Does Economic Development Impact Party System Development in Europe?

Does Economic Development Impact Party System Development in Europe?
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Does Economic Development Impact Party System Development in Europe?
Economic development and party system development are concepts that have attracted the attention of many policymakers, scholars and economic researchers across the world. Whether economic development impacts party system development has been the area of concern. However, several studies have agreed on the impact of political system development on economic growth (Sirowy & Inkeles, 2017). Many international development scholars believe that vast cross-country differences in development result from varying political institutions. The primary institution fostering long-term economic development in Europe is the organization of political parties (Frieden & Walter, 2017). Strong parties promote growth through various mechanisms. They foster economic development policies and incentivize leaders to leaders to fulfill public interests and solve economic-related problems. The bulk of the impact of the party system on a nation's economic development lies primarily in policymaking. This essay answers the question: does economic development impact party system development in Europe? It argues that economic development does not impact the party system in Europe. Instead, it is the party system that has a significant impact on economic development. Strong parties help policymakers solve various economic problems. They ensure better economic management, public services, and political stability, which promote economic growth.
Political Party System and Economic Development
Political parties are the most significant organizations in today’s democratic nations. They give birth to a party system, which many agree is important for economic growth. A party system simply means the existence of political parties in a country (Pettitt, 2014). European countries are highly democratic because they allow their citizens to elect their representatives through voting directly. The democracy in these nations enables them to embrace the party system (Sirowy & Inkeles, 2017). Equally, adopting the party system in Europe strengthens the nation's democracy. In investigating the impact of party system development on economic growth, Hicken (2015) analyzed three dimensions of the party system and found that these dimensions shape economic development by streamlining the policymakers' capacity and incentives to pass and implement economic development. They include the number of parties, institutionalization and nationalization. These dimensions help in policy implementation.
The number of parties impacts the decisiveness and credibility of the policy. Hicken (2015) highlighted that a system with many parties is associated with more potential veto players. However, this system creates a less decisive but more credible policymaking environment. A party system with more political parties has more actors likely to participate in the policymaking process (Pettitt, 2014). The presence of many veto players increases credibility and reduces decisiveness as policymakers have to argue before coming to a conclusion. This is similar to a democratic leadership style where decision-making is slow but credible because it involves different players with separate ideologies. In other words, where the party system produces multiple actors whose joint agreement is necessary to change the status quo, credibility is higher at the expense of some degree of decisiveness (Hicken, 2015).
According to Hicken (2015), Institutionalized party systems consist of relatively cohesive political parties with stable support bases. These parties are highly likely to respond to broad constituencies. Policymakers in institutionalized party systems tend to have longer time horizons than those in less-institutionalized systems (Hicken, 2015). They also have a strong incentive to protect the party brand as voters' valuable cue and politicians' mobilization tool (Hicken, 2015). A higher institutionalization level means that the parties have a wider support base, enabling them to pursue pragmatic strategies. From a political viewpoint, a large support base allows a party to pursue their economic agenda (Ryner, 2015). Therefore, since institutionalized systems put the public interest first, policymakers can focus on improving the economy by implementing suitable policies that align with their economic goals.
Another party system identified by Bizzarro et al. (2015) is nationalization. Nationalization is the extent to which political parties compete and win votes locally, regionally and nationally. A nationalized party system has competitive major political parties across the country’s districts and regions (Frieden & Walter, 2017). This system relies on the policymakers' ability to respond to a broader constituency. The wider the response, the stronger the incentives to supply national policies. However, policymakers with narrow constituencies prefer products and services that target a specific constituency. Bizarro et al. (2015) pinpointed that a high level of nationalization results in competition between political parties. This competition encourages conflicts and debates regarding national policies. These conflicts and debates motivate parties to compete to offer comprehensive policies that benefit citizens.
Recent studies have confirmed the correlation between the nationalization party system and the capacity to provide national policies. Bizarro et al. (2015) stated that nationalized party systems are more likely to adopt non-geographically targeted public policies than regionalized party systems. It means that countries with higher nationalization levels tend to have increased foreign direct investments than those with regionalized party systems (Bizzarro et al., 2015). The latter proves less attractive to capital owners because regionalization increases the likelihood that the national government will appropriate the investment returns and use them for geographically based redistribution.
A schematic literature review on political parties in Europe suggests that political parties play a significant role in economic development in various ways. First, strong political parties create an avenue for enacting policies necessary for economic development (Sirowy & Inkeles, 2017). Every economy needs policies that improve macroeconomic conditions. These policies revolve around taxation, investment, trade, employment, wealth distribution and other macroeconomic variables for economic stability and growth. This also includes implementing sweeping efforts to change societies and economies and providing discipline, organization, and direction that could be absent.
Strong political systems have rejected class relations, ensuring that the nation is not the traditional elites’ handmaiden (Hicken, 2015). They have developed infrastructure, penetrated remote countryside hamlets, and served as modernization agents. They often share government-supported development agendas. Therefore, these systems are a potent tool for modernizing underdeveloped societies through policy implementation. According to Hicken (2015), policy environments that respond to public interests by promoting investments in public goods and services contribute to a country’s economic development.
Every political system gives national leaders different capabilities and incentives to implement necessary public policies. Bizarro et al. (2015) supported Hicken’s (2015) argument, asserting that a strong political system establishes highly institutionalized spheres of politics and policymaking. This system minimizes market uncertainties related to unpredictable policy swings while enhancing political stability and growth performance (...