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Comparative Government Unit 5: Political and economic changes and development

Governments respond to globalization and development challenges through economic and social policies.

Covers: Globalization, economic liberalization, social policy, natural resources, industrialization, development indicators, demographic change

Study guide

Globalization links countries through trade, investment, technology and culture. It brings growth and investment but also pressure from global markets and international organizations like the WTO and the IMF. Countries respond differently: China joined the WTO in 2001 and opened special economic zones, Mexico joined NAFTA (now the USMCA) and liberalized its economy, and Iran faces international sanctions. Economic liberalization means moving toward free markets through privatization, deregulation, lower tariffs and reduced subsidies. In the 1990s, Russia's rapid privatization created powerful oligarchs, and Mexico privatized many state companies.

Social policies address poverty, health and education. Conditional cash transfers, like Mexico's Prospera (formerly Oportunidades), paid poor families who kept children in school and attended health visits. The UK's National Health Service provides universal health care, and China ended its one-child policy in 2015, later allowing three children. Natural resources shape development: Nigeria and Russia depend heavily on oil and gas, and Iran on oil. This can lead to the resource curse, where resource wealth fuels corruption, inequality and weak economic diversification, making economies vulnerable to price swings. Some countries create rentier states, funding government with resource revenue instead of taxes.

Development is measured by indicators like GDP per capita, the Human Development Index (HDI, combining income, education and life expectancy) and the Gini coefficient for inequality. Demographic changes also matter: China faces an aging population, Nigeria has a fast-growing young population, and urbanization is rising everywhere. Political changes include democratization, such as Mexico's transition after 2000, and backsliding, as civil liberties shrink in Russia. Environmental policy, including commitments under the Paris Agreement, is another area where states balance growth and sustainability.

Multinational corporations can challenge sovereignty by moving investment and jobs to wherever rules are friendliest. That pressures governments to lower taxes and regulation, and some firms have more economic power than the states they operate in. Shell and other oil companies in Nigeria's Niger Delta are a common example. Liberalization often provokes resistance. The Zapatista uprising in Chiapas began on 1 January 1994, the day NAFTA took effect, protesting its impact on Indigenous farmers. In Nigeria, cutting fuel subsidies triggered the 2012 Occupy Nigeria protests, and Tinubu's 2023 removal of the subsidy led to strikes and #EndBadGovernance protests in 2024.

China is the world's largest carbon emitter, but it is also a leader in solar and electric-vehicle production. It has pledged carbon neutrality by 2060, partly to answer public anger over air pollution. Nigeria's Niger Delta suffers repeated oil spills that fuel local unrest, Mexico City has long struggled with air quality, and the UK has a legally binding net-zero target for 2050. The UK left the European Union in 2020 (Brexit) to regain control over laws, trade and immigration. Nigeria belongs to the African Union and ECOWAS. Nigeria and Iran are OPEC members, and China, Russia and Iran are BRICS members.

Mexico ended Prospera in 2019 and replaced it with direct, mostly unconditional transfers, such as universal pensions for older adults and Benito Juárez scholarships for students. Its oil company Pemex was nationalized in 1938. A 2013 reform opened oil to private investment, but later governments moved to restore state control. UN sanctions on Iran were reimposed in September 2025 through the nuclear deal's 'snapback' mechanism, adding to US sanctions and causing high inflation and a falling currency. China's population has shrunk since 2022, and Russia also faces population decline, so both governments now offer incentives to have children.

Key ideas

• Globalization brings growth but also outside pressure.
• Liberalization moves economies toward free markets.
• Conditional cash transfers fight poverty by rewarding school and health visits.
• Dependence on oil can create a resource curse.
• Development indicators include GDP per capita, HDI and the Gini coefficient.

Formulas and rules

Common mistakes

• Thinking resource wealth always helps development; it can cause a resource curse.
• Confusing GDP (output) with HDI (broader human development).

Words to know

Globalization

Increasing global connections in trade, investment and culture.

Economic liberalization

Moving toward free markets by reducing state control.

Privatization

Selling state-owned enterprises to private owners.

Special economic zones

Areas with relaxed rules to attract foreign investment.

Oligarchs

Wealthy, politically connected business leaders, especially in Russia.

IMF

International Monetary Fund, which lends to countries in financial crisis.

Sanctions

Economic penalties imposed by other countries.

Conditional cash transfer

Payments to poor families who meet conditions like school attendance.

National Health Service

The UK's universal public health care system.

Resource curse

When resource wealth leads to corruption and weak growth.

Rentier state

A state funded mainly by resource revenue instead of taxes.

Human Development Index

A measure combining income, education and life expectancy.

Gini coefficient

A measure of income inequality.

Democratization

The transition to a more democratic system.

Democratic backsliding

The decline of democratic institutions and liberties.

Sample practice questions

5 more questions like these, from level 1 to 5, are in the practice set.