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The State plays a vital role in a country's political economy and it is therefore considered to be the ultimate decision maker in both political and economic decisions. The interaction between the state and the market is referred to as the International Political Economy (IPE). The developing countries are categorized into the South block because they are less developed, have weaker economies, military and governments. The developing countries are therefore referred to as the periphery while the developed ones are known as the North or Centre. Even though the developed countries dominate the economies of the World and therefore dominate most of the economical institutions in the world, the developing countries cannot be ignored in the International Political Economy because they have the majority of the population.
The role of the States in developing countries has not therefore been effective because the developing states have been unable to fully exercise their self determination and sovereignty. This is attributed to the fact that developed countries like the United States of America easily give up their dominant and strategic positions in the world and as such, they will do everything through the use of political and economic means in order to further their aims and objectives throughout the world (Anheier, 2008).
In the 1980's and 1990's there emerged an increasing number of civil society organizations which questioned the ruling authoritarian regimes of the developing countries through street demonstrations, public debates and through other channels of popular mobilization. The civil societies therefore played a vital role in the democratic transitions of developing countries. Civil societies therefore played vital roles at both policy and implementation levels of the developing nations. The role of the states in developing countries has not been effective and it therefore calls for the states to play much bigger roles in the development policies of the developing countries. By so doing, the states will help the developing countries to pull themselves out of the global financial crisis (Armstrong, 2007).
The debate on globalization has mainly focused on a considerable degree of economic and political forces and on the activities of businesses, governments and the dynamics of markets and states. However, the role of the civil society or the third sector in the shaping of the national, local and global issues has been overlooked. The Civil Society can be defined as a network of non-governmental organizations and citizens who together create a political community and a realm of society which exist without the direct influence of the state or market place. The Civil society was also defined by Michael Walzer as "a space with un coerced human association which is formed for the sake of interest, family, ideology and faith to fill this space.
The civil society plays a vital role and has great impacts on the rise of environmentalism and the push for huma rights coupled with the backlash against economic globalization. The civil society play a crucial role in the society by shaping today's global affairs. The civil society, through the international citizen movement today represent one of the most undervalued and most powerful forces that have been socially invented today. In this era, servile governments or states and global markets can now no longer plan the fate of the world alone. For instance, citizens have completely reshaped the public debate in developing countries and even worldwide like for instance their efforts in protecting dolphins against the tuna industry, campaigning against the land mines and the microcredit organization which enables small loans to be allocated to women in developing nations to aid them in establishing their businesses (Heinrich, 2007).
Civil societies have a tremendous positive impact on states and markets and therefore they deserve not only the support of their country but also international support and attention. This is because the civil societies promise a countervailing power in their countries against the ultra wing of politics in the states. They also put flesh bones of universal rights and legalistic doctrines on the states and markets within their boundaries and even on a global perspective. The civil societies therefore play a big role o shaping the developing countries towards a borderless world in this twenty first century.
Development planning in developing countries has been a failure has been a failure because the states have always remained ignorant of any viable policy alternatives which have been normally insulated within the top down and inconvenient hierarchies viewed by the organizations based within the citizens and the public in general. Unlike the states, civil societies like for instance, Non Governmental Organizations (NGO's) are based on a trickle-up model which is the opposite of the state's "technocratic, elitist, and trickle down" models which are normally promoted by the traditional theorists of economic development. The models used by the civil societies in developing countries are therefore priceless social resources which offer the citizens new paradigms toe enable them get out of their old ways (Howley, 2009).
The unique characteristic of the civil societies makes them to be more receptive to positive social changes than the state, markets and the private enterprises. The civil societies have therefore emerged as significant phenomenon in the economies of the developing countries. The current society has therefore been characterized by a clockwise enlightenment notion which is rational ordered and which is subject to global laws and therefore in good position to be comprehended through scientific means. This ethos is better expressed in political terms through mechanism, statistical averages, totalizing ideologies and systems of all kinds (Heinrich, 2007).
The political economy affects economic development through its three pillars namely the political institutions, the political market imperfections and collective action. Development outcomes are normally based on incomplete voter information and lack of credible and trusted pre-electoral promises. The credibility of state commitments is therefore linked to the contrasting developments arising from political checks and balances. Political instability has a great impact on the economic growth of developing countries because high levels of political instability will normally result into low growth rates for the developing countries Gross Domestic Product per Capita. The political economy affects economic development for developing countries because political instability among these nations will have an adverse effect on their economic growth through lowering their rates of human and physical capital accumulation and productivity growth.
The rationale and nature for development planning which is adopted by the developing countries is such that since the end of the Second World War, it has become a common practice for the developing countries to publish their plans for development which are normally medium term plans lasting for a five year period. The aim of such development plans is to include projects which spun for a number of various years of the budget but which are necessarily not long as to cause periodic delays in the assessment of developmental efforts which stretch over a serious of development plans. The development and planning of developing countries is normally faced with serious challenges and therefore, ways should be explored in order to enhance the models of planning used by these countries so that the quality of life of its citizens is enhanced and improved. The use of aggregate production planning models has not been of significance in the developing nations but with the development of information technology in the developing nations, the use of these models will be more significant in the improvement of productivity (Howley, 2009).
Vital lessons can be learnt from the Bangladesh Rural Advancement Committee (BRAC). The use of an experimented development intervention which focused on the extremely poor and female headed households proved to be a success for the country and therefore other states should emulate this rationale and nature of development planning should be emulated by other developing countries. Other developing countries can learn that poor people will normally safety nets and diverse income sources in order to enable them to cope with their shocks. The use of the TUP intervention (Targeting Ultra Poor) by Bangladesh helped the state to be better placed on focusing the three elements of destitution thus namely; being able to access major productive assets, being able to meet subsistence needs and putting an end of their dependence on transfers. The TUP initiative should therefore serve as a big lesson to other developing countries who wish to help their citizens who are stuck in poverty (Heinrich, 2007).