devise economic and social policies that allow their people to trust the government, and pay their taxes as responsible citizens (Kraus, Piff & Keltner, 2009).
Political Ideology and the Public Policy
Public policy is the most vital tool of the government that is used for managing different aspects of political ideology and a political system. Public policy are the rules and regulations implemented by the government in order to enact social laws. Public policy is a broader subject that reflects the domain of political science, which is used to understand the political ideology of a government or country (Hibbing, Smith & Alford, 2014). The policies devised by the government are the true reflection of the political approach that has been taken into consideration by the government to control law and order, stabilize economy, enhance social security, while safeguarding the international image of a country (Kraus, Piff & Keltner, 2009).
The approach towards devising a public policy is different in various countries and is dependent on the quality of the political system as opposed to the type of the political system of a country. The United States, which is one of the greatest examples of a democratic government in the world, has devised public policies that have become example for other countries to follow. One of the accomplishments of the government of the United States is the maximization of the social security services of its citizens (Hibbing, Smith & Alford, 2014). Americans have the access to free public education as well as quality public transport but still do not have access to free healthcare services. On the other hand, Australia and New Zealand have provided free health care services to their citizens. The political system of Australia reflects a federal constitutional parliamentary democracy and constitutional monarchy. Likewise, the political system of New Zealand is also a parliamentary representative democratic monarchy. This means that the political system and behavior of the Australian government and the New Zealand government is similar to one another. This is one of the reasons that both of these countries have the state of the art public policy system, which maximizes the utility of the people as opposed to maximizing government allegiance towards multinationals and large corporations (Bremmer, 2010).
The public policy in the United States is at times inclined towards the maximization of the benefits of multinationals and large corporations. These multinationals are such humongous in size that their annual revenues exceeds the GDP of some small countries in the world (Hibbing, Smith & Alford, 2014). These multinationals have a strong influence over the political ideology of the United States government as the economic contribution done by these multinationals towards the government revenue is too important to be ignored (Bremmer, 2010). These multinationals include some of the largest oil companies in the world, pharmaceutical companies, financial institutions, technology companies, food and beverages companies, department retail chains and so forth. The United States is a home to some of the largest companies in the world, which is one of the reason for its continuous economic growth. For this reason, the United States government has to devise public policies that are in line with the individual interests of these multinational companies and large corporations (Bremmer, 2010). A good example is that of the expensive health insurance plans which have not been replaced by a public universal healthcare system that provides free healthcare services for the general public. In addition, the government of the United States provided a bailout plan to various financial institutions such as the Bank of America during the global financial recession of 2007-2008. This is part of the public policy and the political ideology of the government, which is not limited to the social laws in the American society (Hibbing, Smith & Alford, 2014).
The purpose of public policy is to devise a balance between government spending and social services. Most of the government spending is done in public welfare projects and infrastructural development, which is eventually beneficial for the general public (Kraus, Piff & Keltner, 2009). On the other hand, the selection of public welfare projects and infrastructural development is dependent on the political ideology of a government (Hibbing, Smith & Alford, 2014). Some government are more interested in investing in projects that reflect an investment such as establishment of a public institution or the development of highway, which collects toll tax from the traffic in order to compensate for its initial costs of construction (Potrafke, 2009). On the other hand, some governments are more inclined towards developing projects that appeal more to the eye of the general public and are less beneficial for the economy. Such projects include reconstruction and re-carpeting of the highways, constructing unnecessary bridges and infrastructure, building a transport system that only benefits public living in a particular area (Hibbing, Smith & Alford, 2014). These projects reflect political ideologies of governments that are more inclined towards corruption, fulfilling personal interests, and lack of concern for the general public. This reflects an error in the quality of the political system as opposed to the type of the government.
Public policy is the most important domain of a political system, which determines its efficiency and effectiveness (Potrafke, 2009). A failed public policy reveals the poor performance of the government and presence of inefficient government officials, who fail to undertake different economic, social, and political indicators while devising a new public policy. A rational decision model has to be followed while devising a public policy which includes the situational analysis to identify the problem (Bremmer, 2010). Problem identification is the most important step in devising an efficient public policy as the biggest problems need to be addressed first by the government. The political ideology of spending excessively, despite a low level of government revenue being generated from different avenues, is a source of creating bigger problems instead of providing solutions to the existing problems.
It has been observed that the failed economies have a tendency of overspending their federal and state level budgets, which provoke them to acquire loans form international financial institutions, which is another failed policy of a low quality political system. The public policy has to be in line with the needs and wants of the people (Bremmer, 2010). The education and health of the people is much more important than the roads and construction projects. Likewise, the government has to focus on other needs of the country such as energy required to generate electricity, appropriate amount of food to satisfy the hunger of poverty ridden people, and to control criminal activities. This shows that the political ideology of a government is able to affect a country’s economic, social, legal, and environmental systems, which increases the importance of the political system to be efficient and effective.
Political Ideology and the International Relations
The political ideology of a country has a great impact on its international relations with other countries. The political ideology of the United States is to behave as the policemen of the world, which allows it to seek help from other economically strong countries like France and the United Kingdom to penetrate the geographical boundaries of economically and politically unstable countries (Feldman & Johnston, 2014). The political ideology of the United States is inclined towards excessive power and reflection of authority over other countries as it is the largest economy of the world. The political ideology of the United States is influenced by its strong and technologically advanced defense systems, stockpiles of nuclear weapons, large size of its army, and its strong international relations with politically strong countries (Huddy & Khatib, 2007). This factors are some of the reasons that reveal the political ideology of the United States to violate the sovereignty of other countries in the name of terrorism (Feldman & Johnston, 2014).
International relations play an important role in the economic system of a country. International relations are vital for the facilitation of globalization and internationalization of the world. This is because international trade falls under the domain of international relations as countries with poor international relations tend to avoid international trade between them (Potrafke, 2009). Good examples of such conflicts can be seen between Russia and the United States, United States and Iran, India and Pakistan, Pakistan and Israel, and so forth. The lack of trust, conflict of interest, and difference in political opinion are some of the reasons that disturbs international relations between countries (Huddy & Khatib, 2007). All of these factors also fall under the domain of political ideology of a country.
The dominance of power in international relations is essential for devising terms of contracts for international trade that are beneficial for the politically powerful country. This is one of the causes of conflict between the United States and China, which are two of the biggest contributors towards the international trade (Huddy & Khatib, 2007). China is the biggest importer of American products whereas it is also the biggest exporter to the United States (Kissinger, 2012). Accordingly, deterioration of international relations between China and the United States is harmful for the economy of both countries (Feldman & Johnston, 2014). The increased dependence of the United States on Chinese products has caused the trade deficit of the United States to increase to $40 billion, which has been negative since the last three decades. This increased dependence of the United States on Chinese products is also beneficial for the Chinese economy and its manufacturing industry (Flew & Cunningham, 2010). It can also be observed that most of the multinationals and large corporations in the American manufacturing industry have shifted their manufacturing plants to China (Kissinger, 2012). This is because of the national comparative advantages that are gained by operating a manufacturing plant in China such as free electricity and availability of cheap labor (Feldman & Johnston, 2014).
There is a strong relationship between the political ideology of a country and its international relations. The international relations of a country are in accordance with the foreign policy of the government, which comes under the umbrella of the quality and type of political system (Huddy & Khatib, 2007). A political system has to adapt a certain approach in order to devise a foreign policy which portrays the political ideology of a country on an international level. For example Israel does not recognizes the Islamic Republic of Pakistan as a sovereign country and nor does Pakistan recognizes Israel as a country (Feldman & Johnston, 2014). Both countries does not have their operational embassies within the other country. This is a political statement and a decision, which has a direct impact on the international relations between Israel and Pakistan. The absence of embassies means that Pakistanis cannot travel to Israel on a Pakistani passport, and Israeli cannot travel to Pakistan on an Israeli Passport (Balassa, 2013). For this reason, there are no international relations of any type between these two countries.
The lack of strong international relations has a direct impact on the economy of a region. This reveals an indirect relationship between the political ideology of a country and its economy. International relations of a country are also significant for developing and maintaining an international image and relationship with different countries, which is essential in times of economic turmoil and in times of war and civil conflict (Flew & Cunningham, 2010). All countries need some type of social, economic and political support at times because the external business environment and the market dynamics of global economy are rapidly changing. A sudden terrorism attack or the involvement of a country in war has a direct impact on the exchange rate of a currency, which has a long term impact on the economy of a country (Huddy & Khatib, 2007). For this reason, international relations represent an integral part of the political ideology of a country and eventually effect the economic wealth of that particular country.
Literature Gap: Outstanding Questions
A lot of literature is available on the economic systems, political systems and social systems of different countries, but a literature gap has been found when all of these systems are reflected as part of the political ideology of a country, which affects its wealth in comparison to other countries. The literature review that has been conducted is essential for analyzing individual variables such as the public policy, international relations and the tax system of a particular country, which are directly or indirectly related to the dependent variable of this research. The dependent variable of this research is the political ideology of different countries, which controls and look after these independent variables. There is a need to research these variables in collective form, so that a new theory can be deduced, which can be used by government officials, academic scholars, and administrative managers to understand the impact of political ideology on the wealth of the country. The impact of the political ideology on the wealth of the country is evident on the basis of the theories reflected in the existing literature review but the type, magnitude and size of this impact is unknown as well as the individual factors that control the type, magnitude and size of this impact also need to be explored.
Research Question in Detail
After reviewing the literature on the concerned topic, it can be observed that the political ideology of a country is its most salient feature that determines its international relations as well as its economic output. These two independent factors are linked to other factors such as international image, GDP growth, social security, and purchasing power of the people (Kraus, Piff & Keltner, 2009). The political ideology is a tool that supersedes and overcomes all the other possible policies that are enacted by the government, as the political ideology is even above the political system of a country. The political system is a consequence of the political ideology as a new government have the ability to change the existing political and other systems within a country. In order to understand the relationship between political ideology and the wealth of the country, and to explore the reasons behind this direct or indirect relationship, it is vital to conduct this research. There is plenty of secondary data which highlights different aspects and approaches to this research question, which can be useful in answering the research question. The ideas and observations related to different variable will be used to develop a new theory, which will reveal the relationship between the political ideology of a country and its economic wealth.
Methodology
Overview of Approach
A natural study setting will be used in this research study as the secondary data used in this research is based on real knowledge and facts. Moreover, a qualitative form of research will be used to analyze the data collected. A qualitative form of research is more useful in analyzing large sets of unstructured data, which will be used in this research study (Wolfswinkel, Furtmueller & Wilderom, 2013). In addition, a qualitative research is more flexible as it allows consideration of a wide array of independent and intermediary variables that connect to the dependent variable through direct and indirect relationships. Furthermore, an inductive approach will be used as a number of theories will be taken into account to deduce a new theory (Wolfswinkel, Furtmueller & Wilderom, 2013).
Date Collection
The data collection will be based on the secondary data as most of the facts, figures, theories and concepts will be found through existing research. Most of the data related to economic, political and social systems can be derived from scholarly resources, so there is no need to collect primary data. All the books, journal articles and scholarly resources used in this paper have been written within the last 10 years of conducting this research study. This is important as theories and concepts keep on changing with the passage of time. Accordingly, a literature review of more than 50 scholarly resources will be conducted, of which 20 have already been used in devising this research proposal.
Data Analysis
Data analysis is a crucial part of a research study, which is why grounded theory will be used to analyze the data. It is an appropriate way to analyze large unstructured form of data, which is present in the form of variables and relationships. Manual coding will be used to devise themes, so a thematic analysis can be conducted. These observations will be transformed into categories, and eventually categories will be accumulated together to present a theory in the form of research findings to answer the research question (Wolfswinkel, Furtmueller & Wilderom, 2013).
Interpretation
The outcomes of this research will be presented in the form of theory and categories that have been extracted on the basis of observing secondary data. The research question of this study, which explores the relationship between the political ideology of a country and its economic wealth, can only be answered in a theoretical form as the large number of variables involved in this relationship restrict the findings to be quantified. The interpretation of the findings may include an implication and role of every major variable identified in the literature review, which include economic policy, tax system, international relations and public policy as part of the political ideology of a country.
Expected Results
The expected results of this research study reveal a direct relationship between the political ideology and the economic wealth of a country. The political ideology of a country reflects the primary reason for the wealth gap between different countries, which can be assessed by using comparative politics. The different political systems that are being used by various developed, underdeveloped and developing economies, are part of their political ideologies, which have a strong influence on the international image as well as repute of the country. The economic systems is not an independent system but instead is a domain of the political ideology that is interlinked to other systems such as the tax system, public policy, and social needs of the society. The political and economic systems of a country are the primary indicators of the quality of the political ideology that has been adapted by a government. The efficiency and effectiveness of a political ideology are determined by its impact on the economic and political stability of a country. Accordingly, it would not be a surprise if the results of this study reveal that the independent and dependent variables of this research can be interchanged with each other, according to the scenario and situation of the research setting.
References
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