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One Company “Where Learning Comes to Life.” | www. harcourtcollege.com : : Fee Wont “ern Monte) UendenSoey Toyeong p120§ saiog 24 pu adoarg mse fo voqeuofseay aout 24 usd 0 py Ut ‘weunaqpr pur yeu, suojsig sous dat oy aN wowsy, ey pur ueusey tompa puoras somo pny pur mucus oy proud yuouary my aye, ontpa passin song muaTeuayy ‘GUDSI wowtpa was saoyay pee snap on soruouorg ynalouy fo Seiouapar pu soyeg pus ‘unpey “ney oud 20403 ‘oy pur sah suey Rtg pu ay UL, Srouary op woenposa rons pue Koueny 1D agra pu pong HMC "49s pur nous auzems) ‘ome passes swopsig sarge spupses) ont sons lsnduquey pus eas os]O pur Mewooyy puEMpy sewouy pue weye9, vorrpa uns MShoys anuowog jo uomeng aus ong, ‘iE ue sezueg Towne (opeqiaded ney pur omg wagenese ose) wong ais yng pu suing sooner ‘eputig puEfouneg SSouory epusyeY -pumy pur PeypeG tuePIe SDIWONODA NI S3IM3S LUNODaVH nang sage9 et Trevsoces a oezosvezio ry 5 an EG serstggo unos ag Su 25 Pu {2 Repioss deg! Rapp eur oan so 0 he posses ponpann yn nerd mi oes PL BE TP 2a soe a0 wo ovo. sam or So 8 ar ood _mranougo seat) ‘Suse inenarace meen nono sowarenaKreinin Inerationl Economies: A Policy Approch Eighth Editon ples of Ecos Eaton (also available in Micro, Macro, Brief ‘Macro, and Essentials papesbacis) Nicholson Nicholson roca Tory: Bei es and Estero dition ‘Ramanathan Intructry Econometric sath Application Fourth Edition Rukstad Corporte Decision Maing in the Work Economy: Company Case Rustad -Maroeamaic Decision Making inthe Worl Economy Tex an Cases “hind ait Salvatore Samuelson and Marks ‘Managerial Economics Third Edition Santerre and New th Ee To Lily and Michael Seah ‘Maroeonamics: Ar intaduction to Advanced Methods ‘Third Edition | Sexton Exploring Economics: athonys te Problem Siving Introduction to Economics Second Edition (also availabe in Micro and Macro paperbacks) Walton and Rockoff “istry ofthe American Economy Eights Edition Welch and Welch Economics: Theory and Practice Sixth Eition Yarbrough and Yarbrough ‘The World Economy: Trade and Finance Filth Editionpaurojut sey sueusojad ps ‘uc 24) put A840 ju 49 uo woe yo NOU snout “ous ue posioo Sour IB ef NOW of BAO oF SARA fe ‘anUOUOD yuadapur usz0p Soe ares SI pue UofA tans at idams jean SOR oar nouo>s pu eanyeday Aq ponder sin 98ueyo 0c] a4, ape sed Wap yaw pasa sey es 04 aes 5 SONOUNDD BAER RO JOON DLlegality, corruption, principal/agent problems, market Jer of regulation, and the consequences of governmer discussion “The book is designed to be taught in a 1S.week sees two chapters a week While itcan “stand alone," course for upperevel students would benefit fom supplementary readings such a those suggested atthe end of ach chapter, Moreover, both stadens and faculty are welcome to visit my Web hp irvingvasst eu /ComparativeEconomics/index ital where they willbe able to acess some material electronically, andbe guided toward useful re sources of data and information. ity, the prob re ate part ofthis ate of roughly ORGANIZATION action to the study of comparative economics. Chapter 1 ‘economies than I am able to provide inthis pace in Europe, discussing the French ad the Swedish con tries are included fr partic ‘ona possible source of market ropesn 1 are more thoroughly discussed in chapter 9 ‘market economy makeitacompeling obje ray requir, chapter 13 covers smaller Asian economies including Tavan, Singa- pore and Indonesia. Chapter 1s an evaluation of the Phenomenon ofthe “Asian temps to astess how much af the performance of these economies world” and how much s explicable bythe more extensive use of ‘and may be omitted by students witha good background, while chapter 16 assess th performance and roblen centri command planing tticed in the USSR. Chapter 17 assesses the “partici is hen. troduced in chapter 21 and discussed in the Russian con and 23 cover Poland and the Caech Republi inal chapters 22 ACKNOWLEDGMENTS | want to acknowiedge some intellectual and personal debts, with the usual thanks, have suferd from my preoccupation aver the years to them the book. cated. Francis Lees of St. Berhanu Abegaz ofthe Collegeof Wiliam and Mary, and several other reviewers evaluated my drafts with necessary good humor and patience. They made many good suggestions, some of which are reflected inthe fnal pretation are mine alone David Kennett Vassar College Poughkeepsie, NV. enmetvasar edtee Boag rowan 0s 9 foward ayy 9 dey oe Ahuouney purnaueD az St 2d ose samonosa asiivies an save nod sud 68 so wad af soon mau 4s. 660) {et tow wean 2 sem, St MEA O05 FO pO wid) 8 four oun a po Surry amp 9 dD aun ave Sor Aiwourg suey wapoy 9 fo suormeys au. § yd) mH Fie 59 Suan mors ue wimg dE 2 swass muouerg sine ar z dey suis nanan josh, {andtory Economy: The Cas of Yugsivia 388 ies ofa Third Way 407 PART ONE INTRODUCTION TO COMPARATIVE ECONOMICS 2ir mosis up mangas “onsen omen 0 fopeg mua oseraeg a, 01 spy psy ome 0 Sounosy OL wessnog sf suanson) sori for] sedan peered 18 ang gary samen my osour0s se spy par oj wos, ee Sunny cso mond 9 fouory urpoy 5 sary 19 pene aaa pes ys py 1y9 21MM MaLSAS Lay ¥ OH 29 AWoNoDa LayuWW v do NOLvuadO AML OML Lave ay e281 suena mower og coe pu fa, Ey swaisas a1MoNo2a 40 sio0M aL oF spay par 09 Fe sie BE woNssnasi sof suousane) 6 seg pu fy 26 aoe 2 2 Fe suosing Saunier | |PART THREE CAPITALISM IN WESTERN EUROPE 132 INDICATIVE PLANNING AND THE FRENCH EconomY 134 Prospects forthe French Economy 147 | Kay Tesnd Cnt 18 i Quest fr Dic 10 eww a re Boks Arie 81 Social Doncracy 156 ‘The Tax and Tanger System 157 Conporatism 158 ‘The System of Labor Relations 160 we is 8 Broad Artes 18 ‘THE HISTORY AND INSTITUTIONS OF THE EUROPEAN UNION 171st Gein ney re pnudog eo se sy pe ong #40 s2inomy 42 wos wf sunt) e8t umpnus roueay Yee Soc me oa ay ez fiopsy owy aotaneo pug zz uovonpoqay 81z saIWoNoog NvISy unod Lave a pn yo ele sumasny sO af uN tz sun pur ssa Ay suey Suu worn tga fo Roa apa ui aut, Tat 3 > fo>Ped mu, tt sora eam os 69 ary wou ayo seo fey PUL eat naan odeoeyy mu ft ey pnp os 281 S210 29 sono sf ssn) 99 sis pu sung Ay at worn) Bt won wed 2 a sunsoeg Buey a1 Sp ora 0 tat sma ose eo wangThe Reed 26 ‘he cif Pak Chang He 251 Phases of Korean Growth 252 Investment an Sings 262 The Finacial System 263 Public Finance 265 Sito he ern See 28 ‘ha Vln Aan oe 28 “oe eel oe To 255 “Capertee To 36 Labor Maret 266 “he olet Abundant Lae 26 The Financial System 287 The inking Sete 207 International Trade 289 Hove Reforms Aceeated G Com Growth Be (China onthe Worl Trade Orgoization (WTO) 255 strc! Background 301 Aga Deegmee an Ln Reform 30 Industrial Policy 305 Saving and incest 306 ‘The Budget 307Le sums OSE SaIMoNoDg AsIIvis0s anid Lava rosa pus Sus yang fo Bue Te moudoag sauadeus spp au‘ey Terms and Concepts 408 Questions fer Discussion 405 Resources 405 Becks and Ati 405 The Geman Moe 2 Coders eee Wher and Managenent 413, The Salerno #4 Britains Publi Sector: Structure and Performance 428escent sn (0 up Sp pm se 557 exe mR) oor 5p wou 06h Saumasy 55 Aumaiog yn srsuasuey a9 wow 6 sen suns) f ‘sw 9 Keg pssonboney et rs sam SI Gb ans Anau a4 99 ope ono fo muy so seen PS be sora ninae/Sny om ser wenden ay Beams apn onda | ry svwa9 40 NoLYoLAINNaR aL sud fo mp ot i oz uate 65n swonooa Lavuvi ¥ 04 wolisw¥ts 40 se33004 3K ep sunny feadiy sano weeateena Fe an ogra pu xg eb vx pry vor 0g (ee Aouarayfy wo woxmmumang fo S130 ALL 9 steano erage ros, ss) spay porstg sb sun 5b woseroi asus) 1 side pussy Ky, Sg aon ns 2 (9) 957 Soars pan sen ony 7 ‘i vonmaney ng xen sf SteuoeY 422 ‘The Legacy ofthe “Er of Stagnation” 493 Perstrta and Gasnost 93 500 Days toa Maret Economy 495 ‘The ida Rjorms 495 oneaing cl Seuty Ses 69 (Scone te One Scr Output Clape 499 The Privatization Program 500, isan Ati 518 Poland 520, Background 520 Refers ofthe 19808 521 ‘Shock Therapy 523 ‘oe lnpit of Shook Tee 58 nsttutional Change 525 Prnasaon 55 Mass Prictzton 827 Dine Foreign Imestment (DED 528 Prospects forthe Polish Economy 528 | Prospect for he Coch Ezmomy 538 Key Terms and Cont 539 Question or Discusion 539 Reourees 540 bse 51 esha rtesuaysis sao Fusion) suyadcog juoyg at suzeis sauouaey SNSISAG DINONODa 40 SLOOM HL :z waL4vHD emma 94 suas Sado iss sacuo3 wal a Bens sais sonny fo sinuaunpung oes oor swouna fo uceusuoic au, Sir Suowe ura smn cr seueszy monary ams uy 3uouerg sys >oeo3 ue 444 oxepauy SNAASAS DIMONOD 40 S34AL “1 aLAVHD SDIWONOD FAlivavdWwoD O14 NOILONGOMLNITYPES OF ECONOMIC SYSTEMS INTRODUCTION “The study of comparative economics as change ages dealin recent yeas. The Stove centrally planned eco- sm has emerged the victorin a war of competing economic ideologies waged for much ofthe 20h century: Whether this will be» perma ‘economic and poi crim capitalism hasbeen reinforced by the emergence ofthe ons that only 2 decade ago were universally regarded as ms of economic organiza. ‘on increased accordingly, and investigation ofthe root causes of thet present economies of westem Europe, which had until ‘a bold step. The re- the member countries ofthe European ‘The strong intervention active ole of goverment inforce the contrast between the American (or Anglo-Saxon) concept ofthe rls: tionship of government and business and the European concept, sometimes called ‘huge array of goods, Neverthe: tobe produced must be faced and made in some wy. choice ofthe mix of goods that are‘uo pozgesisNpUy WDpOMD® nua Jo wag a0 -dooun> jaazoaiy 1) sauo angad sou a yoo 'Snwoud>> [oF woe (pres jo suo ANBWNUaKOD sry Caysy yo dunes ay Buea 69 ‘uonnyasur,Sururyeeus uns weasjsey 52080 ut pamnpoud sors pure spooS ay Jo nga jo stwnsuo> ay ay ze Ay) ‘sapo ain vo pur ‘soge yo sons a} are spjoupsnay PUEY3U0 23 UO “PION sono ayy ase ss munouo% Se sue yo puauodoo eWAMEpURY SU HL sotoHasnoH ers 29 4 owns yeu padopsap 20 again ‘Gove erasnpar usapourearaypeey> yey SUORTUSU JO SPUN a, SS PEI 3 0384. SNOILALILSNI SIWONODA aajona soy no pu anno se afew 0 oigns pee somes pososqo ase pur Aq are Sree nt ee ue ssid ws yo pur saunpaooud Sans ose ng see eID pay) Se, aR Ue PRY 2ARO 4 UO PUR oy wane woop jo Sadia peasy 2504 0 aang eaeyi ou 0 ywezodun 1 uorspap reuonnguasp a9 stSA{L UO onposd si jo ajeuag any aes kom oy oj SION) Jos Pun ay uojsn9p anbiapos Jo 27049 | | |partsof publicly owned (or ‘when this takes place onthe sae ofthe mass (policy) to reduce unemployment Tn the real world, things ae necessri This ocurs because agencies ater to to become “captured” by thse inter: furthering industrial of these agencies are in privately owned « “They may be “public” in that tir shares are traded freely generally ona tock ex change, or “privately hel,” whereby ownership is limited toa small group of in dividuals and shares are not avaiable for purchase or sae beyond that group, Cer forms of enterprise ina market economy ae partnerships or wholly owned proprietorships Economic enterp ‘commonly assume profit maximizers, fan the actual behavior of fms, and managers within fms, suggests tha his may 190 simple a view. Conflicting goals such as manimizing market sha that are more comple tha with principalfagent problems. These arise beca worker, oF management for that mate (he interests ofthe owners (the pric ‘owner ofthe rm thas shareholders) mi the workers pursue their own goals (leisure, prestige, income), wich be in conic with his by the growth of Solidarity the“ltemative” labor an opposed to the state NONGOVERNMENTAL ORGANIZATIONS ‘Thereisa growing recognition by economists and political scientists ofthe impor- tance ofa ith set of institutions that play an important ole in modem economies, ‘These are the nongovernmental organization or NGOs), and they have attractedsu uouoss jo zouneyoq ayy pu s0}>ez20 24 Rog aUREINNP Oday soe ONS ‘Sydqueg ina Seu jenpipur pu si are Sou au NS 0 Sa} eu a ony yuoursau08 a 30 samod os fq peut as ey sar a5OH "UOAEP yerado sn amos © RAN SUOHRUGSUN TV 2330 wo djodouou e Sunny se JO a uo Sar poe guannusan08, Aa ave se fo apa pomanvas wwoay AKL “soapruyt suum oy) jo emgeu axg adeys ose ayy yng peu suo yp sajna yauryeuayyA(uo you aumaap uoRIpEE pu azRAN> WOIRN> OO, seams prana ease ne pamoque sia iasonesuro pypmand np smieng pny sey UY PEN ue moyen jo azo a uetodu xo at sue a Tay sOLARIDG sENBLTUDIYA, rusia pu SuoneynBar pue swe] se eypo> of 909 Jo 8409 KOU, PEARY pue XopdiuoD sauozino u0ua39 SURE zoey sod sys somo pu Spade ap ML sauop 0 papuaya soqaudsdtuara-xe ay 0 250e50q 5nd nd ay _uapang op suenboy Kup pu ‘sanzouna o Brag ym pur ssoiqut op as ‘yo pagar aq ouse> pue dno sejoqued eyo youu ap ATRL 20:98 SOON, saxaMoy, Sunpuods pue Bure fueduoxe jy suapung sxe ap SLAIN xo Sox ae 0} Suypoou youn yusuzars08 jo soy yy jo aos eda: “pa up ysouruse8 a paus ose az LaMv¥ an a) sdnos8 Saigo4 pu GuoneueBIO \>:Myp pur dna qgo4) tr agezado yxy s:ou0eigeay puefeauidoptap snotes 10 ses payrun a ey pag ty 29H) sotaasaptnaad oH Jy SuONETTUERIO sénor3 300 Ons peng souoo9 aside e ur Su way ws BuTYT ‘ome ase nq eyuounuasoBubu Ao 3 are He SOK 20195 QON a 8a UE Uy LORUAREagesDpIsuoDpervasive effect on the organization of economic activity. Procepures ‘Ona level less formal than rules, the day-to-day running of al organizations tends to be governed though procedures, which have less 7 define ther sgh procedures might ‘more enduring, Some proceeds, and so forth Custom, CULTURE, AND TRADITION ‘Also determining the nature of ecnomic outcomes and the behavior of economic actos within an economic system i the force of custom. Diferent societies do things differen ways and have particular belief and prejudices, which may be ‘their effect as formal emulations of even procedures. These uence a wie range of economic variables. Fr example, n ome ing economic outa rust” societies (among them Japan, Ge argument, although Fukuyama’ premises may be Guestoned. For example. why the United States (the most anyersidden and francs Fuknan Th TS Vitro Be Caton Poet New Yer Fe, 58) ‘Sak heii Eon? Sepa 1) classed with Japan (which the developed economy” rusting Scities”? ECONOMIC Economies difer not only in their institutions and the rales that gover the inter pupoteto gop into ve broad ees NATURAL Assers ‘eet anaes pf heb othe ature sure ‘the economy. These consis primarily of minerals ike coal, il natural ‘hich are fated within the ground of aration’ economy, and the na cureng vegetation like forests, which are found on it. Also included in an inven: tory of natural resources should be water resources and certain topographical Propuceo Assers Economists, in their analyses, have tended to focus alot of attention on an econ ‘omy’ stock of produced assets, the extant accretion of man-made capita that was created in previous periods The mos easly envisaged examples ofthis stock aresos uationtt fora stop noses . sa ene Sas icon othe ales onl aes pes Ppl ag yy egy og ama Bana por st HE HEN-I Sais Ga) esd eet ee ae Sun) mn rss moo age ee BaP ngeu aney om ae a18e yo suzy ut Suen sz doy, a Jo 8048 “€ Se qu urpuers pue gasse yossns io; peu aan soussnipy (uoHE>| sag peagund notes jo uoryemguion ayy 5 eas yg woanooosaomeho a 26130 ypeo ur pease ayy Agen op Ridin Jo das pog a uo peyEqa ‘evox noundsag ageurans mmo org PHO ML Mou? UE avagip J ShMuNOpUD anteyaL OW) aed omoua59 Uo} age eam Jo Pass aap yess yon SD3r0S ~~ SNOTIWN ONOWY SBIMVA HITVaM MOH ‘urwamy se porpoquua ase jana yeqo(S e wo s2omosas Jo wang wreyodun ysour a awaiavd NywaH -saaqen sooxps sup ‘spa 'speas ws porpog ose su ay ‘aman ono ed Apu 388904 uspood pur spoo8 poystuy jo sauowanut ayy put4 The variation in per-head wealth between nations is even more pro- ‘nounced than the variation in pr head income, Australia atthe top, has out 5 times the west) of Ethiopia, the bottom county THE DETERMINATION OF ECONOMIC OUTCOMES By ecanomi outcomes we mean measurable consequences like per-head income, the cstibution of income employment, alton and even demographic factors like life expectancy. These outcomes are the result ofthe interaction between the ces, the institutions, and the rules that govern the system. This a picking up s falls ard usng thei resources productively SOME FUNDAMENTALS OF ECONOMIC SYSTEMS ven a cursory glance a the world shows us that ecanomic systems are complex ‘THE NATURE AND EXTENT OF INDIVIDUAL RIGHTS All systems of government pot some constrains on the righ of individuals in ‘economic mates, although the range anid force of restait difers dramatic “Theeatent ofthe rights thatthe government allows, either atively or passively, to ‘Indo omen the Word sk lok owen tot al ogra practi fant, by the tate itself), of great importance in det the shape and functioning of the economic system Prorenry Owwensiup axo Prorerry Ricits. The character of lowed to own “the means of producto ferries, organizations, ols, and inventories that are used to make goods and ‘The existence or otherwise of Is the basis for distinguishing beShumosaivig nto 20 shun npn ‘se yd ‘eg op snd og rn at ng va eae eet aban ary aes Pay eo inure pve even mda for aang oa Sd oa, pratpu ue jo usurp ue aunt fevosid pe ewe xe ei uonexeo sais ay sou wy -snput aos ont Kuo aq syusaid Basuaor Bye panod oy su aney ow ‘soup yo syst Auadoud ig papurg, Snaiand say 25n oy St senpeatpur uy soupo odin way Jaye pu U0 ayy yo suas usdoud a jo aus Aes aye suoqeriar yon Xuadoud yo asn sz9um0 =o4 tha time undergoing the “Thatcher reforms” the share was 67 percent carly 19808 and stood at 1.2 percent likely to havea larger goverment sector because the government promotes in- dustry in an aftempt to accelerate development. In oil-rich Venezuela, govern- ‘ment-owrned snterprise produces almost a quarter the comparable igure is almost one-third. Iis important to recall that in cenirally rebeen clase to 100 percent. ‘to government production. planned economies this figure at this time would ‘These ciferences between countries apply not provide Insenecounres the oremments se ovation and ran sens ht re moe oun he province of priate Pin beterndex ofthe le of government would bea mesure the degre of or ersmetnterfrcnce inthe economy since goverment region of private ‘often acompanied by an in ha high degree of private eco gulated. However, though such vernment interference is hata 0 ‘quantify COMMAND VERSUS THE MARKET of the Wealth of Nations. Command PLawwinc. Planning can, ofcourse, vary considerably in its scope and comprehersvenes, At one exieme we have the kind of economic orga ion in which the government controlled a all production was within enterprises In that system, detailed plans guided plans were finalized they were endowed with the force of lav, and the economic §ctors on the production side were required to follow the procedures laid down, rescribed under threat of legal sanction. For obvious rea 7p-down planning is called command planning, However IVE PLANNING, A diferent form of planning was pursued, and to & ‘enti still practiced, in many Wester European nations (particulrly Franc) and in apt In those rans he guremnen les pe eee voluntary and uncoerced response ofthe private sector toa se of guidelines pro duced as a result of discussions between government industry, and labor. The objective ofthe planing exercise is largely to establish a common information y, and ident "bottlenecks" and initiate remedial action. The powers ofthe government be used to favor particular (CHOICE AND THE MaRxeT SxsreM. One ofthe mast important featutes of the market systemis sucha limitation of coercion, The over the consequent maximization of see inlatr chapters, the market always universally approved of ln particular, the market may lead toa patiem of income and acces basic con- sumer goods that might be considered ble by some societies, The final lstribution of income ina market and welfare are cont bution of wealth positon, and ability. There aze also a vi stances of market failure in which governmen ausbly lead to higher levels of socal satisfaction. These issues willbe more fully discussed in chapter 4 CENTRALIZATION VERSUS DECENTRALIZATION Another way to ity economies is by looking atthe centralization of the desi- sion-making system. Again, we may take the example of Soviet ning in ‘which a single plan governing the use of all resources and the production of out ut was prepared, codified, and formalized as law. tthe opposite pale we can ‘conceive ofcloseo pure market sytemsin whichallof the important decisions are4) tse snl saquaur enews 05 popuodsox simpom sow a9 UO Ing ‘38 sno soy op ue> nok yey sar ype “na 20} “uodsarun pue Sun soqe| 20} rae a ape sex o uoReUap fx) 2, SApamsay 4 uyp{UaK9 20 p95 jo Los aR ayn pu opuaRoW uo suoxpitsas am ay "W999 ane AEE AGS 103 L930 syuouflunoouq ‘0s op of pause weg aney fa 2 dau oy smear ou ‘auaira%9 40 qol © aprazd 0} Ampasuodsa: pooidna: ‘Banas pu auounan Supgeu jo ajgede axe adood auras o soap syst & “sip ‘sem es. yur ous ay tans aM 290 Pano} wa LAND ey aumips &ipns uj soueuoyad unum 6} o}e uo of woyenSod es0uL ‘97 0} 81 a0 -waygnid Zovade ayy ssasppe oy skew e208 iad wena I 5 ses oye gyno pun ee ys no ova" aso 9 0 stuouos pwd Tsun tayo ot Drs SL urdoyasap ayy un wounuos Stes eda unto ain ingen zu rue smuowEN mE pods «|= SPU YAauNSD UES Woy yO aN Spaq an erse so {uate fy pods yn 0 ag ans popu S09 ed Cao> 3s g034 Jo BE sp dum, ag) woos ssrzouooo yey squnoou9 9m Awwouo>9 29s TENpIap Sauna tr fe gana ae opal |NIDUIOD ONY “TWISGIYW “TYHOW !S3AILNZONI esuaduaooreoyeu 49 vag Spun pun feypx9 OUDD9 Oyu A a} 2} sais sound ag eg seionb ndino 9, isms pose ane suoy pny fnmydoargoameagor apm see see Pe ost ops ange ars pursue meso ansap Sp samurai a ahs ago wre a ae Bp snaoun yao UNH ps ae 9 ieonnannd fq enap ed rt) tid uonouud pu wourssueape Bupa spends 30am suena pues pep oe aod ay de saa ‘jue ate ba, soauabu jo sons wezoduy sai pk wap : — saa i sno Sh poh paasondu eye Jo pads ou 4 dn pe a aut om ue sae nue tues ay pao R200 80 OnE ee uci ouaoe pe Ore ‘ue suaumianosy ‘seasons suede 30 23 pau Ayo an Sao ome oR cour yuisu Bune o Kem gaan Kaan wt wang sn UO SOA “red ayia Saad jo vores yo san #8 Sod OM 5) PONS soe io. P Soe, ‘pads soos seununto as89p moe 029 posad ane anes sr yonasao8 Jo uonoury a PUR SuOHTaRSH ead 1 np Lye,developed market economies. Workers performed because of piece ales, bonuses, ‘well as supervision, the same asi the West corpeonage Experien® seems to suggest that the best system of ticone, Theres evidence that higher productivity they produce. This heightened sense of imum performance requirements ae met Is hard t identify ‘witha im itis about o fire you. In addition itis useful to give workersamate- al take inthe enterprise, ether through stock ownership or Bonus systems, ‘which encourage them tobe personaly interested in the frm’ success Suchanap- proach combines the moral and the material, but it also has a coercive element ince the pressure of intrested comorkes is frequently an excellent source of peer supervision, MEASURING THE DIFFERENCES IN ECONOMIC SYSTEMS rope and other planned economies. These developments have reinforced seen in various ecanomies shoul th of which really seck to degree of economic Freedom and the extent to which economic and titutions support economic growth and integration int the global eco- Economic FREEDOM “Table 1.2 shows the indices of economic freedom for 1997 that have been pre- pare by the Heritage Foundation, a conservative United States-based organiza ton. The index is computed by assessing the performance ofthe economy an each cf 10 dimensions ring on Soi! le, wih 1 bing “ee and 5 bing “te ted.” The 10 dimensions are as follows: . 6 Banking policy 7. Wage and price controls 18. Property sights 9, Regulation policy 10. The presence of aback macket sumption of output 4. Monetary policy 5 Capital flows and foreign investment ‘The relevance of most of these variables is sel evident. Law levels of tarts and taxes, limited government consumption. an absence op striction of incoming foreign investment nd limi undergo sustained growth by adopting the same policies as Hong, Singapore Economic ComPeritivencss Quite similar tothe atemp to measure economic freedom have been the efforts to quantify the competitiveness of various economies, Atleast two intemationala 8 = reee sec open eons aaa snes rng seg x, 304s grees geRnaassenRsss‘The compete sation ae the ones hat have chosen theinstition nd Polis that promot lng roth Our campeitveness index designed 0 ss which counties hae the best pape for economic growth oer the period ‘of the ex fief ten years on the bas of ach county ure econmc nites ta iestitson ‘The basis ofthe WEF approach i therefore to evaluate 2 nation’s institution in economic performance in terms of say, gromth in gros domestic pro ‘uct (GDP) is downplayed in order to highlight what the authors feel are the fan damental issues of strong institutional concern The criteria examined include the following '# The openness ofthe economy to international trade and finance of business management labor market fexbility 1» The quality of judicial and political institions ‘The se ofthese criteria identifies those economies best suited to thrvein acap- itlst world Singapore topped the competitiveness list in 1998, followed by Hong Kong, The United States, ind pac, she highest ranked ofthe arge ecnomies, ‘The nat Is therefore indicated THE EXTENT OF CORRUPTION One important determinant ofthe real character of economic systems has been sis the extent of corruption, system difering from the nominalydefinal syste, "Whenever it is pervasive, coruption can deter investment, impede economicypaunur uy says Buea '0}pasnipe janpord feuogeu sos papuoas jo ana Aq snuouoDe pion. eyoeg Suey oD a aD WEY Sw OT ung une yun Bueap ut aouosadea ey OY YESS ovepHOsuoD au SONS FT AL pur pe uy azoubauny paaijuo 9 0 | ay jo snd pe Zana 4p sspumnbasuo jrRUESARS Ist UT UOTE eu MAY 9 Sind uel puvsauisng Sutop Jo 60) ap Sasea.d "yang ale on toed 30009 }9P UD KUIDUOD Ue UE S3W0D1N0 ONINvaWOD enya yo auoend gg ono goed ausapam pur Oop we 9 aos aerane any pug st yuer ABE ayy ‘SNIUNOD asa Soren ee ut wotdrata> jo uondaniad yy espuy {peas SN mown puodsos 0) aige oesoneaing poe rt a sain om i A) ON 7 toy = mo 8 = sernot = seg 7 ‘iso ein «jo sun asaya = sani F deep esa pe eas sun undone wna yeas i> be fot ot & teow ® foos & es f saeipus sue, page] uuln{oD ay & —— ssivapuodsas yoe> uo wopuadsp Aimigetrea jo aailop way ou - ‘ominog 2 suondsiad ge susan oy mvs se ep 5 5 & aatecen a = "eg aaa Jo ysUuRD0; ua pu ZoenWaIM dosnt ue Sid ur Seo, SIE. Oo RY pep HOoduct At the other end ofthe scale, relative poverty and accounts for less RECENT ECONOMIC PERFORMANCE asa econombes is by thee recent eco the more socal the economy. As nted Vales ET waltopanten Nese Slate lpen__Fance Sian Repate funlaRoe cas SA Ae x a the more sucessful Asian economies by the acronym of HPAES, which “high performing Asian economies,” thus distinguishing them by formance rather than By their systems. Some possible comparisons are Table 16. ‘re can look at economies in tems oftheir negative features ‘of nem into capital importing or capital exporting nations THe StaucTURE oF OUTPUT We often also distinguish bet values added inthe con that occurs in parallel level of development, the least developed seceties being more agriculturally based. In Table 1.7 we see that India has a high proportion ral ostput snd a celatively small manufacturing sector. As per head ise and the level of development incresses, we see fist 8 movement toward manufactur ing and industry, and ultimately toward services. This general association ofayy anuny qeuoSep ag; wry, Anse smog, amo fre 2A Ye UTOU a 4 sea bo sap Bae pn [eons posn spuanbay sour ayy. aus ap asaudas _aoour yo uosdaoxa a oj sung ng 5) aoour jo saunty eu spa “ued powoyposspsop ave ay. yuosad ginoge oj azhumb 500 ‘sot tng wmdojag pn sounos ‘ued soved Samad sg 4, 04 S400 sound se moge. mnosoe aguas ap SAUURED 4 YORE {pH poe padojanap Aqginy aug 5H sn) SS aMKOUE SP aumoUt Jo WANG “hsp ua aso 30} uapu agquusip «st asa exe Up uaN 5 uoneT “ded ag uu woe 1) o> azysou pur SOO JO pO FpDSE ut ae ens ous ng Sea yen gy ‘onIag-77aM SINoNoDa 40 NOLANSIAsIO 3HL sour uO} pur eUOH9= S01 ut og any st sons Sans pue aumyouse Buse Yu waudoraap “won pun aU anos : eons it ire a 9 RRSRRRAR| o=. Fp ‘SOURCE Das oa ‘of summarizing the income di bythe rato ofthe area between the OTHER CLassiFicaTions “There are many other waysin which wecan classify economies, nan age when we are increasingly concerned about the environment and the future ofthe planet one increasingly popular approach stock at economies in terms the sstaina ‘ ined and might be important in viewing economies that ex- ot mineral or other naturally cccurring wealth ike ld growth forests, The se ‘of environmental sustainability willnceas in importance in the years ahee. CAN WE EVALUATE? tempting and pechaps appropriate, tolookatecon- failure. In doing this we must exercise the greatest an economy isnot reducible to simple "production fune- tion” terms. The ultimate objective of human endeavor isto achieve well-being, and that has characteristics that transcend the economic: Economists have tended ‘on measurable concepts—like material income per head — torsaf the: range of outcomes when we atemp to evaluate success and failure KEY TERMS AND CONCEPTS European Union Gini coefficient households Capitalism cash-flow right rine economic system moral persuasion natural esourcesoy sur ogy pans apse anos gee PRoowrmnen diy (OLM) vonezuelig ape, prov 24L steno ura pH ue any ‘sogestend ag py wf nuns or 3 srmouns Butdrap pur padoanap wo pros as yugpsoun @ gePENRENGP a arenes KaRROURY Le saps eae Od /ojar mn) Gan puny Gee (ruuew ' SHONDDY TWaAVTILINY sence rooyryrs ofms 23 28 igen ow ay Boe ago Sr pue"sNEOUES or ou ng anon» yo ayels pe ames zoe oy BENPIE “annie soe pat a fo suPREEUED 0 sauis 8am oman jo ape: ado yp Busta. SOON ate ky “S jo vognquisp uaa ue o spade aneSau jo yun na ued Atos © oj afquepe ur pozapruo> aon jo UORNALASTP U2A2 OW et yM > Sua xr #0, paneduro> wayo st uoudnuzo “¢ yutos yy eo} peal wopacy | au syn a asogpg nox OP AUN, pppou any uses paeususnyios suoefon ayes ase sayfa uadord ‘que esau uotspep, son pout waists suoggoudsae/pedourd vwsir505 swapped soenouap je208 sepnod ‘wepy ApS vwsqende> wuogoeg Awowors su wosg03 SOON| eonomic and Social Commission fr Asi andthe Pacific ESC on arcu agpets of comparative et encleswath nonal ahe than neal resporsbliies re abe ‘Word Intellectual Property Organization WIPO) ‘Ovnen Wes Sires cal Jonson Bei ‘rem. Washingos, D.C. Hertage Foundation 19%. Te source ofthe Inde of i Kpunseh els. Curing Corton Tend» Mat or to. “Corraption Around the World Causes, Consequences: ‘Donloadabe rm he IMF ite at hp wei ong xteral lenges clash 25830 pny, cen of entrormentldeelopment rm very enone ‘Wishngton. D.C: Worl Bank nsitate Development Stade‘auayoasa pazanaco ane ye wn04y smo.409 aq ueD WHS OIE Jo yy sands ponyono oper ai Sus038 saBuey poatedun uanbasqns uy sowesunon pafumyp 9 asuodsor ut aenyg a 2M] UE 20, ripe saqafos a0}0q “ant Lous 49 wt SEO} “OH uonEndod shump (RE, ceo 20g waysds sped pu wrap a 0g Six papae 831 9q oe snus acjnay pur "ways anOUD2 a0} sNOLABOD uey> Rojo, soureudp Om nga 0} parpisuo> UayO s Uo adumyp Sag op MOH, ap says uouns9 op Aya, aneredwo> jo suapnss pu pu yas joa axes pou pur ado 200 5 4ao'dyeuno and og ay ae sasmpuy Ate auoUDD9 WANA ey OH, sos pu sve Jo gan a Bua pe jo sem na ag 20 wansss ap yo Sanpolqn amp speoidde a1ydos “oy nb du ue wang yn Sung Lee SuDunUZA03 MoU PUT SUORISE IRE ‘ip u sans Bump uno suaunaxo® , ORT RUONEL, aA3AU09 SY Put Deonbisienacae: (uaa wana a), uouezeatad, ys souea pu yuysuno sueau ou Sq ag ‘us uornjonainoge passasqo oun se "pus wos ssaidazd pias siuaunsnipe io yuna Jo Uap a assy aq eu gous Fenenapus 4qp dad oy pasa iss Aa]05 Jo enpiatputpue sénar f 30 su ax pu “perry soo po pu "PSLaD a eut ‘sonnei say -iuanay Aang sr aSueyp onus eg sn soos apesap sed ‘ay Sasa Coys ayy uae ‘Goss e aur’ y anes OU muayeKs MOLDS THONVHD SNOILALILSNI DINONODS OG MOH GNY AHM 2 ut afuep pue sauudojmap Ruyipnis SW31SAS DIWONOD| 40 S100N SHL ONVHD AMWNOLLNTOASY ONY AUYNOILATONS on 09 MENS po OHO sy ung ney void pu napa Rip ne 40 am asstructure of each system these systemgto change? How did tat change occur? How did that resolve the problems that had been faced? HUNTER-GATHERER SOCIETIES To start we look at the most primitive economic organization—the hunter satherer society. While out knowledge ofthe precise social organization ofthis rehistric world is imperfect, we can make some generalizations We know that ‘vas in this form of socal organi $ystem wil be threatened. Sach overeapltaton of renewable resources has two ‘oots. One isin advancing technology superior hunting techniques and more ad- snd weapons take a greater tll of animal ‘courage waste, The other cause lis in the growth of population, Great Ofcourse, these two are closely related PASTORAL AND AGRARIAN SOCIETIES However, around 9000 years ago, we know that some hunters began to make the ste to settled farming, Tis may have taken the ble = The populace, aware of the importance of hydraulic organizat natural resources. Over time experience le to improved technique, ‘opment of better seed and livestock resulted in rising product growth in agricultural communities accelerated Twas. this point history that a series of social innovations could our Fist, the population engaged in agriculture generated a surplus that enabled a greser division of labor. Arians, priests, soldiers, lawyers, and doctors could be sup- ported by the excess produce of the farmers, The eccromic system and the legal framework had to became more complex. settled agri diferent se of institutions and moze comprehensive la the hunter-gatherer societies. Whereas inthe ty property was largely ‘communal, and resources open to alla farming society property righ are im portant. Some terre on the land is essential only betwen the planting season and harvest, nd mach longer is desirable if land improvement isto be effected Some authority competent to enforce property rights ard adjudicate dispute is tal Settled agriculture also allowed the creation ofa greater social surplus than had ibe in hunter-gatherer societies. This in turn, allowed the creation of a roblity, an artisan clas providing consumer goods and services, a religious e=- ‘ablishment, and a permanent military. “ORIENTAL DesPoTisH” As the population of agrarian societies grew, pressure on resources increased. In many areas water was a vital resource required to maintain the highly productive agriculture necessary to support the population. The socal order and ductivity in agriclture depended on the preservation of the waters gation and clear definition and enforcement of water rights. In the and othe hand Eastern Asia, the organization and management of the water supply was especialy important Su difference between 3 highly populous and produ sand a sparsely inbited and precarious subsistence economy. Irrigation projects were charac terized by lage economies of scale and required considerable, though well rewarded, cca investment, Consequently, a large public works bureaucracy was requited, withthe resources and expertise to develop and maintain this water. It was precisely the great social return these projects that accounted for what called Oriental despotism in Eastern “hydraulic” societies. The rlee and sociated bureaucracy were able toexpropriate the greater part ofthe produce oso- LV] seuoy pouays, urs pe oo ayy ut Sypreuow ay wos) Awwouoyne eryvesgns paaka Syqgou ag jo suojpo oddn 24) eGo sara 0549 0}, exp pases Seo Arana wadoung ways adua wee, 24 ade a 0 eM ot waasas Tanga ant ‘Tey sew pue saemoKRP sautoy ofigezpesunspayngtiuoD wayead an [ue asa juaur>ioju pu vows uodas 0 950 aed yf paepueoy Weseng adap Kayes yo Kaan e009 suoaioyy pw 3s0ydap dao se voRnysa a prea om MO BNO ployosnoy ayy ung sass Skid dns se yp se Suinpeynuaw pur uoR>ns}sueD Buns Ks soge 954 I saiwoNoag 3AVIS TwoIssvI1D ‘woe 0 saesAioysy 109 04 seratnboe oj pao} seat samiod Saen se pase asco pue voneztue2i0 uomonolithic iss; within i lay distinct gradations. The serfs (also called willeins) property and small plotof lan, pendent on his rule and tories and armories, Resources flawed tothe crown via monetary taxation ivkind enced bre itary and oer servic. The gh In summary, the important economic decisions were made bythe command of controlled what should be produced, how t should ‘when all was said and done the peasant and gave goods to, 9 the manor because he had no alterna ty had a monopoly on force, which could be wsed to coerce hi or within the system oriented to, oF supportive of, economic growth a development ‘The nobility were consumers rather than investors and such economic surplus way into castes, churches, and military adventure vague allegiance to Byzantium, Within Venice banking all began to thrive and to throw out impetus fora broader commercial revolution. seeds that were to pr MeRCANTILISM Although it had proved a durable system, lasting for about a thousand years inreso} wwauaots ¥9po9 e85|uoTO eg Woishud pue teoy ‘wor uvadosng er snopoid jo day e ps 4 agdood ysyooysagie Se 5 io aeyduooer ave Sg ing sued fqano prea uma ewes ou se aay 1 1) 2 0 aNp st UORSRAURD SH o aos oss Posnguo>soyter et pays sey snp pu pede ssooyuayowa9q eyo ‘nou Yew! um xoyduo asou Sunpauos wou oy ao se 99 Bsapune 5.249 Jo Duengut pu zstod Sunol a pr Sys zeOOK 0 Seman Brpng es ay auaRYUOD ay] “aNTEACL MSITLENY IHW sep so sus gent npn uray ters Bo an ‘Roam np anya me ooe down gm ae Sg G0 gps pr panda a in pou si DOE dan ppg ae oy ‘wsepnay jo asd sao.%q paonposd ands onuouons 28s eo soouod20D nu af 8 pur Sew Jo uaUYRTARD a prENo: w9UBAOW sooURMS ayy ado iad pa axou ypnse Aq paoeidou sem pu pau ag posta pur salen dn pousnd senz04s 209 moo pu uo wong UoUDdwO> SIL Soop ued ao} do wo papoge suncy Suwa ay porpar poe a4 240 Oye HD nai oo pps assay asare ala Ave UL SREP np Hun sn OUR 8 TEL OEM a ‘ed oy ‘anjaout um pey pur “paupur asm satojdua poseo-umoy pue 20uew noutojdwe ue jo Aan>np Spat 20g 0 papa 3m Sogou ag sid ag “pana pI 00} fo Aad Ase ea aI a4) 25ND) word aug amen suuzany jo aon op “KuaUNS aI pagtun e sApUN ayassod‘This preoccupation with he trade balance was one of ought that attracted Adam Smiths derision in the Wi accused mercantlstsof confusing money with national Ihe ilow aco viceroy ene sa ruil tht ae al sore ato Sexe hc, er ane po fete the stent on el posto fe SSittet exc te aly and ex ‘The policy of promoting 8 positive balance of payments led in aresive acquisition of overeis possessions and colonies that char metropolis” tee- bullion might be avoided, Te preoecuy ‘widespread use of subsides or "bounties" fr production and export. Goods that Cost more to price than te prevailing market price became profitable for pro- ‘Socers and saved bullion from foreign exchange while requiring taxation to raise the necessary subsidies. mercantlism was the establishment ofa positive balance of spondingly the most advantageous rodiuced manufactured goods for for- gna copie sara a Screan hens epor aterm nb Fenpmimcanneaetern aman tones ‘ane Sa pete nthe oem channel creat and the means by which trade was tobe conducted. fn England these took the frm ‘ofa seres of ‘navigation acts,” but parallels are tobe found in Spain, Portug France, The earliest navigation acs in England determined that al trade fo and in vessels of English registry: th rand therefore the size and profitail chant marine Subsequent act ensured that al colonial imports an Including those with other colonies) shou of ished products. To this end, there were often laws ‘of manufacturing industry and even certain kinds of from “less developed” to “developed” status* The have introduced here (economic unification, state ‘the close management of trade or sate promotion ‘ofthe mercantile system as practiced bythe Spanish ‘The policy of establishing the Low Cous 1d markets fr the metropolis. Active policy to dis: i was the norm, and this proved most irjuious tothe long: un economic health of colonies, rade with any ofthe colonies through the metropolis was so bourcensome since it raised both respect to British North Americ andthe maximum figure anual colonial gross domestic product (GDP, a igure thought "Temos ntbe o the eapan a Ka wpa sures andy apie"aye Passnosp 3 yoy wojues ys aw ruRSsEg a9] 799 amt a9 20 ssouonbasuea wu} 340] pey sy ‘HaKordus ogioeds punaze novo pare pasion 8136 UE sptnS yerD plo ayy Wo pays 2s0q) Uteuag UT ssep Suppo ayy Sumuasadoy SoruT seu 0 ‘unfuaua ag 20} assem Bes oxy pu poutiguo sk wogerueSa0 zoe J died lena annoy union pos poe speworae, pn aq posoddo. vlad ayy Se 959 SUF ASME EU s(eide>fepraurucs ayy argu gt rddnevapuorepnay 2p padoasop = pur you, Suey ssn wsrvitay> TWwiuasnany sno 29.9 48 pnp az suoyesodac> osonqqe 2 "PUONG SUNS AUE ‘ig 20jsueam 24; 2a jo uouran am aeuastiown ai pur sosouyng o woyeiodioou yo anoeld ay suourdopasap we) sade yuanbosgns soy yeodut Aes azam xg sugeaou oma jo wsudoqsnap 2p ts asmeneg aBseyp joursms fo su 1 poqsarai 9m pu eed paqos}z0> ey sorauasdarieo ey s20od jeounod ‘smord pur ayy jo Sumuutiag ayy ry ST ‘seme jo soodsaxd uy ag panoye Apsaxpe suonoens ayy pure wsmepnay yo pu ap usaweg pogeaand tay woishs >HEOUDD9 dep-ce ap xp {usouesa ay pur ao pajonue> SjaatDaRD i sssep a Aq pasTod “a3 ayes ogag ezauad nq Supaselano We se wspquenow pue8O1 ued aM STM Usiivitava TiowaMwod do SNOILALILSNI BMLTHE INDUSTRIAL SYSTEM IN CONTINENTAL EUROPE capitalism and differed from early industrial capitalism in the role that was tent in continental Europe difeed from tat in Britain because played by financial capita. fn Hilferdingsconeeption, which w the role of government was by and large grater—tis owed Lenin, a small coterie of bankers were capable of dominating the ‘much toa different and generally less liberal politica raion. Second, European ators were pling tap Coren he a he porn ae that had already been pioneered and tested elsewhere. This was e sm would face repeated crises. The cause of these was the basic tendency toward sccums labor by everdeepening capital. This meant rately always be faced wit CONTEMPORARY ECONOMIC SYSTEMS large amount of sie gand he gant of Large firs did not grow ftom s ake advantage ofthe sope of at tue providing leans, owning ca for brokerage services FINANCE CAPITALISM AND IMPERIALISM ship between rope, and wich was ev an cbservers to Se anew stage Following Bruno Hillerding, an Austrian, this system became labeled as also came tobe largely existence ofa high degree of centralized planning. "inthe Unie Sate motes gl tis does wa the bevel nism and instead the term has come to be largely synonymous wi ‘nds by) Maran Societies ofthe Soviet Union and China‘eset 0p 0 pardwaye aay eps aay Jo uevodut ou 9 SUAO4 eso nus Yas SIS >uIOUN3D JO ‘wounguisipar Arqur 29 weep ag nD vu sada pue syuiouars 2 -s1j0 ep 24y uy sau gqerapysuoo uBag sey a4 S9PEDNP J —pdn0> sed aU VTS! ony soiMoNooa. apenop snolaard a poe ogo] a wou Ja 30 adsoud a Aq wogesodooo Ot 3) ys ‘Sau 20 ‘suoneosse open paI0s 2s uy asas mak pur ‘smu 090 9 sun ateiado pu Sq psu ‘owyeztue210 suuouoz9 jo uss 0 sou ue 40 2500) _istesodioo, 9 swayeseSarouoos 0,98 pak am oo su Od TNE Ty wsiosvd anv Wstiv¥ostoD 1 uosayo[ opus jo woud £75 3015 aso fac A 4p YUNNAN ay ae jp otis 38s © Jo ciysiouwo ayjand sp vogdunsse an pur ‘ae> yysey Pozi anaes feos aussazdo> Je WouaD a PAPMPUL SNL TUM PEON Suasoqoy weypawnus wwesoxd yo “os unpear-ey wap poner pue Sse peo. 248 UBB roy suo pais uequg ur Sryadur eon ep enpeaagom ‘pasngip sex juauo>sp -oa ayy quanbasuo poe afue> eR paso} wy AnayoNposs wt IAED! 18 20qe7 2 39.01 uo sey eur jo sgsuodsas Suppor sonpgssuodsx jo a8ues qe ype panes yuRuTZe 398 aeyoM Jo ge a ase Aero “uoanjosa1 0} syeprpue surzd 39 39% pa 1 pnom ‘seoxopoM Zoaneyrn 28 ‘neug ase 29 u29q 0U sty sy '9H008 a1 BOS Oey pynos sede o S989 94s UL UDP seo EH aA, Bavis 3UYE7aM FHL 40 HAMOUD BALRESOURCES wee sites ‘Ths chapter i largely concerned with economic history and the history of econani tought A pod staring chit the istry of economic hap ithe in the proces Te proves lnk o Web nfrmaton on ll major economists iving a dead), providing acces fob ‘grapes critiques, and ther work ls dovaloabl from the Wes Two parc KEY TERMS ANDCONCEPTS ee ee balance of employment balance of trade Islamic economics ana of Karl Mars ad Fridch Engl well a lot of commentary. Is st hep ‘siclaradoctu/ps/mare/ the com aws Books AND ARTICLES technological change QUESTIONS FoR DISCUSSION ently cause changes inthe economic compatible with singlesaesry uruny Sadana: AWONODZ LaXaVW Vv 40 NOlivuado 4HL hg ap ah fonng main fo soba aay AWONODg LDMUNW NUZQOW ¥ 40 SNOMNAISNT SHA 7E waLavHCD sary ao yoy suntiva iNawMtaAoD any aunts Lomi cy waLavRD aaah salam 249 fo soestuaz) uouase waopoyy 2 un semua eS 0 sty SOM WILSAS 1aKavW ¥ MOH 2€ NaLaVHD:a best and relying on exchange in the marketplace to meet their needs and to in ‘ prove their wellare In Smiths own language, i as How A. MARKET SYSTEM WORKS ADAM SMITH AND THE INVISIBLE HAND [Ever since Adam Sith described the operation of tem in isseminal work Am inquiry in Functioning of markets has inepizedakind fae ooted fehand” theorem. in Smit individuals act only to benef preconditions, such behavior result in social opt generate a level of efciency and. ems of central planing have been unable to and exchange, coupled withthe single-minded pursuit leads individuals to serve the public good in a much more to promote the general wellbeing. reveal Smith ha a deep cynicism ofthe maivesof people wi today was well understood by mith argued th though the change and barter was both fundamental and universal to human so unique, one ofthe things that set humans apart from the animals. she wrote mith’ important insights was the ned for specialization and div foduct were tbe maximized. Rathe than mee all of ‘other markets the preset and future prices ate goods price, and factors of production will all change, perhaps oly to some smite ster Tis quote stom tok cpl Ine and aloe Lito ey al ype"Sur og ye osu a pan a eb SaRDEES i, ye wed ge 39 n SBN5 94 sre tm msi nh eed wa pa pur ann Sddns ao uoRzosN} aL SNe 5) untpou apt) ast 0} pounsse are uon>npoud Jos is prem se payuasaudarstaxun> {dds 8 p008 pa nue 20 sjnpoad emul As $03) paonpond dena ag Joase ay uy so9Ed snoues ‘2xano puewop a 39°15 auam> dydds ayaews oxy axe 9m pUEY G0. ‘ou en 0 2 any Co yup po08 eyo 3s0ur 9 saua8 343 S99y SH, Sutdos presage anu qeuruew 20 se 249 aye FE. Seno S[ENPvpUl Jo spuewp ap jo UoweRaU#Te ue s| amo puewap ye sooud ual ye asypund oy Sim 24 sadeouos rau Suen popes aq ue> sayzeu asnaduo> yo souneay wend ayy ‘onset Da satesiovo sup yfnongiy pump pu Fd spon ona a Aes 0928 pres 2 J sooo ynoge enuasso sem yxy le sused © y>ea PInoD ay YN PADS ( Apeaqioe ‘Ariodursjao> suas wep ‘ORNL Aq "PuEUAP poe Adds osonss vo Busnooy ‘afew annaduo> jo sozmeny ue oda 2s i UO Yo as asap ure peurye ye 290 400 0} PasIape a Pypom Sx SONI MH JO {uounean noroig aoa 205 pue Acco snoouoo9 aepSuAI pus KjoNpoORUy ‘ios a way Sop our oy NRE ze pazu UM 2m oo aL Te aN ‘ur popidap "poo eaoy zea fs we Sugoo| Aq uidoq sn 31 SH BENIN OL “gaoye Sugp00 en uno auzege a jot sneupiono yp swap eo sz I {rode soa ou refs reno} soe wornped na 8 ue sonpud nj pump a sium cae 0 2684 pron tang 5a prom wound a Jo seu ape soe 39 oF ANB pIRom Fe LORE Zp yo mou ap ssxgne uname £4 3p e946 ey eS) SUNS 125 pue suo} spood ye 20} 292d eaunaep Sete 259 13439804 "wenugymba sous sau vo} uounsnipe ves 39q2 fy 24 Sou pues fo0e) uo sed are a4 jp ae 2g scene‘ABIUETMENT To DERAND SwiPT im THe BHGHT RUN ‘quality appeal to some people as being equitable. Those who consume goods must ‘ay the marginal costs of production of those goods A Siirr ny Dewan. What happens if the demand fra good changes as a r- ‘ul of some exogenous event? AS a first example, considera shift in consumer 1. The higher demand is from Py to Py reflecting stocks of the good willbe able to reap wit where the shaded area reflects thse win ‘ering mazgial costs and establishing a new longterm equilibria, because of ownership ation. The rent knowledge, and I ikelihoed marke share wil increase. Inte long term other produces will either have to match the cost savings that result from the innovation or go out of bosinss.sags pox Sot oud | oui ne imps on a ar AT, RANT TIVHSIYN /13h/=R0/abo py wayne swoynadwoo wooo asou ares rE a au ogo uy sp0ad aes uo oy 40} sweodu (301N5 3 40 TIO IHL baron pando aq sew yew saod axzea Jo uogaiaoe ous aia yy O8SaKng KUELE i‘As wells providing means fr the bith and growth of firms, the financial mar kets also act as undertakes, even exectione's, by ensuing that existing fms whos prospects donot merit continued investment are culled fom the system. By refusing to issue new loan, or by the protracted fall inthe value of companies” shares, the financial markets are signaling tothe management and ownerships of firms judgment concerning the prospects and periormance of the ket swells providing forthe it fms, alo prods fr their ethan for changes ts ther course mie plays a Deri oe of seeton. ‘Asin Darwinian naturale Mast importa, the dgment ofthe capital markets an impartial one. It snot that motivates the decision in fee market economy, but the result ofthe inter cof many groups. The verdicts weighted one that takes into account the ‘own or manage willbe st his own jb, and the future ofthe Bank ae at that run counter to logic her performance sufes and she manage, The dispassionate function of capital markets is ‘the market system, subsequent chapters ofthis book, one ofthe drawbacks of cen pervasive influence of what has come soft budget constraint. This phenomenon has long ben ‘he Austrian Economist Ludwig von Mise” altacked the thenn pn, 2249-96 ag un my po sysefrag ERS E orPEA S eideyp ur [ep 330 et 8209 XuIOWOD9 2) SERDSEP 9 UR. 895 EGS 3 49 sep Surin] fq seweape LA 01 sr 2g uenodur sou sdeyny s9ap2aGo ‘oaup ans smpaud oy S2ecmEDT Of {bapo> oy Sinsey a asuadea sases 9 eu 040922 dad 9 Sams 8 a ox po sung 2}doad foes oy nou 3p OP By ep 4 Gow sag ard unoyps seo S40 24 voy Stxpueysiopun yw ane Spas a4o OX pe woHELIO UN 10> pu P04 ssnve any spaou Suse 30 fenptapu 40 ON 3 stwouoss pos. xp ona psa Saqauryn fay ayn 5950 ta 20j ssuonbosuo> Sueusep iu'Spg6t Jo pu 248 FM disem pure sobs “psi uononpord axsumyu-(Suaua‘SGsaua deoy> yin ponuuc> Sane 4304 paatioo poe paqosqe uae 50861 ‘o(q anydansee> xipenunjod e pauses pey auos 0 yy "UOREAT ipod wo euojehe out pasa sa ee amb] UO i 29 auED9G WOR sionposd fo ue To Jo uoncunsueD paonpos poEANEAD sooud oul june Supean ‘eéns yo won S05 305 PxP 96 EY saNaMoH OKs 6) or fqyuns Sunslpe wosy waspaun jag ay paquasaid aq ssn aud ay Sunn {yog yom sammjeaysnosSqueape jo aqunu ese wasKs aseManttadumDy WBASAS LaWUVM 3H 40 SDILSIY: ads si Addn xy Sus jada uy p08 a 30) pucuep a So agrigosd 9 i uoneoads ‘sioedads jo Auane ay Aq paayny os st eu jo aameu {up IY vwoeuodsuen pe uoxesues tp 108090) youd e nue no "russe uy soy smabengeyunaze a abate Kops Sd soy wong uopeodsven os a ug 28.99 pS SOM Eyck <0 ve aang ood Jo 9d ur eRaogp ag) au pur eds Se opie, sassy sore a Sadb4 ose ak pon ay soawoly campy ue ent Tess aoe pave pue sna Jpuoquaye a} wee ay ssney wats ye ®uuRSDSeyDAf Noluvinoads any zovaLiody say aod sy hg p08 ey 3. en soup yz Aq ned ase wt pouutap qweRsuR> png YOS‘they might overstate their need for mates Gathering datas expensive, ‘system that minimizesin- formation demands and decentrlizes decision making avoids the problems of whole system orienting itself on data that are themselves Faulty (3) A Manxer Svsreu Provioes Srimutus 70 INNOVATION. Undera market ‘system Innoyators Who pioneer nev, lower cost processes or new products that largely tothe research agencies of the sate. An enterprise manager has ite in- ative to research new fechniques or goods othe than those that he or she has stem there isa tendency forte price ofa good tobe driven 3 ofits production. At the margin of his or her consump- the consumer must be prepared to pay the have gone into the production ofthe marginal ies of gods thus refet the relative costs ofthe that politicians, in the name of equity, think should be nate results for both long-term supply and allocative IHE CONCENTRATION OF POWER, AS We ior of planned economies, thei function re- nomic power. Again we should note that under the kind of capitalist market power. Te leaders ofindustry and trade unions do have considerable power, both in the marketplace itself and through lobbying inthe halls of government. In the economic power the Lrited States became so concentrated that were evolving form ofcorpratism, but one in which the state was subsidiary tothe needs ‘onstanly under threat, but compared tothe in the Soviet Union under communism or that consequences were modest Even f the leaders ofan authoritarian state are well intentioned and sek nath- ing but the general good of th population, the task of organization snd coercion isso great that theres every probability dat the eying on the enterprise of indi ‘iiss wil render a happier conclusion. This too was the and we conclude ths chapter with another quot fom his ved in China today, the of preference or of restraint ar taken a ate people and od "cig tw eel wt suo ret of be i. Te Avision of labor economic ent marginal venue product entrepreneur market demand curve, D The es so he comet fanaa power inte Ui Si nee seein Reeth Gabe The Nes nt Ste‘eee ossv ew “et nay among nose sens sey Sangeeta 3 HO, RP BEY “doo gp pu que gun EEG oso 0 esTeUopUn, Ue jp, © 0g IEEE FD MLA 9 enor a so anasaid ay Stag s Jo ant0u00 RNS Sep SWORD TRNOUNDG EHS emu vwortonposd jo soo anes sayar on oud aapeas oy edt gy vp Seu 103 pou au fano¥aD® SURG eu aT iy sovomds gp on nynmuskn oan oS 2 en yas nda 99020198 PN | | a ae us SR HON Bhp Nolssnogia doa SNOILSa: IV tungny moun mes yw uae) amy SPN a BOS | resuming gos 16 Beydew aa Pe so OL EY “AOS gumbo Supa 495 (06-6861) [ee ey ESU0D NG oS UL, sue TO 61 sg ison wo ae beryg-vonog ust oer peng AU nS NS Soe LON, soeoads “00g es guia oad yousu- soinsMARKET FAILURE MARKET FAILURE AND GOVERNMENT FAILURE \dam Smith envisaged the task of govern pri ‘ot oF could not, assume. However, a glance at any mod Emm market economy reveals that government activity isnot confined fon, regulation, and redistribution In the wealth in and spend an average of about 40 perc ‘Despite the common poltial shetric downsize goverment, the trend, measured in terms of govern tents’ shave of GDP, sens to be inexorably upward How is such widespread (One general ton for government intervention in the operation of fee en ie many modern economies ae cha ineficient outcome Similariy iaborthroagh unionza the value ofits mar ‘we might encounter mazket power in the sup thon implying thatthe price of labor will die ginal product 2, Lack of information. Any inability i market participants to access asonable cost prevents them rom acting ivan based on private cots ad privat when socal cost and socal benefits are economi ‘his chapter we wil fist, will assess to what degre govern benefit ather than harm, the general welire, SOURCES OF MARKET FAILURE: MARKET POWERjo arm suns Syodououn qeameu pau fens 340 podouous Jo suo} os | waweg paysSiasp Aqeuonpen ancy SstwOUODR “AOLONOW 1WHRLYN ean oun ng ue a abated ong sudo 4 as est toy, oi outed Aoua go Ue uss "uoRuD -siooudayeudoidde ay apeurusoqsey ajar of vos sj 0} wong wou ap joss ur syoud no yeandino x pron Gado -our Surrnunceuragoud e owen aud yo aounege aw '7s amr sy amiga ep tn ase(ideally in the form ofa block rant from the government to cover feed costs. Sub- sides ofthis kind ae often politically unatractive, and 2 common “compromise elton is for regulatory commissions to fx the price at average total cost, 38 above the marginal cost and allows the tum o as an example of "government "Natural monopolies do not representa fixed and unchanging st of ind Dut area function of the state of technology They area much les significa ‘nomenon inthe log run thar in the short run, and economists now regard them asa less of an impediment to efciently functioning markets than inthe past Changes in technology are capable of bringing about the emergence of competitors ‘hat may obviate the nee or regulation, and sometimes regulation isa bari to ‘ther emergence ‘Consider, for example, long distance telephone services. When al phone traffic nad tobe cared on fixed cables, the constriction of the netwo ‘establishing then thermore, in most people's minds ly network. The emergence of satelite technology to rep entry, obvi ‘ona price ‘some cases, government’ wilingness fo intervene inthe market can lessen tion modes are gross substitues and are to some degree in competition with each 3 market context they can at asa limiton the price behavior ofeach other, toconsumer weliare Anrirnust ral or ari prise which arrester to forestall competion. Ths behavior is Cuntered by wha inthe Unie States tree antitrust policy regulatory and e legal action designed to promote freedom of entry and to prohibit he merger (or collusion) of competitive firms that would result in harm to consumers. All developed nations havea government agency nominally charged with the maintenance of competition, although in some countries iis more Vigilant than sn others. Inthe United Sates the relevant agency is the Federal Trade Commis: were t investigate and bring sut in defense of trade. In the United Kingdom tis the Competition Commission, formerly known as the Mergers and Monopoly Commission. Such agencies are ged with reviewing competitiveness on an industry bass, pact of mergers on competition, and, in eases where the evidence falacton because the public interest In doing 0, such agencies are looking for accretion of economic power and its impact on economic welfare Inthe past much attention tended to be teens of power as measured by “concnaion tes, ened as bbe of domestic fx (HE, named for its originators, O.C. Herfndahl and A, 0, hich takes account of the market composition among the four However, recent developments have led to 2 change of thought about how weshoul “aod dacs ft metas wl es ferry cane ound in W Kip Ves bn eo a sgh Harngon EmoNOLWWYOANI 40 OVA [31g ag has po. 4 oN ree ma; mW) Y ‘snr open os stu spr samara gan} pad amb ran ase "ane stun ogee soto ood ue a pon oy megan oe Suaeixp qso.qqnd xno} snpaud pas vfs Sugusead Sy au0p 5S ing axe uy ep onposd ay (Re OF Ssa>e any SousuED J Ku fae OM LD SATS IE ‘pauueg sare suown ywapuadopayesauopuy ay sui uaundojanap ut OURS vou sauznoo uy BurSzauo wou are suorun weainy Wuaunuz908 pues quosoddo jo sapeoap sayy 505613114) Ut on a posts aan so961 SHON 9 uotin jo afes an yEnong Sse spay reso1299 09 Suoursmtomp im ance {suiafem ancouee pu aod og swab vey one Poe io “Sqn dome u uouseara nous sondage poecie fear oe g's annus ou soutnen posts ous Sep, ouwarou jog a eau FT <4 px aja nes ose suns peep Sue pos ord aed [tod unos pny pu dio os om sue Sag te Sudaxdoou oy npues puoi a fo uae ag uy. Pouodsp someon uo pur auosuda pase aan sui wom pur oY one) a non poze sao 19 pan wes wad oo aye pr syom oy yg sono put se ay pesos soa soup ys osoyod eas po at eo ERP “sour 3gsauzp fo nigesojus jo a: Sep yy snp jo aouaysNa ay sos a5 HL S051 PH a UL AD Jo UOKEEasaur SOO “1 posop worssnue3 apex ferapay a Se FEU a4 aNSLUCD ASE MOK io gs purses oy eu 00 oj over uoget wy o A sine Aan uc Aig es nox scst sot jo oY Stnjocsoead Sing ys MEN NEL ST JO ro app € pores te np x te RDO amity ps doe x omen pn x USE oes gp ot Pea sr wpa pur uoguTanae> Yo haope nape ins pe poy sens ng pst 2 2% ry APNEA! 90 PPL Soeur ouauop ised a 3pe esnmuni ouseg Same end owen Suna ag hg poranpe uay se soed ae aR Ue Jour easy a3 St Apuanbasuo) AajsmpUy ap aH soe Sino) ania pnom sot npoad yey pe eo Aeneas uaog sey Asp aRhas in he case of disappointment. no government may createbarits to entry by ‘oho hive “appropiate qualicatins,” preventing the unqualified from ofering ‘sich goods or services Such icersing is common in a wide variety of professions from lawyers to mortians. ‘This may provide an effective way of minimizing the consumers’ need forex ‘oes. Performing surgery without such qualfiatons is forbidden. In contrast there are ew restrictions on who can ofr to shave people or cut hai. In more re- ‘note ines, sch licensing was not considered essential for surgeons, and indeed tubers doubled surgery with ther shaving duties, Ione case and not the other? The an ‘enables producers oF sollers to charg tothose who fale pay the ms greater than aero. Eifcency, therefore, equires ice that i greater than zero a5 wel. Exclu ars raqures #20 price, Anyway, there is ro cost-effective way of charging for the the good. In virtually al count fed bythe govern such goo are probably essential ‘ofthe moder state and itishard to imagine in these caseshow a pri much-ssed example of publ mic textbooks. Its frequency stems more fom is tractabil toan economy as defense or do have economic benef ested partes as by a concer fr corrstng market be a gui igh24-4 moe) eae am ONS HL RL me nom sys Aadoud poyeds 5 1200 Sf Jo 30m 99 fy pouyusna 3 saettap9 Jo waygad oA sojeuBeu ey ssaoud ay ur sii yo areas ap Suonpax pe ae ay Sutods 9g san pur aug aestd Apso stoprsue> pg ayy aseypnd oy waxy se>.05 1S 14048 0} wo ‘rue ent ag ang sounaap esos (paraye au) 01 vOUesu oj uauod due Ruied yoy anaydooure af | HOU yu oY SoMa yo Auge ay sdeysad) yew enuesgns# yo a e srg 18 JoD0s pu ayauag eos a9 prnoys suoNEIPSUED: 4o tod egos © wo ssa ayeaud pur yaueg tend ‘re ssinposd pur siaumnsuos 4 suoisdaq) AusHoe ou Su 34 sso uotspap ayy on a9 jou op fo (50 22) eampemuna a atiep ue jmejrueut og SNS ao Ue ou aimee; spans ave wnura yae w suo ssosd Sapna eq ue. “spur soso. > uonngod unas 0 SwanseLaoep Bay wou40counties enplyed in maig spot bands Suchet ppl wo cm . esse ndipnd poten tun Pes tomutiliaretbe contac and therefore ef, mght “amie ho nie fps rc nohing nd ne fw mee neta tele outcome intases whee te numberof paricpanswamal,buressoonss soencan compat he seman ce wh aa Sh Beg wiceewaee ope th einige manny be be costs of negotiating the appropriate contact may become prohibitively hgh. In may achieve close to equivalent results atthe SOURCES OF GOVERNMENT FAILURE gestion are very important isves and play 2 very promi ‘We tum now to look at some ofthe specific sources of government TY OF INFORMATION, One ofthe beauties ofthe market system les economy of information, since it operates na decentralized way, within par- nt needing to se8“the whole pictur.” Government action, onthe other hand, GOVERNMENT FAILURE i phenomena previously discussed is real and each can cn tan outcome that sles ecient than would be theca ‘economy it sin the interes of groups supplied good to overstate their demand by Goverment will erly outperform appropriate information, but this expensive and at worst imp ‘when participants have an incentive to provide misleading information, * se ateas a daaging athe arhet are tat ey ek ‘Wecannot assume that governments will always ben Anne Krueger’ phrase, lematic even to consider 2 ho- members of the public be thse who gain mare than “revolving door” of personnel between the ‘agency andthe industry in partitis due toa understandable absence of adverse lal behavior betwe aly enjoys guarantee eee ens finns tend to grow cautious about innovation and fen pay Te whaler aioa he whl po revense met ost conto. The industry scully comes to enjoy the proecton ofthe agen that was st to cantain it A comfortable symbiosis develops, characezed by high costs excess capac, and lack of enterprise. Prices fo the conser hich are eto cover averge cost tend upward a inereasng ineficeney an vasteareacommodated. A Sf budge constant is established whereby the xtss go “Fe dex soy sy) oye mL NIL WIEN pa URRINE FEA wo Aa sue od azoyn sazyuno> u uo “}0n 70 dos ap et sg asnesog ase apie a 0} sitpaadha 280 lw pose fuzouos9 pod us Ys04 49 sRwOUOD uuruespng sows womisad uno xg 3)70q 4 32 avoid ae 20u.0 papope "uauaBeuew 0 ans yp RE ‘todouous Suneosn ue sddns Suonpas (senses wode> Ceujon, 43) uN doo ens oy uounsiaso ayy aa oY (s0un0=a es) Kg MO ‘aug pte _pgan) te a py ang sey a MT RD AN 1 ONIETIS INT ‘ua jodouow poured no) sates payun aon poddins yjensas node Gens, osodun yeu aneyruauouay Sago andyo ad a, ues a8 230 nods yds 29 ras asn> 24 0 nai us 0 anzaioy ge ua pu sores wo} pg sna 4, se oy sold uF sony Payednsino 391 sr sovonbsum ow pur uoreedoa Bade peg NOY aaoneD fo 986) ayy Yoog wuRUOdM sx LY -NOUDY wAtZD77T0) _uoneyeSarp soa vy Aap pois 98 200 ap uni pqeasa pubs aug spud ut pepo aun 220 oy 34 weg uayoazou st -pasodard st amides an yo yy eau ap eu, yo Suid sonny ay ‘saumsuo> jo aed “x9 94 e Sue 2 30 voRDe ag Sq params ypu ag jo amesfinance their election campaign paris likly to receive gre ling, the creation of coli Roosevelt administration founded the provision of electricity to rur wer and those who doa’ have a i ‘rues tone one, However, government inne of tree ways: taxation, Doering. or the printing of money, any of which inevitably has an adverse eect on the operat ‘wn deadweight loss. government asoin- ‘Am increase in government borrowing will tend to rise it~ Printing money has inflationary consequences that ticipated, distor the “tnt even pln cen ae antic on he ce fal sie and whaves dedi | choice between present and future consumption and if unforeseen by some will ‘ have profound distributional consequences. is therefore important to recognize that any goverument expenditure must be financed by means tat impose welfare losses, Any efficiency gains that can be anticipated by the establishment of regu Fy agencies or the provision of public goods must be weighed against the ef ficiency losses that are occasioned by easing the revenue to finance them. GOVERNMENT AND REDISTRIBUTION that has grown most rapidly in recent reasons of interest group politics outlined earlier, be inate the public finances cof mast af the developed market economies, Inthe crose-ec ‘Wester Europe and the United Sates, subsidized housing and social ments taken together represen ed toward the por, thse ate Dy and large oft by the beter ff. Such tax expenditures take t "The Sed uel” wich we sein chaperones an cqranar,‘us ueprens jeoos aynoeyniog paUOREAUD Ue ‘yfrong Suaq-yam jos 0 un _sajeaid ay Jo sau Prnow au0 sod © 0 “299 340 yp eu sew pone aq eq Soouos ut 0 ay Jo aug oyzew a4 Sa oust HOR [Pune oj voiuassoquruaund9908 29 pe 34 AvMed aaunaiuisiaay wos sNolvotaiisnr ‘soem aesane ‘uoueonpo ‘uoqo zeus syne aa ‘suum au uo ansaid st aay ‘dos aun) aydood Simos Ruowe 01 sey Bese Buea omy he -ujon ai, 58 81S paNUA ag UE xe B59 ay of sar ALUM ver AepoL Is} opi ag pue xe aA pone oy Sunda BUpI apne oy asowp pajgeuD sooydoot “anamop] ‘vO aun ou #2} pay Sunde a9 pu ‘spayp asquour sane3aq pies toto 2901 us 9 pu “poesuadwo> ag pos fxg Sago warns Popressatg prnoys Jeo wewny uno .av0 uuu ple Su}ars mou 2 Sf 58 Hom 52u0 on sind au0 oD fo yunouTE a ey aTUDA ayy 4692 28 nowt ajdoad soyy"wonnqusip paseg.ayseu o agen abun xg jared papoid jo Hieunaaap est voy se Museu 07 pus worgeanpa Aq peu (jpsou0 ws) muaoe ap Se sp reas Aesoun8 sno june ayradaxdde oy 4s) “os yueut © wt uogonpoud jo 20} Yeo “Sp weiss qr eu sys ey autcou 0 wognguasp ay 30 , RSH, 2sm. In such a iew the welfare promoting ‘spect are even greater han the wtlitarian rationale. Under altruistic motivation, Portia quality of mercy." would be twice blessed, enhancing the we givers and teceivers. Again, however, tere seems litle suppor fr this Janaton fo the growth of major social programs. SHARED GrowTH, Economists are not unanimous about the relationship be . tween income distribution and economic growth. Some sce in egalitarianism a Iver of ncetves and consequat soe pot pas Ot ae at ‘that sharing of the proceeds: Soman r0ups to create problems, thenumber of papers. Consequety support forthe oor whether “indo” at sing cash grants and in-kind support was mine ln modern democracies the key tthe increased rare isiklyto be found inthe ballot box. Eater ‘we discussed how politicians act so as o ensure their subsequent resection and providing acess o redistribution iene way ‘om expenditures (ike crime or remedial eduction). | tconmies ala rug ft ail ee and i Siro caren ols beg of roving ces gle ees ' pers an gens Ths sey cai hasan. impera Roe sce and circuses” The response ta contemporary urban disturbances in industrialized ‘ourtries has frequently been to ierease the number and funding of social pro- step nn fh vam ene te nti the ‘grams oriented tovard the disafeted group. Redistribution canbe regarded st fue lore varenskmutne sony reiterateoyod ayqnedwwo>-sanuaout tet (oset-99090)¢ memory pj us 89995 Jo UD. DAL RUN A) asym ogy ay sue sak Lvs pQu 25 A tnd sean BEN Pa 61's Kesey pean apegueD ain. fpdeany eg 8y sym anyon 2m 9m spoof anand sano1iay any sioog ; seed seen el x9 ama bur eng a mL eee Pt yom oP sausop goats uo snd grpmop pu ane sodomy foo ssigaforjoasnido sooty ‘mst ope peg 37 sano atng satis 0am ‘ronan conan saounosau _— oneaqpe snus Cue ‘S1dadNOD GNV SWuaL ASH ‘suuaued pyar poe yseo tog ets uorngusipes ys suo ounipuen jepos ssopso>uojorauag, e ou jounaNG a -quourun4o8 jo sueuyrad a aq 0; posn 2g fu sanyuaour pouSisap Afeudoudde pur iyse. unuexa oy pe yauaus2s08 soy afeyuenpeannezedw0> jo se Prnoys yreasar aman; so uoRDaup "yoog si 0 1 ue spade nak pnom yay 3 posed 4s peaiddl saoq ag Kea egy ZuoaadWo> apto-ksNpL 3001919 soypu poo se Jo now 1 SoNeL UoHEAADUOD Axe Aya “E asread | aber ut pap ,sayodouow eye, eras 0} poou Ny £84 OH Z sapodouo gd of amod yusunuas08 jo sn ays pu op uae a ened “E — ‘mou ag Tepung Apeseoau seu sau po ag Boe woNeBas vey Suamose weg sage apes asus Jo asap sonst 0 pausop Sapna pag 9 pon emus a ‘wouendod jo dang wren avo aos yxy pasumounsd os 5 ange Ew aay Se — emer, aut tbe Aue azoaq utuaisa uaus9408 3 samme eauayod pe : fier one gc 2 apes) sooo puree pera aq onus sea fo ST reed ayy wore NoIssndsia wos SNOLLEan®THE INSTITUTIONS OF A MODERN MARKET ECONOMY THE OBJECTIVES OF GOVERNMENT POLICY rs, Exxon, oF Microsoft are quite small com: es ofss pane ii 'ponowur age 04 WEL pow aps Std as eyo sm ‘weuopTjo uoneuaus put Sesenpaanesns jo sing og ease OA 94 WD URED np 89;p9U j 90s pur “iso st Burau uogewujuy'sappueON jo sores uetsempug ang ut yeade peas G38 woman Jo ga4ay soysly ‘2 aney suone weadosng jruauuco a esoua uf se pOuUT aM pe ued oysmo owt ump zayper ua fodowour © 299241 5 “oud, 20) 9) «jo Bure ayy wo says FINED j -ufoy sagoduov apapxa pue wonemanj 24) ue wos 499 Jo 3 ‘soju Bupiaasd jo 0 Suogeu 21 ut amepuadso nanuano3 | "08 ‘an pay ursnoy—sysueR wou ood spout aun worsuoid ayy “009 land ¥ SV NOLLYRAONT 0 mys pay due gy Sreoadsa ay. semaen} ax you sunypuadss 9] SOY, wapANG puE yeu uazin> jo suy ur suo uaaiag WOH 39 wea woonposd yuawuuano8 jo ayy UO s2K95 30 spoo$ ax 0 20S 9 80 any 30 30.25 aed I aS a $4 80 a330 IY IN NOS eponpaido sna a pnosd spot oe sou, oes ‘ fer uotonpond axpunpo sou sure areas oudeypp a9 FIA es 8 8 m 8 8 on en amma eee ce ee ceneen o 8 & & & H Ge Se pany coe eo re ec cr oe coe EO aco eee cae so i vr & & of Eo if mo Gs mo oa Fe Bo gene eno ay xcea pS pope ag ome pen yuu 2 soe we we w ao a sy ‘6q papkaoud spoo8 isoyy spoo8 yo ssep paar saypes © are Coy s af ue poo ee 400 0 Beerngwmpade epann a SD [TESnnOS sasorvas wi aunsionsaxa snanneanen 10 zantoness 204 as a “eae vnunanso oanaoad ag pomp 221d pu UN DD Eno jut Ajpaumoae ve spoo8 weua> paxdéns 20 soqeBoispooH mos Addn ofmi lana one form a rte. nt United Sate or ape seaside and efficacy of many 1cts, The eco Ixpusrey. Moreover as we discussed in chapter 4, govern REGULATION The DisrmiBuTiON FUNCTION Income Surronr, The second brs fonction of government sin redib- tng none Wl snot anew acy een ance Egypt ané Rome bad ince apport pcs) it as own enomouly in inporace i cent de Cader A ep Strona fincome dtu, nprevioscntres asian wa onerted fora poet wit and interned ont ie th ingen fo the bec le Tithe 20 century the goverment assumed nese eponsblity or stabi dst cae oe eld ince espe for the ind Segregaeconseuenes of blest. “Soil scary” ‘mies during the 28h century. Support was proved ro io rents ante disable, Asa res trans pay Ses toeduce ue ovale nse mr comin They hve Shap falsn meaployment tains acaet pie Cite were site now epenece lowes unenploymen Shots counts hat hae naitained hg eet floment canine 0 gow (or empl Ent ese tare paymensc ‘ae sippot or the obs cn be juste in ters fg the acai {tice ofthe cena snc talons more ratonal proces fb search and Seer estan fe ReDisTRisuTION i-Kino,. Economic fare is raised by increasing his or her redistribution leas. of uneestric the form shocerm rts ove og te wel-being. Hence a element of patenalom s used sil te pusine vison of such gods rater than providing cash lo purse he spoon unt in private mart. This interference with invidual preference ets 2 caso goods hat are refered ine tata ao ett gods, and bey oe widespread in et econcmes In recent years the sate cred industries and bureucais crete by the public provision ofthese goods have come under ack benupe of tr el Giency and inlebiity relate to the private sector Inthe Ute Sa cites ths fcsedon bil provide education In Bris the National Heals Sece hasbeen under siege On pose aver of eons sf vouchersyten Al though thse stil ve interference with pean preferences ge eye (unt cash sevice pei they itodice consumer choice betwen pee 2nd theeore fester competion, sding its hoped fo reser een THE STABILIZATION FUNCTION ‘The idea that government should be i policy came to have negative connotations. Confidence in the e- fectivenes of sal policy waned, and goverament activity came to be seen by 3 ‘rowing number of economists a the cause of instability rater than its antidote, ‘While inthe 1960s much of stabilization policy had been framed in terms of the judicious trade-off between inflation and unemployment, a new orthodoxy ‘emerged inthe 1970s suggesting that unemployment, a least below thresholdros i ea pods sum apa ws am so 9 Oak ae sts madi ade spe spp a os apa, \yvos8unovar Surys oxy os yop osu ourUsane ayo az euouew uate sae Seva pom sonuasa xe wajsis xe ansaid ¢J9pun papuedna Ao juan ap xe) anssaddond © sepup “Sn ouns9 voamyag didieys Srp uoexeyYazp 70 94 ssamosos ye puruop uED uoNAs Jako ON EY 0} sOMod ayn wo Aodou -u sey ep suo sawno way wede Wanda oi sas Ses eu (WALSAS XwL AHL ap 29 ong my aos mae a ge 8 ss abi gu so wae tn wos pow oa od AreUOU yo as ay 5 ‘yuuouosao:>eu Jo anbuSa; peoig WO >|, 9"TOd AMVAANOW ip 49 2qdwex2 10) sorypinds s a yin dquo ou pausaouen s oyod jer 9 J 9 24 dog UIE Jo “ouoss vouisuest ai ut cae pur “saoun9 podo(ssap ss uy SSeINaINg “Sei pu poysygesosrse © pounds 51 ounua%08 ay 9 Sosoddnsaud vung wt gn ptzogun pte an og ae SME KH YS UT URIS xy PUD puv pxdoraiap om e Sounbas Zogod jeay ‘aoy> 94 6] ONO 1381 ‘onan fouou aq jo vonemndivea ag ayonur eg 3509) ae, sua pur sie x; Jo SUMP 29 aout YH, vo sas ump ony SOUS 7OKN We ney URN 09 yp asap ssuoUay our "uDxENS ag SE ump. aT PED! Jo aN a TE na papuos> aniipuadsa ghd se yosualouew puewap u bua urusno8 jo yasar ayy Se uses sea por wok nso wr uo Sue nope “uonegu Jo aye a paEA||ne joUUK|duD ses 04 duu IN0ge je Sungauos ou ‘pe 23ye "Ses [aay INN,“Fae vaucTUnE oF toe Tax SvavEn in SELECTED COUNTRIEE a Stet a Parceage fT ox Ress como er ned wat pole tal govern spl fancy taro prope Sis taunpredonnats ste seed elpment fen ona eively va that do not in hist, several nation relied on ht nt in pone tna eaeptos scety relatively elicient with minimal deadweight loss. However, such single cammod: ity taxation cannot ase the volume of revenue required by a modern state Con- sequently, a broader base is often sought. Unfortunately, simple tumover and ts, which are the eases to administer, have the drawbacks of be {ng inefficient and dstrtionaty, and nonistort ‘added tax (VAT) are preferable where poss We have dstingu spon an individual. Such taxes ae signi stem of developed economies, and the tax base isthe profits of incorporated business. Atte federal level, the United tates depends heavily almost exclusi rect taxation. The individual income tax constitutes 45 percent of foal rv and the urity payroll tes contribute 38 percent. Thus axe on pets venves. Corporate income taxes constitute THE LEGAL system ‘Any modern market economy depends ona clear and enloreable system of prop ‘ert rights and the caifiation and enforcement of such righ isthe most impar- mA com system istoo high. Ne thanin the U income account OWNERSHIP AND PROPERTY RIGHTS chapter] we discussed the concept of property ownership, and we sav tha itis ‘rather more complex matter than might seem at itt glance, embrocing the issuews yous] Bah) sf 3 samed. Ju Jo asia ny way ysae yp AYoHd yousow asaqe un at ua KedoUDpyYy snp ar pet apg omg mine pee a See pain wen asa elo aye yoowyTy souorens aug spojad pue vodeuop deaya stand snsey q “Suroine 0 ssayouqypos sua Sng pou fauy wont ay e241 ‘Sienfe juve sauo}s aus Nac Sug se papuajp sjensn aay e Burin un aunssesrogdneseigeu pu apy ye Badd ue s9pUD] EI S43 nf J01uaueda9 930 1 Kzadaud pop jo Mv Adtdnumnve souewopaduou w03p ide ue pur pryesuadiioy 29 205 pou a 5 ALIALL9y 21NONODa NI 39VONA o4 NoaaaH oj uoqjesuadiwo> ps satpouas “sys uewny so usta >roua39 20 sayy 10 (699 poo’ ‘irsnoinsy nano Ser edo um sponds "yds pur Raut aggro seonrauons aes yousis ware, patna ate pos panpi-ipeae oy san, 9s nos eed renur ue ane spain sprepars uma agen of sed Spun oben “so an 49 je ape ae ssn tou wayeaauny ey {a uns 64 ey nc po me od ye “0 anne teat we ea pos dens sae NOLLVSNa4WOD aNY S4>vuLNOD 40 LNaWaD¥OANA BH ‘310 949 sey suonesusysan J woysKs eo] axdo> ay ax0u Ypmursanmbas apts yey ,PHFeU, eueR s > ut pea tH auoyy ous MoUODD Bu jo Jaysuen pu dysouso joys pay ayy wo aM, spusmuoid 0 padeo uaa a -suaisis uu uta atouons jo wed spa we ae sitseqypns wo sat ns joa 0p : ue onmtodouok se uongnar ypns aounouap ‘ueuupoug UoNtyy ay sespelcan only be assessed whei there is fll knowledge of the pecking order in which {debore wil be arrayed should the firm go int bankruptcy. ACCOUNTING AND FINANCIAL DISCLOSURE role by requiring that firms must report their nancial ina specified standard accounting system and that thisinformation be made pul lily available. The efcency aspects of this are obvious if we consider the altera- tive: without quired and standardized disclosure the cost of information to an {individual or other fms, whether potential shareholders, ‘would be very high. Thus required di ing information costs. Ths i of great importance in the operation of equity mar- lets, here buying shares without access to accurate information on the financial id be undesiably risky and share pries would not reflect underlying values Ii aloof great relevance to those who supply the com ‘pany with raw materials and inputs and these who provide credit to msi more direct ways. [A CLEAR DEFINITION OF GOVERNMENTAL RESPONSIBILITY ser In Gevelope art ono thee ge dy of mint nw tat has grown po Seine goverment in the counties now on the path of transition, greater respons “month Functioning of industry and the abor market requires a lar and compre= in ofa government provided social safety net. A SYSTEM OF CIVIL COMPENSATION A functioning civil code is an ai Incorporation removes the ings in all but be argued tat chief executive ofcers We an beter understand he signe of ths by onsieing wat “happen in the absence of civil com st eeu law. Blame, when cull be assigned, as a criminal matte and would be redressed by the ishment of the offender rather than by the co alta ger tee, sete hal pr forthe Wes rue rte domenc Reswanbusrespersen Removing te is ever nngecrrngos tr en suring the aly of vin ob cmpenstel, equle the Secon civil liability code, = aeons " role of financial system ina mixed capitalist economy is paramount, While can be argued that since it does not “produce” any final good, the financial uperstrcture ofan economy isto some extent “unproductive,” the evidence of "See erin chapter fr fale cso ote expat td its adage THE FINANCIAL SYSTEM‘20d wa uo ons apoyo aunssad wou paren sacha URL ust op sueuod ‘puny soy ag) up spesaad eoWap satedaaidas ou} P1n0> oo ung jess ayy food Aaya ways PUR Ha dpe ae suet aveqap si 03 svusue Buoza pu ue suo}9p rename 0 asad a S90 ha a ‘p01 go yy ary rise (AIUD Kp Oe} a4E wo sisas Ao8sMpsouapaadapur ro; jmNSse AL uo Sur Reap sy ious%08 Jo pit aaron ue ead eS eeu Bump pu steak Srtnmacvanoymsiman = fin ep nguna um apap ss pan a wed \woaunjan pambsl oe oR np sojouezed poss aay Pup Sug pu unoace oj yun0228 lol payp 5a spn ae Jou ie 49 Oe Sung feD:ouWO') “S¥NYG TIDKTANOD 29 uy =>uapuodapur ueg fe2> jo aap aarp ut sy sams NON ‘soe duuuoo ut arse Ag y INVA WAINZD 2HL 40 HONTANTATONY IHL | ee ee “yee st oe aos aso Suquid Jo aap snoxagn 244g paBueD yeas -sonaneg SNOLUNLILsN| AvoLIsoeza ex sarge sure pry srs squeg yeu sass pnb jo UROWTE unuuuna ag wo somuo> sinysuo orga Saas ASAE LZ gnd ng 004 pu 0 spung aut > TNS OF auDud axe pure YooRND Us UOY © Bo uso 59510 fing ug enum 2g pry fy suogeado aeUstady "L aque pms ese 30 pg nod Sumpredol aso po fam 5 2 9 uais{sesueuy an jo ovo pu fanges ap DUE 0 paulisp oes jioueuy Jo sosonn puesveusoud ag see OL Z ug 20} Y0egSaIEID ese DEOL Bannoqoy 9 apr a8 Aezouay 28zeuosp 6 suopouny ueod esasoe sey xURG [RD 3 ‘deputy udp 24] ueg ua pS ways EAE 4 pana TWwuanaa 3HL sae ai88e yesouons yo sua 3s9q 0040} pumas aN | teu (Sumn25) aayadinooua ay 20 (ea0y pu uede)pafoi¥0 ‘sua uti puons sy aon pu0d 2 ou; punoxeusr dows 1odde o1 Sto syuapisaudv any sa} om 0 TE 01g Asana ynoge eave uo nso0 sacuRaeA AUS ARthey are profit seoking, However, a quick glance at the commercial banking sruc- es reveals very wide ferences. The United States is char- the much more concentrated systems i, for example, England or Canada, ere commercial banking i dominated by only a handful of institutions. convenience and secu- ind middle-szed companies. Sablity and probity are ral bank share some characteristic (gen- reduces risk and makes the prab- Posrat Savivcs BANKS. Although they ae nt found in every country, many ‘economies have an extensive postal savings bank asa vehicle for mass banking Suchasystem uses the wide distribution of pst offices tocreatea highly accesible le and UK bling Sate pecs set ee psn te sguce Ba on co Insurance Companies holders pats a rest d makes them importa soving i perl upsardto the govern sizing the general goverment deficit oa source of pooled svings tobe used on investment project In Jpn, for example, such saving is ech post ofce and channeled by the Mast of Fiance to fn chosen nds Process NoNDEPosiTORY INSTITUTIONS and underwriting new stock or bond issu this undereiting func tea price tothe is "yteprofiy sling slockata evel aboethe uaanes pie Tis asthe “sprea merger acquisitions. They also engage in merchant banking by capital to firms in the proces of reorganization. fund industry has seen enormous go Stats, s male Venrune Carrrac Fans.” Insecent yrs ver comeback and has been credited with pro and medium share ap innovative than commercial investment banks ene fancton fins st pro accretion of the Htbu sy sw ga4d om aD; ‘1 Apeg Suuoyad ae ye 14 “TOWINOD 2UV¥OUNOD Hor LIA In spueuuopa uounBeuew uo poy ord quawaSeutut Jo sdassu of worn sts) pul Se uy a0 129} UDR RAS IL SunULEP w YeReoNE ave -ud puesariedasspuny os ay ingouotsm9 © “so acy eso fy 20g Song pgp 615819 pus Am id sea pm amon “xan ox 94 ne pu sao mais umea on Wo asolee ste psd ag ney tunes eoueey amu a ® posod tsa oa Spay angen yon uno> 40 0} ass Ses PUN a NS yo UOTNaLASTP Apna frp oup sonuowoa9 ede afew ayy UD eyp s9A dysiouno ares pasodsrp oy ssi jo adse eSaiqe, wonemndod ayy un {sen sounpnas ROUEUIY"3OOUS 40 AINSAAAMO 2H, ug ‘sugumos usanaq An seudes yuouysoau oy ss0e Seas 6g ung 3p auoooq 10 PeUED poy YPRY PUR ods prnoys Soedio: ies spas jeoumuy au, 29400 51255 [BUEN 0 ySUeN Os pou Siassy WIDNYNId Hos Lav aH sayeth un pawn ag pur uedefsauquneD Io a pod suedo> ouesnsu eS PUA ee Gl e Roe & © So 2 9 8 6 0 fi wees seer est ever eset caer Sag wa oa ne —_—Cos resolving the issue isto make managers’ interests more dlsely coincident with those ofthe owners. Thisin large part accounts forthe rapidly growing popul ‘of stock options a5 form of rem since rising share price eam mone the managers and hence ensure that they wil end to purse policies that wil ‘THE ORGANIZATION OF BUSINESS THE CORPORATE FORM innovations of Westen atcan throug thesale corporat \erperforming tof takeover interest from other companies or entrepreneurs who assets are underused. Since top manageme to be ejected as a result of hostile takeover ths prevides a constraint on management behave ‘or proprietorship, where the owness would be Liable fr the full 1 development ofthe corporate frm in Wester economies ov sus of capital and liniting the ‘THE LABOR MARKET ofthe opera porate form gather the finances necessary to undertake large-scale Eperations Corporations may be either privately held, in which the shares are not ttaded on stock markets, or publicly hed, in which ownership liquid and traded stitutions in most developed market economies ae in the bargaining agency. A third agents the government, which can regulate the lebor ‘market by controlling the age of workers, the an also maintain ins jes Also very elevantare gov- ernment income support police, which affect the reservation wage of workers and so can tend to increase the unemployment ae Fi TYPES oF Lapor UNIONS. ‘THe BEHAVIOR OF FIRMS lnallindustral democracies, union power grew with these of tsalenterprise. There tends ‘Thereisno doubt ample, some three mil makeup almost 90 perce es Within that group large pub- he majority of emplosment and ouput sistence ofthe modem corporation presen’ the theory of ih some serious problems. The fists that in large corpe- iy a separation between the ownership ofthe Rr and its gent problem. and 53 eachig igh a one eo the wari ui Amen unions ten tobe rgnne sang nity nes Thus orxanple alnost ll urerzed workers in he auton indy are member fe Uiuted Automobile Workers (UAW Wage negotitonanctns oa ery em basi ther than beg deteroind for he ete industry In ae courses stioization has ake ifetpth Atouph he pce has caged sme suit of prot ma ‘hatin cys non rt ae ora lrg caption eran Son th snort sco foetal pu Pan nea industrial lines. Ths all electricians belong oan electan unin iespectiveADMod Twiuisnant ozrprsgrs uounuaao ayaa ee aojeursep wuaudoarop pue Ypres jo Sin - Puy uouna408 ‘wy 0 uaased Asan pas aprput aa “ojod enon uroujo ymsand ayy ut souneeaujo £1 esodep a es rende> wun em a4 0 nuourkoydzaun oy souanbosues ig pen Suapio xg ys 10 "woRado> uaz 90 sp armiges0y x2 Casnpuruejoxguoe ax ao ‘onuane anp pu yjvos8 actos Suey jo uoneun9p a) “Uoter ‘prs sy yo uno¥a39 jo wood 08 Jo uowasjonur an sossediuanso yep i fesound aout Jo jana] no 2 uos8 quepodua Seared awe younsoyda ou, jo assay Sura neur ut suonesodso> ase da paaiunoouo 5 Gey ayqeegep st suousogdsaum fo sjaAat wo Jo pay ai 20 ase ans sg zaouse yg ‘SNaladad jour az susds odds ed st guede(uauuoydwaun yi st ouantasuosaqugord puesta ut gp, premusop, jnbasuor) aja Burjiow tp Jo ana 0 Se nun se aq sjavanboxy uta gol e Susoy sap Aed aaoy-aye, uonin ueodosty uy iy sutewa padoydaum ides jo ana saves pain ag ut Aa}IN09 "no wou tgeuapysuoa sete 0u Ayes es, J s0uN pu NO aL Avodans aHooNt uounfoydwa zoy-ggnd ‘pnp 1 pouisopsanennuo pasoddo ae pur prztue8i award yy st 2098 yuseNaNC ag 0 yO a sanity panoud Sey uA OES sons a4 Jo oor a poe—sonme9 ‘99 ens, 2fes-28ue Jo auTpap ayo np Uaaq st ‘oye sey 20008 aeand ay ur uoneuontn sonnei eae eso 33 so pio ena und oq oats soo ve Se wee 1d oon Se we a ae nol SE ~ ie yer uonezruoTun Huai sa2zn0s aos LM ‘liom aig ut snes pa Sm ein apy amin wages ue sysop ag put Ne oq Nona! pu su A ooo 8 ‘uisks yo pug se fea reuoneu po ed yweodus, pon Kone Beh oe toon preety ahs ue 1g siseq Axjsmpur we uo paciuvdao aze suoNun ‘says PAUL)TRADE POLICY _ or government-direced finance, andthe use oftarifs ot quotas to protect domes: roduct. The most aggressive example of indus meld a great deal on 19th century and during the 1950s Unite States. However the rationale behind any government inte ‘economy must be that tere exists some form of market imperiect hardin te context ofthe United States today, imagining the bu forming better than the maket “Thus while macroindustril policy might be used to address, fr example the incompleteness of capital markets or falures of coordination due to poo informa policy is mor dificult When an economy is be Inthe postwar veut there has been concerted at rade. This has led to burgeont Trade p ‘home market, Some countries have economic agencies that act weryaggres strong role in coordinating Japanese exports abroad, The other sid of trade poy is the protection of the home market and employment, Tis kid of pli has its roots inthe mercantle DEVELOPING HUMAN RESOURCES Wesawinchapter1 that he greatest source the wealth of ations isin the stock THE EDUCATIONAL SySTEM inmost developed market econ ‘THE HEALTH-Cane SysteM ‘The health-care system shares many characteristic with educa ble good, but is frequently supplied by the gover ‘ope, where national health services are the norm, and less so inthe United Stats. ‘There isa very current debate om the effectiveness of publiely provided universal health ate versus private systemspanos Byung ana aydonsng HEN sauis 83m, ~~sapunosaa oS if gous 2 oN sey iy 0g PK MAN ops 8 366 Segorny ma nD O00 ag UL RID 4 gH | eat Said 3a oN -AN Sung fo senayoeueur o) ss As2AU pp OK MNO doy sanang aang uy LPS Loe POU ay anuRUsA08 aendO9 SS sped ue aay sme payin ay ase Jo Suppoy pensdsapi a SCY smeud yeogod ag jo wopudapur oy squeg ea, ny ax) Suess uouaIO; De sést ‘sid LN se pz a sp yeas EPID ede aa un na ul 5 on i oss Sua ur don ng ave su "ea ues 94 Hoy am ey RUS omy me 52 "opr ms psy 9 fo poss ag sy a) pe me oP TL — venom uo oxy ste] ap eng Ue, 9 py eed ve ‘sm tet suai sano ‘oqo oust Saiesun pa0p0 prop suo ee pty fo amy aAa0a0 ars Noissnasia Hod SNOILSaND eta, ‘oqo 54 a a a oe a eH oe aa E ‘won >uny uoseages ‘wouuny woungitsP Pereeeaen eee ‘Ny RULE PARYDRY PUR “D Prakg ‘saMOMLpUE siasomeds suognansuy (aoysedap tsa 5009 sa “S01 rag pe sere mon yh yo ps a oe eY oe ot sanoiuuy any soo so08 gdb en ansaid ness p> ns ao re ‘ded void po song psn os sey x a sood oa re a ‘spoo8 yaaa ‘wor}suny woNR>O}f | ears Siaaawod ONY mua ABNCAPITALISM IN WESTERN EUROPE CHAPTER 6: INDICATIVE PLANNING ‘AND THE FRENCH ECONOMY The Theory of ndeatioePling ve Planing in France spel forthe FrnchEsonany CHAPTER 7: SWEDEN AND SOCIAL DEMOCRACY Funda Lasso of he Swish Made! CHAPTER 8: THE HISTORY AND INSTITUTIONS OF THE EUROPEAN UNION CHAPTER 9: THE ECONOMIC CONSEQUENCES OF THE EUROPEAN UNIONeum, 113g") uo pare suonsload we) su asain So > {MOU au a ‘sa gesea se “xa Sunwzooueo Squeyooun ay 2ya38 x pu ‘Surouons a ado o10u! ag) sd Sooo ayy ssqun nq "Sunaved anneotpun fo asm snob anaagmbo 2s9p out puewap pur Siddns snousSopu Sug sod 34 anmpo> ses pe ang {Goa 218 ued anne ue ot ppogua se) oe AGE IE i Ao gees yo tay Sass 1 eaag aspen ok aN) a pre tera ae pao fn ng on HLS PL aun ‘surspopwwounsanu sy wo wepuane sys ap aSpaqo HUT YONE AST uquuotd youady u nw auo yo Spuoan any pass Sag yo sums smyag © sey sse9405 ‘wueua ize seus pun aa}duoun pu paiddnsiopin ag 0} pum ojasop fama s fw ay Bn, os os pur aes uonegut xy Covaun> ay oan Sxour‘Kuouoss a Jo you Jo aye ay iN J A yop uy BuO SageteA auto¥OsSaDeW o ae aumbarsoteesyuounsoaur paso] Suosap juaunsur wurydo 9x oat “to pond pur yop op wo pron uneasy ‘woxypasoxjssideyp ur pasapysuo Awounn wysM ey SN ONINNVId SAILVDIGNI 40 AUOSHL SHL AWONOD3 HONSUA 3Ht aNY ONINNVTd SAILVOIONIproblems. There are, they say, even within felatively open economies operating in uncertain worl, advantages to sharing. in Commissioner Massés words “a ‘common view ofthe futur." However, theresa temptation to make the plan em body as rosy 2 view ofthe future as possible inthe hopes that will induce te ace tors to operat in an expansionary fashion Setting a growth forcast "Thwarted goth nist of expo of GDP at equi planed ving with ‘sed nvenen cin shou, der ipl amps il ot ol open Sty tomato ecapl expan government and busines alike, Moreover, the preparation of the plan io exchange of information among the principle economic actors. Technocra nets engage ina dialogue wit abo unions, business associations an sentatives of other branches of governments wel es any other groups that may be included. This process, known tothe French as concetaton ‘exchange between, 3 business and labor eadersand, often neglected but equally Jmportany, the various government agencies. ‘An important question is who should be included inthe dialogue. If the partc- pants are nacrowly defined, we have a corporat sate where onl tions sanctioned by the state have a role i formulating policy. In Japan, for gly limited tobusinessleadersand bureaucrats, withthe tnangle,” the politician, holding a watching and community groupsare by and large excluded although the concerns of certain gover hy gu straint. In Britain the plan attempted to promulgate a growth rate of 4 percent, but ‘is was derailed by one of many balance of payments rises and the targets hed 0 be jgnominiously abandoned THE BACKGROUND To THE PLAN hl along history of state i ineconomic development that lance tothe “Anglo-Saxon” tradition of laissez fre. Aggressive and INDICATIVE PLANNING IN FRANCE0s pur sdnou8 suaunsuoo ‘sdnos8 suauiom ‘jdoad Sunox Buuasa puso} 9, pure paejua uae sey syedionsed jo soqumu ay anasoy 2a 2349) ‘3824 6g pasuany pu poyoosaxam yey asouy atas poyediuzed tp SuON ut Ao ay, Funared vouazs 0} adse syesodio> Kian eau 0 papuan sap 9 paou sy ssiooudunyryou oy 9.08 fegUEISgN W pel amNY ngenassidas puv’suonm apen'sdnos8siojdaza a uo sued Ase a \seap suowsunuo> yo a sapouy junussedap seestxo a9 pul 2p [edo ‘wong; souos9 seas Siyauag (es ubuaiora au vo uouro ee auaze suede a aegap pe wound aioum (a7p23ua> Yat0u07) SusO4039 Poja>UOD © 2 ayy 21mouo22) ‘iwouoss papi e wep apes sayy sngAd ayy pe juaunL9.0# ay uaoeDg ‘opt jo afumpxo jeysue>e yBaany pasos ooo soy preBay ypuniy ae mG HO ‘org ont poyysuen Sens ‘wor.2ouen se yun Ut uous ssooxd & purare ‘ssaua> Suruueyd pussy u duanae yonyy, “(anv0T¥Id ¥O) NOLYEAIINOD (2) soqod ap 190 Soy 27 3 eeuoisy aq tw dura og “aseyd snp omu nq uaeg ea, ou 3000 2 ted vawoseq any suonesaptsu0> [308 alos -euad wag aney oi sun Jox0 pate aney wines Saved oun 9 pue aeu as yfnowge pur “saBeys sunt asap Jo SLND {90 et 1 pn) say Aa em Pr ss ey amy weg oma, ee ong AGP ad a we snp pangeuayes yo dn aps amp josuauoy Bie esayoaut oye i34pnoysuowewpio Jo zatod ak x 204 "paqeuoHEY 29 PIMoYs woH>NPOLE jev1p woAumsse ue Kau sexe DN 2DUEN UT SORBL PUL STEEL ‘aq ut wow jxang 4a poadope Suraveyd puranuos pazyenuas jest KwSy ‘01 pow pu fuydosoyd ut didi pastenuco seinperoid yuan Aunaueyd adqueu 205, sry uesTau, jo aduzexa aad seymsco pu wqwuanayt 0; prom e aeo0q wsHI9q aap uae) aisadeg-ueo{ pay sspoad Sumaseyd so ge tndno yemysnpu jo usd g7 “nen au aged 990 Reap MA pure Aaooydwo> a wasea.9ur we sea Be pods ou. go ued 3828 wore 310 248 0 09 dao so §20u014 0 URE ‘oy weg Kd auzou a Sans pu paseanur sorstunaoo uoneZEApO a > uogeoseadaso ae) ayy uel Yi ag UPAR asoU gurEIg WORAApIS inqsporsed Suuejd snowatd ay Sump ssnoud ag ou Burda w3IG eyasouy mnvoud 2206 nus 824 0} ueaaq onod jeuot#as Aypnpu) Sannoalgo eos is -pasjorasaperd Sunareyd gg yo oseo} a Sn STp Om} S961 HAH MT AUIXGTANOD ONISIAE ONY SNAZDNOD 1V1D05 #=261-S961 pom Sonam ng 9 ur Barzun jo soxnoelgouejd tz Suoy pe -usmypau ap 0 x04 wo ies ws Hos Bury Jo sua;goad an an KU ,aMpURdAPU, pas seo $96 uoueRSTUpE 3 ay yu ag 24p 01 ypuny aeys oes Ue Py (oa soa peg oe Hy Suumpass pu ade 9 poe ‘uone sa 1 sin Sr ae EN deus sous snousoxa apps fa 029 feo ayy 304 souRng jo aperope ar9m e S or {NV ang 0 401920 Oc6T Se eSURSUOD WOUTUOD JO PUPY awOS (eaaar oy dura a a bn isan roy pa une ee > 0 asanpe 390} S_EIE ep Gr TapOM iar ot ES oc ays pryueé yosos SR oe ow 7 a ee 1 = uno Asi pur pou sis ea s on 2x eputay pue fosid €seonued Uy sTonRTE suo Ua aug FD a Boyppour oan ag umd su 986 os ssa png gg Pe Sar eee aT ‘need atone arena ee (CERT ae suananainay ssenuaoena Susosa jo suaigod gn 4 Capra rng ree S60 Og se unertiges Wa uo4s a 3 seu 028 0 idusage ue pussardar gr| government to completing regional planned projects ‘of pasiament and broadening the cotertation under the coo dination of a neve National Panning Commission. The planning ministry was the old system ofa commissarit reporting directly to the prime ts significant that the planning proces is now being coordinated with Furo- pean objectives. In the production of the Tenth Plan, coer was extended eaders in the other members of the European Union (EU), a8 "young people” (aged 18-25) within France. ‘and change, important in initiating debate and inthe development of consensus. The current commissioner fr planing. Jean-Michel Charpn,recenty redefined the role of panning in Fr ‘The goverment dems it cesar to have angen i developmen: tallow beter coheren of cn ete one! Jospin, the prime minster recalled thatthe CGP had a special function in government decisions tis, he wrote in his mission letter tegic and forward-looking analysis a privileged isterial cooperation, and the evaluation of public within three aspects 1, The development ofthe French economy in the contest of globalization and European integration nung and ald ofthe insttutions of government, including regulation of industry and the environment WAS FRENCH INDICATIVE PLANNING SUCCESSFUL? 0 after the inception of slorious years the French fondly remember them) to the planning eto te the performance ofthe "French miracle” from the miracles ‘the Netherlands where planning was much les a part of the Coser Pl, Lo. (Sovenber 98) tof Mision om spn the CP 9 Jnaty 18)pee fay © st sg su ano | 2g uaag sey su jo se uy ued Jay © eyd suoriapsn yews 59; pu si 8 a a yoy ut 9u0 ot afr ueuMOp Apjduse> ouse we pag “ero are ema of on pee sa vod no oo9 st Bu Pt nog ago oS ‘pods 24 J yon 97 gn amp (ROE wT Husa‘ a PP ‘spgopnouruose# dian per aoylunun ust 4g prose ono 21 Sopa yo poe ago Soe sd ou pore py a i ny soo BU utes emuom po oneSiangpnaron) pegs eau jane aed ove 9P OL ee eas pa in of nung fo Oa Sus Ran jo ou ovo 5 1 7 reels Jour ped Soop Suuueyd woy au euvupen was} seme is sag seat suse pseu ay jo a01 3 Uo wg sy D1JeyD ss fos) AWONODS HONSM4 3HL Hod S1daasOud ‘swuedied Janay pay poison od ue> Suey yo syuauodoss te ‘Suimp ur pao sea doneaSUTUpE p05 mau 3idoad Sumo Supa os U394 Sy NOUS SUORE | mus aq sey oueuuojiad quo san ag sey Aumouo>> yruniy ays Sumauerd ase seus pig yp. ge a Bune fe oa “0 “auo axarsod v Afauaur x saxo DATIBUIOU fs uoyse anny a9 Burawerd NO> wo f05G0 WIE ssouanbasuca 9007 fi ‘Buor8 wag so 238 ‘dno os 49 senuo> ut ng’paaonvaqor nuedied notes ap yo ed a ‘do auena vag pinox aay ue BunOU pasayo aeaaNe: no As uoneysjnue Leia ‘enya s Sued 3 1, SO IY -eoyp o auapna suns aur a0 woRDae-Sso aygenjat os aun smereddea ‘AVERAGE ANNUAL Gnowrn RATE Tong sty ard na much acta by Futuyanechtcerian Hench sc tslow tt and cing the cape ot ‘oul ascii habe ees be cur conn reese woe Franch dng othe ative vee the case andthe eft ofthe weakes ‘cee compen anges enaed Fecha elie semi hinder te motive forte reed intervention fhe tae, which sought to renege 3a {nd unimaghatve pve sector. The wilngnes ofthe sate ote on en pe ated the dependence ofthe private sector. These became co Inaaiiton the average French ats in fewer hours of wark over a fee than anywhere else inthe isis shown in Table 63, ikely tobe exacerbated inthe ness future by two developments. One i a palcy shit—a current governmental intatve to lower kya, Ts Te Sul ind tr Progr he Yk The re rs86 ON vodoy Kno gg ane ons raps aun A, oot SsmaRE OK ayy OK Aw A wey ar ssn ope cry MP SAL ML oe : sar wan By lan sop nang pur yw Ser ns IO A eS ‘6s mse Huy snp ay sp SERS Ce Pe umd ag 0 sie 9040 1 pe aut aq Aews Amouooa ypuary ayy uy sxoWDe amp UDIYan Aq Seon au DUE FEM, Bupa syeanare Sanam ipa 0 sta ag sum Biogeypuy sozRD SPA, frag Sng sod vg 0g Pros ey Sgn amen nao oun mH UN KOR T supp pup Rms ag AMES PET, NOISSNDSIq Hod SNOLLSaNd ayer yos8 pauesren spenuos Sune Sepnud aapeuou ae 2255 $1d35NOD GNY SWHAL ABH -suogeu anyge yous ay aemnsupunno> sas woouT aBez>4e x as pu padi sou au Yoo a4 2m. “was pone ou fe ny sro > «m2 Pd sen asus ope Sasa Stop seen oreo mame amen 0 darn a 04 4a ur au0 aroy wos aysratursadns SSRBOUNDA axe Jo afd ay CL cpem aid ran (ayanod Soerop a dng puny op nopat pue our our 9 30 LUI (aps yay 8 spo uy wotrvonay ay Jo Ast sold pur wos nau $299 2 nogeuouruoyur pay ues na anys snes Sere on Pane ued noe dy ey ap esnua5 ress) oun uy sine Szeogaed rng sees Su) Aa paseo sr ue Suen rusadoung 0} Youno> sunt, 79 IGEL UTMOST uORERdOd aig aio Suse a s yandopsop ogo au, you rymo pu savanna > Samos Sena ej a 59 ur aseaD daeys wasn do 2) SE ng Buses 0M, oF amp quaudodus passo sas im sg tug boda uoreisupe ayy gf oF SOY ge HOH] WaNEHOM 13D] aM sadunosau es pon ay, UL 2808 ou ls oats fe fe eet gee tae oces WueeWetzeeesonsevos avo ano ‘521 Susur yo aoupead oy ayeus anSoperp ay Simsapeosg, sp ML arourp azou Sunes d jo ssmoid ay ayeur wou weadoang oun ut dsioqusu §anue24s90p Aig 9 usu aesSWEDEN AND SOCIAL Democracy A Survey of France: The Grand sion” The comme 199,52ped asp rong ‘onsen pion panda ape ra me oe eae sours gp ng wo es gdp vovimdod pas Sed sg palo sou nt pees fo (arp nes pa eX om pans sn, eto serogpe' 1p LL PUOM ayt UE MOE SHUEL VapEMS JANA) ame -o1 wuaudoyenag suouen pain 243 £q pau se, uoundoy 90 o sua uy suo pado}ayap 10) uEaura\yyoge ae juaunuase reouan sas pon 2p pu oy soy wand 9 oasesane ue yume sare p= oe so 48004 9 i uapamg sy Tay9 0 *iapos yo sampalq 4o vonepadxo ws asou YSly Spanos 5 AzagH Penh ron ews» Sue axey (Surges Aonod yo ued w peu aso; 249 pera: fies no J apna scaly ssid a yo panel peas ou Sg poms ae sons fon sun nso Heurunson aod fin pasean sy ans fod oi sneer ‘Tyson ion wate utsezo we un a ag an oa ed agpp jeraqod a pur >a peuwo djamuo soue are woronpoud jo sueau {(Suous spans ur pur Ut spoo8 pu aGoDUL3o UoRNgUESTP ayy MOWRY yn eyo Buse ap do idwaye 200 ues 5) vowouoad sup uaoq sey annoolgo soupouy “sm “upp Aesnouoos pur feo 00s ou suaWEp2s 1 Bul fase pds sirUa of Usaq sey wasps ButeBzegaxnHO> si $0 anH20G0 20D ‘wopam uw pnpaudreoos a Jo uoKnaraSTe 2) Jo worpurustap ajo ames fn st Sune Szeg ys yons pue—uauasse nka0> J uo amos 4g pasana ae sas0m Jo y2dHod gg— pom ‘gut {ago paztuorn Apasng sou ay se uapang WwounLaA08 ayo dayspIE ys a aapun weap aue pry “at (WoO a4) wo Siaopds> uP 109 2 soxmeussardalusamingsuogeno8eu kg paumuiaap 8m pue haze sae seoqnexd SurueSzeq aoyon pazsenune dys yo a9 4q ayy days va08 ‘ose sey fopou! ysIpaMS ag] usHIdeDyaysew amd azuapeseYp UD ye JOO [pu juanyge aut unswaag ssezucn dieys aq Foptone sey uapams “nuesnsot 720s pu spoo8 eos o sat wily pue automa soy Sree 6aSOCIAL DEMOCRACY Shae ami da dp en = oo pe eacourarne st eee Se sree high axes or overgenerou taraers cee nubian rs ‘THE TAX AND TRANSFER SYSTEM operon nd Deep. Sreculyremuncrteg employment ae thn imply cshorservces | te of social protection that ly ined wth progresie income uso aceve a igh dere a alevaton and equlizaton of incomes” sweden entero ee reputation for being something of nce funds are government financed Sweden sickness, injury, mate slobal andar, presented, and publicly accountable i independent beards of qui Sweden is perhaps acess is subject to strong means esting requiring recipients to sel Housing beneisaremeans tested to, depending on the numberof ele, < fr equalitariai ing the operation ofthe labor market, reducing saving, and lading to high ates of itt. The replac 5s 8 per (as elsewhere in the social insurance syste) forthe st 12 months, Day eae foe “Attlee repre vee Tg ae td st Sane ely pos ence rt eenmet aman 'ORCD Exam Sa Sd, 996‘Gordes Sno a8 Jo souRURGOP 24 5 pose: has speodioo a ‘uy a8 Sg pteuuzp Caspr sip swung ou By wens eau) paurauR wo xe Jo ser do oy tuo ansuaaiduoo e rage w0zq uote ibosvo9 aye sypuag usnoy pure py) poptaoud esau’ sm $inind seeps ys 205 ian ayy Uae RODE evsned uo Wuapudsp pur ys nojaq sad ye papraod sf UA:PRID e205 409 sey “so nd on yo your yn aes sspeuodion Sy es spony oud Sunyew-uorsinop ayy ular a¥0;za59 518 SDeIoUNap fee Wsilvuoauo> os 9 pay osama or senso ous ob e992 * eet pain zm wou vag eaongounmaneset man son EY a Lo on SoD eR ga (TEER Raton vwstava 40 avon‘THE SYSTEM OF LABOR RELATIONS: fessional Associations (TCO). The SAF now re {2,00 firms of al sizes ineuding Gas ear ee ee Nunsen oF convanies arone EUNOPE'E 500 LANCE COMPANIES heer ptvar sym uni te ed ofthe 18 oegatatonshelween he SAF an the LO prove the newark for ch tage costs Bo sue sa bend inthis. Te employers viewed the species cress in abr cna lowe prosper e suke amor Comouies x Seaggensing he nor pred E an ster tarde ovr poli gal a m 3 suse ater) Negotton condita he naa lee hana lng interests in many ofthe big companies Firms interest make up about 40 percent ofthe Stockholm stock market ‘nna power i Further exacerbated by the f ed ness. Sweden, a small and relatively open econ ports oughly one-quarter aa ce internat tected") etr nich prices might bo ndoerensy ‘THE Basic SysTEM ne ofthe most distinctive features of the Swedish economy wish to focus on here, isthe system vba ‘Ths implies that, WeR+Q-L where W isthe rate of change of wages; Pis the and Lis the chang fore the change in product ation (the SA toven of Salsa stone of the syste. the ate of wage increase across industry and pl tral action by the unions nas we have noted, Sweden i now one of the mast heavily unionized societies in the world Some 85 percent of workers ate members of some union’ The LO represents ony blue collar workers and now has about 22 milion members ‘workers, which have been growing a a percent of the workforces ted by their own confederation, the largest of which isthe Swedish bargaining to determi ison the nature of indus rs tlnce of payments rtcns, depen of ecard inan open nomy he Seder. As artnet ample i he ae pris for Swedish expr oe expe acy Per "ned Naas Deven Programa Maer Dele Rr, 195.2‘peg Sted warranted umiiman ag out] suo sto lp p> mete SS se | 2430 fuse ay pan Ae enbo ymbo 0 su} ur puowasgead apy, aon enbo yyy asus oj diay | | SANAWaauOY TWNOLLYN 40 NMoaNvaNE 3HL | sioqseu oda UPR O}Og O1HS AVS. 348 PoE OT 3 snd ny ons noun Seu aus ur og sear Be vo Nouaee umn noes sa 8a usa pasar “up po ONL monks jg woygoad sous paxpoay “pads you ojo an pomapres Sen Doe ox ara wa wou paves 9 or pet styso%4 sp UAUALIINOR pul Se paonpanUT aD SING a {aso poole oy) anoge aes ey pase ag ou wauborerevoue ayy kq pauszap 86 961 pu ywoored 9 0} woes pay 496A WdEAd ge se 20] ap Pure sayy put satan e948 Ua iad pnbo oy paunuoo 21am Suonn 49 ew zooue nd ON é os ‘poate oj salem ep Buiiopm a ase aes em og & & scans rokrnjo au anno nor UDR ape PBS PPO TL oe sr o ee ve sat gma ea cayopment of wage differentials, the goverment had schemes to solve the problem. been wo important diferences 1. Union workers rather than society asa whole, would have been the owners of capital 2. Control ofthe firm would have passed to industry-wide unions, rather than to the workers in the specific enterprise. The Sesh paranent edt racing he Me an to aw deve fn Sweden have a much ing work than nother counties a powerful point labor market policies. ‘lopment in the labor market in recent years all rms that employed more than $00 workers should hand over 20 percent of ‘The unemployment ate has fallen fom is highs in 1986, nevertheless 138 percentcw ay uns end un np pu say 2°73 = na onda aL 9 "sy nt nT ma aA a wen BaF PO, ‘Srp amon wap o souonsngip og oui peur ajo vos pa on wos opoqpur et pagpUT] sy or Pur Epa 8 90 ses yy au uRUDO Od yas [EDO Usp a jo aye ean AR ey uausaesunos asp suoneroSou sogey[euEeU 7 amar a4 23na7E4NA ‘was Squeingpreenu a woy creep 210 pan st nod sge J saxpeag onbay a" 39 pang 6004 Aue aps worun aq wos; westuml popsen spans sea NU ra gs spans ep zt 19H UL "UO HPI UD pes pasts ney, ‘eq ils seo euenpin pu soso spans ao URED panos Kae uremia" spunn auoape a ang si joss ood oe ae saya “oj Sunsari ag fom ops yang ad esd ge ed a0 ye adoy ag sana qo uD agate 9 Faw see Ress ‘cons p20 us. we) agg Em UNE eos, aus 290} 0s uowor8e 309 12490 soqued yiog caoy 0 poulsuoo Apuouewed 520 pao} eq INE 24 1 uo‘ onsonb ay Sinsezeq em Jo ways4s reuogey a amopEAIG pasne> Arysnpur payuouo-nodka jo spa ap pue oe ge Aaos uy SymboJ0} Damp ag usaouag oxpun> 2g, yoous Ho youe> ayseusoge| ayy SyEGOU sax aeano>u9 0) sae evaiagp oxy wo poor agepne ese papsedal + uate ue Suauiry ur SaBe4 0 9 o> ep suayqoud xp jo Sada ng. sauypsSunaes22 gol jos ‘nog spioM aanonpond ox ast vans foun mary D302 NTN 0 HR RUIN PS HE ANOS ot ez we et sieuea sou psa re ve n + ‘nda otere= a so : i a ts tas yn ade panes dese a er ” fd matas nosed a . = ‘epancopie pon #9 oe 18 os ‘sun sry mary one Sacy sonata a veer erKEY TERMS AND CONCEPTS hours vear compared in part de to increased outs” High tx rates have forced activity into the black found that between 12 and 25 percent of income in Sweden ‘An OECD report a decade later addressed the iss of incentive and eame tothe following conclusion {reese in apne ene ftom moving Eakin work sti labor matt labor exchanges corporat Meidner pli EFO model protected sector exposed sector OECD Fema Saye Sad, 8,8 Sallsjobaden agreement wage camer funds 7 3 democracy wage solidarity wage dit QUESTIONS FOR DISCUSSION 1. Why is the concept of wage solidarity central to Swedish society? 2. Why des natenpt limite datbutn of wages sen the eflctive ness of the labor market? 3. Why isan active labor market policy a possible remedy forthe absence of RESOURCES a ep soe Insets pam Swedish Employment Service Investor AB np wwwneston se /lang ‘Swedish Confederation of Professional The Swedish Trade Union Confederation, LO Swedish Government Offices ations... mp /rew teoeinde np ose ht ww egeringense/inrgish/ Books AND ARTicLes“unig eyszey ag u ajedtvared oy payaut sem 2049 athos ay adam sevasod so vostap a wr das dnayueg soe soda Cue oy pu Soyuod x9 uaa. -ae SBious pue poses aso Suara ee 9 J94e aaa Sopexop aaa au es pe ‘sd 800085 ¥ 124 “ed pur usouens voy pu ada “ost iy san wean NoINA Nvadoung aii o4 suosunoaud oc mae ns mi as ama Pn — Ss re soumery ay pans se NOINn NV3douna ai dO ANOISIN SHI ‘pa Seiad) po ooo OPO), NBM 1 HOO BUOY RE ‘et ‘say Asan pion 279) wan ypN M vag NS ApS UN BLINK NOINN Nvadoung aH 40 SNOILOLILSN] GNY AYOLSIH aHL i. ur wo ome pur sous 0, suond, wa SIN puR apINS ing ‘sping amy "uosey joi "os ao MPU A FAY EMPTY1907 ws ofa rope devastated by wae 1948 Benelux Treaty cating 1967 i wn ww Santen tod Eero CConpetin ofthe cs Denmark, end and and pain Dare Even 1986 Poxtagal and Spain join the European Commanity 1987 Signing ofthe ety and ery it force of he Single European Act 1999 Signing ofthe Socal 190 92 198 193 the European Union 1995 Aosta, land, and Sree in he Euro. 199 i because i was conditioned on extensive ing fof Eaetem Europe helped draw te “ron cura rope unt 1989 1985, conferenceat which ll the major w ro European nati resented was convened at The Hague. Originally called the Congress of Europe, this body became known as the Council of Europe and made its permanent home in Stasbourg in eastern France. I became a useful forum in which to debate and define the competing models of European integrtion, An important issue was Britain’ role. Britain had emerged fom he war with great deal of ty and might have taken the leadership role on European unity ha Zuropean integration through intergovernmentalcogperation rahe ranational organization. In retrospect we can see that the rit fer clear path toward the federal solution pre ferred by the other west Europeans. ‘Thereal precursor of thecontemporary European Union (EU) was the European Coal and Steel Community ECSC), rst suggested by Jean Monnet and later ad- ‘vanced by another Frenchman, Robert Schumann. It vas originally proposed to ‘combat the lear thatthe revival ofthe German economy might cause German mil- nwestem Europe, compen el of he valu poking ata mache tried to move toward political unity ing. a European Defense Commi the draft of a treaty creating 3 Eu- rove tougher than harmonizing economic arrangements. THE TREATY OF ROME The failure ofthe EDC and EPC initiatives set b uropearists shifted ‘culminated inthe Treaty of Rome. This established an Economic Community (the EEC often called the Eu ropean Common Market} and Euratom, the European Atomic Energy Commiiy “Together with the ECSC these bodies constituted the European Camnmites (EC) ‘The most impertant move was the establishment ofthe EEC. The suc ECSC demonstrated that the market and therefore a pact on efciency and dy Seorraeee]anoxd peang wo mpi pos age HME OU nh as 29 900 ‘souseran 201 way meso ee Sp Por mS, food yons uoueradoo> paseaout 2 “anap Ajuanbayy vos esau sayy pue SE SZeg-IHOR ay, wt SpsOP pawezado “oooynes ap SoeUD apts puny pee oneUepY Pra i se pateupsno> 0 poundo a9 pon sun453 949° padsoud ayy nage wsaoUOD eo 279 32H PRO "224 0 Aaryuas@ jo aenb ago aE, nreoq se 6561 3g paisa amen ap ay pur 0297 0 paanpassanssarZoud 290} aM SI URIS) UR sug sy Suumg oun SST e Ys 04 ous yuan! bye auaoy jo tea xa 4g pou gas IS 0 AnMaA0 94, XIg 40 ALINANWOD aM ‘qua suap oj on young ay pasn oy ‘anes ap sop ean asa suoneofou nq dusioquius ueadms ey pas 961 Suunouue “3 ag uo oN sj poeudaas Aa} WIE yum year uowuno> eo uauysrges? ap pu uogunsuojsn # jo worn xy sees pron dag uy" ueU wOW j oo eo aU 349 Se puysou}UNED saga a SHIR Aq ALUN Uuonanpoud jo suo} yo susuawou 2 ayy oy wuoutatw0D mean 020 sammy oun sanyo es yaqreur vou ¥ soyunco (enon pa “te Sng urea 0 an 9 2: no iL bs wnodo™ on nh Pot ot 20 juno ua9wjaq spoo8 yo uaLDAOW Ap SAO Rae 9peN ap oa sarap wana ae au ‘edn fens 94 “dsiaquu 3 ansind oF ladon oy ozs. Se sme anoge oy oes py eA aaoy 7 au a BONS a ayo sie sua [eg ut aaanooun 9 uy |membership would pt these countries, lof them recently under fascist regimes, ‘on the road to moderate politics. EC-1992: COMPLETING THE INTERNAL MARKET Esperia shown that decpeig the polit inks of he BC masa ist operation, bcause it involved the sacrifice of domestic sovereign liz: Ig the interna econo side effects by fostering increased comy grasping of economies of scale “The European Commision oficial marized in Table 81. The elimination of border controls wa y increase in gross domestic product (GDP) of 04 percent, cut eon the creation ofan ad ing economies of scale constrained by national 1 percent, cut consumer prices these medium-term consequences second-onde sults fa virtuous ele af eral mart was Enshe were comple sata rales many ately designed for ‘Consumer protection, had tobe dealt with Although public procurement was, it 0 re 0 sco 0 a3 oe : SURE Cot Report 1985, 8 Uheory, liberalized strong indications of national i sil persist Integrating labor markets hs also proved tobe dificult bt passport are no longer required within ofthe size and depth of the and several EFTA members actualy applied for fll membership. In| and the EC combined to esta 's hard to gage the success ofthe internal market project. It has file fo de= liver the promised ecosomic gains, and EU gh head of state or government at the meeting of the European «lin Strasbourg in December 1989, I et out broad principles shared by the here wre ember st ht tne a he Unie King “ep a”reed a up saz ened pu onsouns Rog u eBuaReYD MOU PDE] 3 by eds Sous ap Sumario ts 2ot-ba Jo so NTA! A BOO (oy 1 nase a pe oe ons ‘gov pmo mouse Sn ny a nyse Aavaua LHOIMISYYW HL ‘Gyno soquia wo won2e agoads {ve asodi jou saop yng wuauuizoo xvas Jo yuan © np a ou pry aggre wag aot SUL Saumeieg sno u aBeRia on uy soqUzENS ue SUN Re] von oj se any iavdey> e205 301 Psst ‘ssussng J ssn} 90} para ‘3 peU0 a A aN SSONDE He] 30g RITES see D0 | 10 or a z ee re et 50 ‘wan nal i ype Sus 24 souetage ut paved uaag pey wun jiod 4250)>Ja%9 ue premo)saisos4 2pGunga, Polit sons te Cash Repl sion’ report, “came closest to satisfying secure democratic government, © to take on the obligations of EU compared toCreee's $8210 and wiley 3ctral funds However, this group of five nations is certainly beter off than the subsequent _g70up, which the European Commission has decided to groom for membership ‘over the long term (Bulgaria, Latvia, Litwania, Romania, and Slovakia). Their (GDP perhesdislessthan 10 percentaf the EU average, and les than one red in purchasing power sos pec repos Hang sensu ede on agreement reached on how each of the EU's member Stasis tecompy wih he oer ebecves ofr protection Hower is iobeet wpe ign recig scons whith heed he cnn Bid popuaion ‘ern Europe by setting aside total of ECU 45 ‘action by Brussels while France resisted, citing the i matters the principle emerges in other impor al reson tht Turkey eae mnsiderabh nstiuton an outsider a confusing and regulations that are atious Segre, managing a budget and making very mie umber of agreements in al sphere. These powers ace vee bea dragon the budget and. ale inthe east wil draw investment away the high levels of unemployment now en rope. However, expansion ors clea politcal gains by ensuring the stability and ‘moderation ofthe countries to the e35t ‘In 1997 the European Commission conducted a comprehensive evaluation of each candidate country’s politial and econamic readiness for EU membership. ~ Europeans and baling many European for tis useful to outline the distribution of decision making aut Sen when sed nr ofthe mae esi prcsing pon pay ett thas an ae ge ofely 5400 oan ura eee cl 00,ay ‘stxsumosp euogdana uf spsled yxy pe pouououe wadoin ang aij uoRde we Sag Anu edo svazn9 1 avo: U0 pu spun uo ‘sod sp de sa weuiso@ rani, e wo aeons ud ixpo wo Sopa juan 4 4 Hua PUNT wos page acount ie sry os ‘Suse sso pu utpds ene wo prom ssodoid eu suosuno a 0 Suaupuoule 0 sue POU oad -oxd um pur sta oro opng 3nd on sacide uayieg a, Pe UL ato 2005 us uossunao a uo asia jo uonou sed uj «ss. 2qguo aap stunsduo> e298 pso sf soqucs rourwind Sue 840; are urs ayy asodu0> yoy ead sa seers an paurode peougod ze s3uoesrT03 aN sa] uo ,doys Buye, & 98 Seo pe 'O2 suo wwounypeg ueodoang oy ane awoy jo oo euzo a woe 89] seam aan jute) siamod sauoureeg uradoing ayy, “LADHVITUVG AHL 40 SIMO, ‘suaurwaso8 feuoneu au Jo Kpuopundapun saezado i uy 81 UOISTNWO ay) joaydouud jutnodur uy Bumoquer yo zues sonbor{ BUDE urwoy sou quppsaidyuoueuuad esey pur ssuorsrauoo g Aq p2) powuwajdun spadoud ‘sys 0 15unop uoun ueadoma any 4a uaye, wd9q Sey USED aloud vousco dn simexp uosunio aay ado ont aos Sufoyduo 3 jo Aoenneaing yuaueuod posegspssng ay 5; uojstmuso7) weedoang 24, NoIssiMWOD Nvadouna aHL prensoy paged yuna aos of pu psstonp sey epuaBe ay au ood yn oes ‘oj Koopman quo Ap SUN] 66 Ut PURPA pue 61 uF weds pursue "gp Ut KueIED pue 915 ;pOuAd OLAS Jo} ono umadamn ah 0 spd ue Ogu De AI | Jo tao uown Urodasna ka lon prypas us9g ou sey UD: oN tr sungsonb panda seize ose 3 sosgns azeuodu sou 24 Uo emacs aa speaod paw spe Sod ya 8 SORE DAUDNE 8 (,20DK ~s08 pu ais spay ag) SP poe ajo pswodo> 8 sPHM TD [ano urodamna aq pou 9 wot wtadomn 2 fo epusBeyes0 “ay unaoang ap jo sagan g¢9 ied paras spon eaney sop 1 UL ANaWYInavd Nvadouna aHL ‘ase satood pue sop ai uoanuag sayedsip ao4099 9 40 wa 0 palisap ‘spung yemrang a Aq pus puny auezens pu aoueptn) Teamouy ueadomg ayy Aq paysoe Buipuads we) q pyeuiop st YoNt ‘966 Ut wo 9 3a) 18pmq ferue suOKUN 2X9 sare Os UOC) ‘gs quo UF paizadsor aq ou ste SUOKUN ay no DREN J Me auoNno> Nvadoung aHL ‘wones8aye py 0 ayn au 0 saes-oneU 24, 24 amionas ,oHeDoWEp, a rnoge st sisMeue say epauthority to investigate and if necessary take action on them, Inthe United Stats, the function would be achieved by b pean Parliament aftr cach cection to the Palament forthe ofthe legislature MAKING DECISIONS IN THE EUROPEAN UNION five years (One ofthe mest important features THE EUROPEAN UNION COUNCIL OF MINISTERS. Most ofthe daytona decision-making power within the European Union es in unc of Ministers can ether adopt amend, or ignore inst ies incng sss that neve agree, chen sport, the Council decides on the basis ofa “qualified ma th member ats avg he vag OTHER EUROPEAN SoDiES ‘Toe Economic and Social Committee and the Committee of ‘which are Scandinavian in origin. Te purpose of the office i to provide «clear OO snerue for any Buropesn citizen ot resident ofthe EU with a complaint against titution of the EU. The Ombudsman hears grievances and has the(1g) worn weadoang, nx pnsemasanayloquns ajand/ apy mywosyangrey Py ‘Ae peer 9 70 M91 rg jesag weadaing wor weadomg uo Sea, ‘oy jo Geox, (yt) eary apeug 2014 usedomng (aa) exxy snwouoog ueodomy i weadaing 2 jo woes pur sa aa . ray weadomg us, oune wradoung san ey ower weadang worms 12904, ors wradomg aaersqns o ado sao) u0U0DI vada 30) Uonezt819 vweaspraio os oar catieanig f pur nga Suruasuer snag Hosa wns ys en vy Sosa na coe au wpSeEHY rasuoyy wef ease apes dog ssansoy ama pO) 17 Spm uenosng ay 20} 9899 umd poo sau ans sy -ysv3 eeuotdip ean iy ra ous pur adong eee sceoyoma/a weodu ut 8 yp pur sade Bunion pu EE. uring ‘pvnsay ane ig seoryno usounse ayy pul Se aE JO sais uou002 934 eye savas saounosaa _avod a snp pros 99 un Znow Supe UNI assur nog oure> hang posse aye gw Noy AMINT JO WARIO © FO AYIA A ‘SHON 94H UT DONTE 184 MOH inoquon uso Woeroouep © 9g ay st asURE EYE Ut “2 2014 aN oy wowed sAogy Jo sugosd sensed gam YN aor oSuoqp vag adomng wayseg jo swore sawood ayy Sump gn “F yeradod oy apo yaared ZF SPoRuOoN por meg Rema Jo vonrrqao> ways oN PO jar eo xo adie 20"Yo YA ounendod eo4 ey (PUERL Speunag Sunoquoxy ‘puepa Teinog "wnifpg 28a) suoNeU Yes Jaeae aioe jo uorenaony SuDqe ous xy Sos woHsAS Ap PUR "sO, dod xy yo sua powsaidascapin aes o saquinusymOsge 3O1a18 103 90 44 pssoye sae _ai op popoou pue va wos gu pau anaoced UTA PIP Ap“ ‘NoISssnosia sod SNOILSINDTHE ECONOMIC CONSEQUENCES OF THE EUROPEAN UNION Since its ast expansion on January 1st of 1995, the European Union (EU) has con Ssted of 15 member tates in output has led to an increas debated, but labor markets anda lag in the pace logical innosation relative to other nations. ‘THE WELFARE EFFECTS OF THE COMMON MARKET ‘Tre theory’ ofthe economic co sopean Union. Europe’ Mid ons Ero Commision for Earp Anal Rts that Country C ean supply ef ‘ny A, which23 aga op sg es sone sau 0 sod arse spn Os ay at a wo Posy em me ayo tonpoid ag av sae uo puss a sant $y 2pen aay oy prey wis pnuap ag io oj ono oe kg sna, nganpad bos igo gy qssoe ued gn jo owen Pus ine -ond agave avo st sel on 5 au ae agen adsas gu 2 -agsuonounss eionb pu pe y saununos Suzoqyiou ue) au08310) a pu son jo 30, sae na iueoo spe gy stirs sew ed ssutedesi “aya uondumsu ay; pany ' pur sad samoy Aq noge wnoig woydumsvo> ur assur ue st HOU UL Pep uoqeaD apes a posta spe pu 4g 3g wads o 2 iq uous junouze te) pood a fo sod SY JO jody 0008 ~=~CtaaS mS iter ‘mw sot on ng sn 0 ea ey No PHN IONSthe EU. The greater overall sie of market allows greater specialization and divie rade floes increase. Some do- other member counties cut ‘While th static effects of customs union ate important, long-term dyn 3s ae probably more significant in providing a rationale fr the the openness ofthe whole Commu altered in this 0 yer period. Between 1960 to 1967 about 88 percent of the GNP 1960-2867 sana-a004 Cee 523 Ba 330 ‘ofthe 12 mation, then pact ofthe FEC was traded. The comparable figure forthe same group of ountres between 1994 this had risen to 386 percent. The evidence there: fore point to substantial rad creation and trade diversion effects ‘THE EXTERNAL TRADE POLICY OF THE EU DEVELOPED NATIONS the United States directed its energy Md trade predicated on the most principle ofthe General Agreement on Tarifs and Trade (GATT). The creation, ef external tariff (CET) The EU has also sought tex core membership. The fst exersion ws thee the European | ie Area (EEA), Subsequently the central and east European econo mn have been afforded special status though the signing of reements (EAs) committing the parties to mave toward a zero tariff status st period. After US. pressure and i p ‘overs full membership, Turkey has been adi er aspects of he EU. into the customs union wih Trae Wns. Despite overall conformity wit the rules ofthe GATT, the EU has ven that agriculture ay beyond the purview ol the GATT and tonst postures of both Europe and the U cover new European Union rales requiring that exporting countries comply with ‘he EUs food hygiene standards. The BU blocked the import of American chickens and turkeys, and the Clinton ac $200 million worth of meat imports annually. Like other disputes bef resolved but an undercurrent of mutual suspicion endures,suone2pisucojoaod nq sy yy puoiag pa 702524 Uo 230m (ada 9121) At pur wuaniad77z1 ones gagy 3 ep pa oa “Sou mage odo san span pur rea ‘sg nae es 01 AND UM Dy Sup ut Daren, x epuny veaoing at ene af pwns cum 0s pson ou pap aes NEL T ‘uo Suswoyy ax au SUM uo Aaeyauon jog 38645 ‘ius paynwype 2g 0 sea aes ON Wed use ua aa saqoud a ey ane paidope azo euaiu wpunseeyy paj>-os ayy aout, ny wrodoing 2 0 uous gasy ay Se hada 66 0 Snouag a 2s pao a) TENN 0 poner snes sua a Peon an ony ot og ng ued pony 2.801 08 poo “pont span no A HEHE “jus of pauopun san fed puma maj 232} pur den sy un gy 9 6 god Ges spaus cya sun aso iy po Se uoTnsuoos pu uoddns zoo 20) poo ay UOESYTURAY WRI) jo soouonbasuo> ayy ypeq 9S Ses LL Ase SEDAN "Zegt te UL syueg jae) ‘23 a Jo stowsano9 Jo snymanoD ai yo voysundns ap pun Koqod K}puou “ADNAYUND FTONIS V 40 SDIWONODS 3HL ey sey Rp ane swale pay aa sysomued waredde no ands aso ‘uOREY OV ay ot ple tun urodoang yo wanzad 9 inoge sosunasip pun waundoyensq wrod uy (uss) sodxaresaurar pu (rages) sodx9 famouse jo uoneniges aye da peg am sounBuere 907 a azouNy.n poidhas Aue nou sudHeU JOY a4 J0 Sod Sow 0} 24 ow “2p, 343 wi SdngsuORME Sa a4] “SNOWWN DNdOTIATG G¥MOL AITOJed tw thei inclusion under the generous “fudge factor "Consequently, 2 group 1L ations (styled Euro-1) were admitted the monetary union ‘Eomore ay Warvom races a AE ‘THE BENEFITS OF A SINGLE CURRENCY a c pected to by 5 benefits. The most obvious is the Keele — a urrency union is ring several benefits. The most abvious is Sennen liminationof currency conversion releasing Substantial resource inthe banking ao Mow pwnage Nowe pete secon! Ahoter is from the end of exchange rate uncertainty, which should ene — vate courage trade and allow more efcient allocation of resources within the EU, competitiveness tow becomes hey ome ofa rise in unemployment harmful isthe los ofan exchange ate ‘The degre of factor mobility aso affects the desirability ofa currency union, Highly mobile labor or capital helps adjustment to 2 negative shack by moving {quick from the impacted region toareas where they are the Utd States. The stat of Maine had a high proportion the US. average ‘When cheap shoes from low laborcost countries began to flow into the United States, unemployment mounted in Maine Ifthe statehad had ts own: ‘would have sen a deprecation ofthe “Maine §" and a movement toward restor ing external balance. However, the shock was absorbed by lower real wages in Maine, which prompted an outflow of labor to states where wages were higher, and some investment in new industry in Maine to take advantage ofthe cheap countries have lower costs of joining a ied ‘ate system and especially a monetary union. "weer ne mt ft eerie eae liner eng a the acl dee fsing igh wel be selaguas eg yp a se mea Np EG NUON ay 2p py mon a ay wry was NPD dy ‘ymsuy rejouoyy weadoung aq sosmnoaed sq soso ag jdm 0} 2 sad a fo wopssad ang “yep ju stug pus ‘gg 24 apes se UE FER 24g mous snm0U0D9 vado asm udeosns yo asap a9 Bev patuiodde are 59 2 o waprsnid aq pe pseog "od uur rant un pest suosap amor gag a4 ouazan> uimuspdo ue 3 jaya ysigerseor ops LADNaWUAD JTONIS v Wows 54507 OHM GNY SNIVD OHM, equa wou amnssaud eo, -od wos poet Spy age a) Aueg awa Ueada nau 209 wniv@ TuiNaD Nvadoung aHA 40 ZONZaNaUZONI aHL “sing pan agg ut ona aio suanad wo uy union Sei Np SC: 33HS mona sou bom mg) agp psa se ope en pg Vidalia AHDIISYYW 3HL HLIM s74WOD OL ONIAML (ax pur wopny pamun ant ‘vapoms uewag)sopurwas paved -aid 99130 non ne ou a4 pt , Ss ene oy mua‘A compromise was achieved by spliting the eight-year term into two fout-yeat terms, but the prospects for independence are not good, THE COMMUNITY BUDGET Te mop Uni oe hing dat gn 04 mod tries an the island countries ofthe Carisbean and Pacific(ACP} signatories ofthe eta eve 2.08) onc (2.808 Vater 9.825) ‘Lomé Conventin, is handled through a specific budget (the European Des ‘ment Fund, EDF) financed by contributions ofthe member states, Admini pean Commission is overseen internally by fe the European Court of Auditors and the Euro- tent charge in EU institutions, and both the (Commission and member states have decide to sep up the ight agains it THE COMMON AGRICULTURAL POLICY Common Agr ious, Tesystem complex and vais rom comity to comme butinessence icons of aiplsting prices within te EU produces dened rm coe, Tis isacheved by beth high ierventon pie at WHch the EU buys exces produce and aro. 2 income from country to country: A big agricultural of funds and since the CAP guarant nat29 pur ‘uou>nposdiano ‘paranpe wey sow ua0q sey Svan (suaqqoud ponod yuo paurensua> aze yrus Jo Auew “tod Ay se yprys rojas ABrava ay es yen ssequo> sy) dousignsys.a8BeN 2 bem aes og pets uot odour 0 Aypusus Apeseqod west papod “32. fiqewosear we wou fo pow ‘seoNpANd 406 1D e015 puespuny aman ax wo ads sea (09, suatadoypsap euorfau asueuy 0} 33X99 joads Smpsoid pur vorsago> aay ag oy ang HOU ® app ng oy ueadoung aug a 0.80, [pes pue spou033 3 Des 9) 90 pd wey Sed rexwod > pue souoour jeunes apse 839s 23980} 0} Pou yssaufe pe 1324 Jo souyMOD Joga Sou 5.6 fod wjoq 20} ansmbocaude se popuedar nous UotsaN 208 “93.2430 un ao ese axaud Kees sgzedep >RGOU099 -210s ey unos sey usaouE ‘Sovatagtp aay SeapDD adoung arya, SOUL 4 subir uaomaq pe suoqjeu usa ade>spu, pub azn Sen] Ut sO “vomtp ame arog) soup 49 papuua pue pazUaDER sg ap ‘SNPS ‘uy ssouaiogp revo apis aney wus jo Auear‘SuoRe st yo parodz0) aug fro sey sy ssbuEeg UF Ags. SoINLNED pap gM, aH PU esION “pura ‘pueners ut ss9u; sou00d ageua eu Stpsans savonut yD ‘amin 2p yo yprun Sosa auoyeanss euodeu e se uoRNa 08 Sanna qvunionais aHL 394 pur a p05 Sys sursea wed uN, onpoud wow ‘yeaa pub “ep “wou 20} swosaus8 azour st woddng ones jeanyouse aie va nos sare) sameeren a (aac en amar os) sys se we a9 vous so8vons auoag a 9 apa we SunOS “anposd py Iebcares aon icalsiops us | (oe woueasiuny | juno> padojpagp IY asepun st dyruoreay 9p -pueasne eying ‘hystiompoad jemymnouseuryuauzsoidur dys ey PIPE “jon Sey g¥3 Jo bu2}sx2 ayy, adaung ul AasHionposd yeanyotse ase o} Se 2nuoalgo puns ¥ 71g ao uouednasond leur e anos sey sSx9 jo esos we)($2 billion in a newly established ‘members ofthe EU known as the L 1. To promote development and economic. pe bead is ess than 75 percent ofthe EU. radially improve the economic base of regions most seriously afeted ustrial decline onbt longer vempley ment {Toads the labor market problems of young people technology inthe abliy to grasp scale econo Europeans fared that US-based multinational corporations had jt sted eg of al ronal eget a 95 ard pracy alps Ey Er ety th ones depres Fac inant postion. These concerns nurtured a series of initia- iy directed to puting European industry on a more competitive NATIONAL INDUSTRIAL POLICY AND THE ERA OF NATIONAL CHAMPIONS ics Seven Sher, The Ae14 wns panmbas pue souyapins aoud yjog pswdope sey pur wang ndino arnt seonb pas iysnpu 4p 30 UNEASE) fiseauon wy ssapjoyareys Se eo ueunuopard np popripat my ‘gum puso Asai 1 vadomg ap 808 ep 0 {un psn 3 feH pO soso ag "wonSenan snp os Op AT UE UTR ANA noord ag) ye hapa pour wag mg ogo! NP Udon our eg sey Sag 3) EE PO 9 npostusodomg ues ne uy engry aq san on ey sata pur qos 30a ued 27950 poe wodsues, ewey jo au pood e aun 019 open ged ae sede ou wy song yo 209, ‘suonisod yoyeu fuous © anyp 0} sue esse paras jo wo) siotuou yo pouueg wood ego ws ‘ojoursay wopewsozuy uy yprasyy 49 swuresfong >aeNS veadoung 23 uy sguorigs usadoung 982 21 24) J Spe Suga wx papas “wou8seq ‘usadaung a9 236] Paw su ares a se wae sem KHojouNpeH ORAL ‘payeygmiss a9 prox Aasnpet aut usw Buea, Sado papuny Apu usiy ‘plnyon Adtted NelLiuaawo> uo wpa xg uz yao aompar oy pauisop ‘Snansnaiso1younsnput agewaies jo wed wasn Sap faygejt uo 9m buna uy syoususea08 soquinu idano 0 Kpsgns ib jsyos pooug on) paxpisuc> wossKuNO) ay sea OM put av0 wom, 39 7 pause seo undef pue soins paws an pa] adomg ype da det jexBojouype, 2h vay got Ase ayy ut paues soDKOd m3SOCIAL POLICY +The sost scious problenr-undetmining he cohesion ofthe European Union as eseo) Tie Grow'n oF Fue Enrcgrmeny Gare managers, and employees? Theresa certain irony in thatthe lowered barter to ted United Kingdom easy ing ofthe playing field that would make continental European fms ‘more eay to acquire, Whe itis conceivable, and even likely that specific esl willbe removed, the barter takeovers imposed by low legislate aay gers, he Commission has als the power to investigate any anticompetitive arrangement and ley fins for such is- ‘ues as price fixing or supply constraint For example it changed that iste inthe cement industry and imposed fines totaling 248 ECUs on 33 producers. acted several times especially against lap” allins including Air Prance Iberia, and Olympic ‘What shouldbe apparent from much ofthis scussions tha the prevailing social philosophy of the European Union is concerned wi fenance of what is now consequences for compe "much oecupied economists in the 19605—the eo “Es" equity versus efficiency — thas within the EU become the two “Cs,” cohesion versus competitiveness THE PROBLEM OF UNEMPLOYMENT «whole is uneniplayment. For the bulk: ofthe postwar period, unemployment the countries fat row make up the EU was very low, especially relative to Soin FU Tarp toan idea of ahigh degree of social sa strong preference for maintaining substan ity creating unemployment. Thebigh ‘ovulate sce egg the Conan company (Te anon 12 Feta 200 8 degree of jobessness entails a high degree of expenditure on social protection.trig od ey uo n-gram ay EID gE RN Png tay rN ML TNL mt mp, ssuouednoooard seus mous suauife aj asudsow pur api pang ene ay s2y200 suo uo 3 oj aus. e se spe peso 2g dn sap aovoppur yasmin inom pu s22doydus a pares aval ae a9 Y ec Twntad 03 paonpasZayay see gg ae a0394 08 ‘oy en paonpas gst ut surojaypadoyduaun say uous ded roman 0 suaupuoureayeno8au 0 siaoqda pur uN -vado, oj asunoses Surseabur 5:21) "uu an arya Sueunag se vans syn? [a9] aprnctasnpu ayy ye paeyoou Siuom sou adoung wn}soy4 WL “ONINIYDAVg 3411937209 40 MISKS HL qustesaujen 1 srs! oma i por nsx poi gp - noice 5) sonoos ueadioan 0 25ncountry theres aszabe “wedge” that distorts the labor leisure decision and raises ‘ to employers, creating a bias for offshore production and capital intensity FRAGMENTED Lasox Markers. Although the European Uni onstittes 3 ee wegen ae, Me ee i tt a Shores ier an coe nema’ buss ei eee = 2 Sotictenseemrymecn neers region of southern Spain, experiences 32 pe ‘protection scheme and has experienced one hited a vieious cy longeteem development for an economy, the term has been growing unemployment ch growth as has occured is ins of about 40 per Further 2 percent" Thus although inereases in wages themselves were modera ing, real css for unskilled labor in France were about 40 percent higher than the United States “Table 96 shows the otal taxes (payroll—both employers’ and employees shares—and income taxes the EU. While the various components ite vary from county, in every 's generally regarded as a posi consequence for Eurape inthe om of coletsve bargaining the high reservation by generous socal protection, igh nonwage costs, and frag ‘mented labor markets. To this should probably be added another factor: he shift Tout, 20Sjonupadse. juauersey 99 18 ose aouesy pur Renoquaeny woe Sng e sungeu pu sn spar suesiond jo Suen Yh bd guy ap ys poser pe ue yg gg ney ay oo nd HONE ORGY pssouangsuay-youoydua 2g apt, 0 wan # repos ajouoad 0 duane ve pon ung sey suse yp opezed a anspor fs] uewioyduoun fxg azene ie tou Ueddoung 249 pu" BSL AL sammypundso ars wautona8 ur won Ips ay yew o Bunk Ka pause (etre som aap emos zo or 60 ct ede a te ur & sesamin 50- et v0 vetoes (eo rig ten mao § 90 ee oz vw ze sony t 50 0 = = sons pet ts et ss vsun vss eo t= er@neg neon ort unaey t a Fa " ot a z= a0 fo & = (r= Za Ses = names nee ese so. ez oo tr eo veo 50 90 0 60 * sg at on a a oF an wea ono da = wads ow eust-196t ar Teet Oost aoeT eroaet Soer-v8r a SipsCes aa] “pines” and six “payers” The gainers are primaly the small poor countries 8, Has the common agricultural policy been a sucess? (Geece, Portugal and Irland) tht are beneficiaries ofthe CAP, and the various Sn ener erg eeey eee forms ef structural funds including the newly established cohesion funds, The [title igaaaby : fms ofthese thre courtries are cnsierable—clse to 5 percent of GDP i the Dsus the evo of competition poly inthe EU, Why th EU con- i ase of Grece in 1994, Spain, Denmark, an Portugal also gain. The main payee ered atthe merger of two US. firms ike Ali Signal and Honeywel? 'S Germany with oth the lrgest economy and he gest net ass percentage 11, What have ben the rot causes of groving unemployment in the EU? Are o'Gor they the result of the economic system? KEY TERMS AND CONCEPTS = “resources Basic Research in Industrial European Steategc Programme }oOKS AND ARTICLES “Technology (BRITE) {or Research in information Briton Andrew an David Mays Aching Money Uno nope, Landon 5 “Technology (ESPRIT) Publatons, 132 . ae taser fire ‘ater, Willem, Gitneate Corset. and Noor! Robin “Excessive Defi Sese and ‘elong eduction ‘Nonsense he Tel of Manic” Exam Py, Ap 198, 8-10, ee Devine Tiothy M. and Wile C. Hightower Earp it rT, ecg, jenunepnere ‘Mass! Heshand Co, 191 52. om me ae Seapine he Eur Conon 3 ed. New Yer employment intensiveness ‘most favored nation principle i, Amedeo, ad Gini Panella, es Fa Feri the Ear Unio. Vo. 9 European Central Bank (EC the Een Eon Nev York Routledge, 19, European Currency Ui European Econom European Monetary European Monetary System European Research Coordinating _trade diversion effect ‘Agency (EUREKA) ‘vocational raining, fan nto hay Prati England: Dartmouth Publishing, 1990. o ‘Nevin, ward The zooms f Ere New York: St Martins Pres, 1950, “A Survey of Busnes in Europe: Present Ppl” The Exams, 23 November 1986, 136 ‘Swann Denis. Te Eons he Common Mar, 6 ed Landon; Penguin Boos, 1988. Tolls Luks. The No Eup Ey ese Od Ono Unie Pes QUESTIONS FOR DISCUSSION — 7 te Nato nmi: Commisn Eure Al Raps izations like the EU will ie 1. Do you tink hat he eration o hasten or impede moves to freer global ra surprised thatthe openness of the EU with respect to the rest of i has not changed since te 1960? What accounts fr this? 4 Why was it thought necestary to improve the Maastricht criteria. on poten tial entrants of the EMU? 5, How isthe convergence issue to be handled after the ceston ofthe EM 6, Is Europe an optimum currency area? 7. Why sit important to have an independent central bank for Europe?(ae ins oi fea ag ee ee ru 2 4 Blog sons esa wane w Bua. PTT ° 1s SaIWONODa NvISV [AMAA ‘eww Bays i ry fo sng purong rou seni watoy Manos «1 sss ound Rigor mmassnpay unpre eng ‘sono visanoon any ‘auodvonis ‘wymivs ier aauawny | MSP —Hray sousuapeang jos (OM) wore pe ESand the warrior Samurai class was integrate into the cil society: Most impor: tant, the government initiated a program of stte-led indus JAPAN | INTRODUCTION jon and a GDP in 1997 of roughly $trilion, the there canbe litle doubt that Japan remains a formidal With population of 125 sltuted a poter- Soe aun naeas encouraged and finance to undertake industri crmeconor commer were proto en panne 7 ipse of American business unless Industrial groups grew ino zabatsu—cl and financial combines that dominated posed of oughly 20030 firms that ty-coal mines, steelworks, insurance, and so forth. This sytem small numberof diversitid groups, Mitsui, the oyed about 18 mlion workers; Mitsubishi, the operation of the Japanese system and examin Class inks been he leadersof industry andthe members ‘elm, and the gre A BRIEF OVERVIEW OF ECO OMIC HISTORY EARLY DEVELOPMENT relopment of Japan was spurred by the onset of Word ‘mand forheavy industrial goods, The Ja voneso, | usc ftsinput to pads owed wp udoud yo sasfop yay © pe su oni 55, og MT 0 puedo fq pune sem sua duu ut 0 Bua J uO 2 OH SINPLatpuE 70 ‘uuouooo osouede| a 30 vou Seo peo os wg 3DHIO ee ee seen over set over sect est (ot = Lae anno umn 6 xo swan a ||«quite violent, were common. The government threw its weight behind the em Dloyers and helped them break the more radical labor is period saw the modern model ‘hroughoot he postwar ‘he ken and the planing and fin ve bargaining was abandoned in tur for tine employment’ ust be regarded as an immensely “Throughout most ofthe postwar period 1945, Japan enjoyed rapid and sus- ful economy. From the lw point poi lesson tbat othe system of labor manager policy, the system of directed credit, espect for social order, and the absence of iasge defense expenditure (which may have allowed for Righ oth soit and the economy sa deep sense responsibility. In some or ae insisted on their dissolution and to preve gence, aban againstholding companies ‘he kvetsu groups that emerged are loosersans, jonuoo are eset we wos uauadevew2e uppaysson o ped apIsumop 248 UC SERUORS pu nog se sioquau dno 0 oo} oy uosea e pues nq ‘dna fom asouede| a U0 doy aM eI my 2] ee fwouars ayy 04 dros ange ay soy Sue J LEYS Pon rosy eros woasoirg om «) “era ores 1 Ainamunwo>, 40 “dnos¥ ayy. Bu teiy souo ag dno ai jo sraquow yaFano sine wt ies tonne SOURCE OFC, ea Sar 195195 1S. ‘The Misa! Group can be de: scribed 25 the largest busines ‘held within the group are rarely sold, and consequently execu from outside takeover bids. Hence a azuthe strong yenhave prompted Misul management t purse 3 range of projects overs, paste level, ecsu solidarity is further ‘company ofcerson the bord o ries to exploit new areas of Du prises between group members, with equ “The Mitsui Group” ‘races the Ristory of that organization from its origins in 1568 ‘Other conglomerate groups are best described as bank centered (Although the ‘eis ofzabatsu origin include a group bank, te lead company in these cases “Today both legislation and practice plac limits onthe role ofthe bank within the group. The law prohibits iersu banks fom lending excasively within the sr0up and equires that nongroup borrowers receive equal acess. Silty, groupss ase pou 2g Suede ai Woo 29 da pew Saeed) ons "uns Bupa ako a9 aq 0 ssn ae pm asm Bun] © ue pede> go uonertiour ayp ye popoda 5 aus aun 2400 sd 30} ayo uedef ui Sez ue sands usu of spunixa ose d go pur ouapuadap jo asus Sutmmpun ue pasnseout vie peo 9 Surpen resous8 suede sous sta aoe owe pr sea Spe undef use wets Hamu sosys cos so ,sonsedwos Suspen paesSon Te, a aS] waisisauouoos assuede| an jo amnea;yueagus pure abun sainvawo> oniaves aun oy sore penueysgns asa antoag aes -pesp zoned eye ase sod uBio) pur sug mKMOIFTP Aus a a 12522 0 auepeg Husa ap Buu sogeu pu annitadinonnve se pope 99 ue amon 219 oon Mog pe sapagns axe spay e uy se ‘Phuedwo> upg @ sovedel wt poiauser sey I sin ‘sd yp dn yooug 0} uouep Boy paxdsusi yo wort ay adsag, -uomiau wo sia asey Kpuanbay eamseaue eye eA Ay Ur WoIUa}. sy uede[ wr ayanias dnoe¥ ajo aT4) nsiawiay Nouunaiass: “Sur sens are uy sno ag ae nsuzy aes}SueD a4 Wo UTS “pea ‘urwuoqiod woo] pus ssounqiompan jo ayo, wou 280 20} an pue ‘tunsonb of uado asus ass asauede a yo Sages ap fepes 0: saruedujuo> yon apeutSusouoceasauede( 2 jo wsyareusp PUP \pSuans axa ased ou uy yBiy st sy antsnasodas Suey osm $d} renamed. souopuadapiain jo aoi8ap yBayw ajonu St 21 30) a4 puonss wor; npoud equ paonpost 99 oh os 39 #30 tpnpoid pasoxdu ue 0} po yy) uoTeSoUUT UP Lag “aD WH sO yang ou addr au e2) ymoyrp Goa W384 yueOdu se UORETPIOD sya yo suauodard yore waqsis ays a 80 ae ta ue soypo aN LO 3 yo somos & a few sug pue sueuodus aq 0 sanumuos dno ag uns Yue ag jo aug SSopRIBSON "voRNDytSanrp Yat Wapnad yuasaidas SUNY sa ‘eq “door ayy apsino wou Suroueuy jyahos KBuseasI ancy soneduoDsuoqun apex, sey 0 Bos ane sosudionaaxouedef wou Kus yore pur epot animus yen Saenz uoRezadoe> soda zsa% pays ges -edoo aim sour fue “Soys po spot a4 Fo WRUAYE A UT ENP 2 yo uorsodoxd aged ave eu suo ut paueHH0 abe soyu0M por re ee ror es ‘ueg atopy ‘soon Auedine yuan ays, sazNsa, eat ree Se 8 28 60 s % * o uy Kuechaon 990 poouy a Seap es yey aunyannis ——. tones soaopy wap Aen’ pos sued uoTus asoyon asc 0} suonsod jwawaeus adda asionpand nous jou {dus ae assyy saovespe yoges ee Popa ka a039q 03 Put uausSeueu asouedef jo sanyo zadda a ‘jepawexsd s saoqeuN830 10 aunpruss ower pemyeu oyp urs “SWO|qOHd sNO19s insu 25 se suosaid so8em Aysonas pue yuataiogdia mua ss opian sng yo ado ds sey aod ue yxy sad uaoiod JO wong essays Std eu soxuouar padojanap sayjo ut 2qred voUIGD 9p} UR 315 43819843] uo suapuadap azow ae Sen Kuwano asauede jo 0} NS Baum ag ue Kuanonpoud jp S30¥m ALwoINas 8 Pst eee 20e weokae— wwokge-or weolars weer may pain aguraeyuauomayeasou aa Sots opppris aru SG ued a A poss ued you yoru 5 epoy ses payin ax UT uouswounyd wouuD &’SursUNeG, saflen ya aH yarn SEE Og aN Apuasas 2 anynSUCD ey HY HHO nists mer ')90 20S “66-day goa HOSwould appear tobea major factor in faclitting the commits. In atin ing conditions of exnployment ACTIVE LABOR MARKET POLICY ‘ate, but Japan also di per unemployed worker ia xpnttre Uneroaymact ate nce COP} (page bre) anos soem SOURCE QECD Epa Ott OECD, emi Surya of job occupancy andthe Jo level of ur Jot market policy (those polices designed rovide publi low—about one-half the OECD SECO counemies, 1983_] xpenttre —SUORDURSIP soyp apo 0} Sumpua} axe So%05 xa PHO a¥p aBexoqouy ‘Supfueg younsonn Bungay [sou woo venaq suazeg fe Sur|ED1 ‘Mon NEAL IA, ea souedel 2 joou! 242 IY “NOLLVINGN985 ZIVOVIW IVONYAT] DNILIND, wo saved. , 8 ut fpaniod pe af Asan axe squeq ued OT uoxasayunansawop Banp at so wy fue yeu 03 qq 5yueg e speun> pu wages Surya mf p55 jo Sua} u pass “est no ae aLtechnology are making them out of date. In Japan, regulatory change to accommo: date these shifts is ky. uly eee ‘examples in which promotion of a specific industry ox products has led of foc growth; however, equally important, especialy 35 older Sg ime, ven the raion! proton et of Japanese pi, los markets, isthe rationalization of industries that ce inev limited to preserve the essentially Japanese character ofthe banking KING WINNERS. If microeconomic industrial policy sto improve economic formance, there must be an economic justification as to why bureaucrats are INDUSTRIAL POLICY ‘The Japanese economy embodies a high degre of “industrial po intervention ofthe government fo promote or change the velopment, OF course, Japan isnot sone, many counties a promote industrial fever, in Japan indus major groups fels This concer sbout| restraint on competition canbe socially beneficial Hence governme stape markt suctrcanled ta move ce of aa After ‘seul ‘omic industrial policy and its microeconomic counterpart. MACROECONOMIC INDUSTRIAL POLICY ‘This category embraces measures designed to increase the pace of overall in- justia mix required rst-class economic power and keep i thee. the pace of industrial growth, albe expense of the consumer. MIcROECONOMIC INDUSTRIAL POLICY However, when we talk of industrial policy we generally envisage is micro- economic form. Indeed, one prominent economist, Richard Cooper, has defined industria policy 2s action “whose intended purpose isto affect the structure of put In ths sons, industrial policy i designed as a substitute forthe allocative Propaganda and moral suasion, Such jawboning was not always sucessful [na pps 200u yon @ py sey (sto Lu) ispuy pur apex euonewsnn yo Ansty supp 2929 Stu sossnons oxy apy puED po pause poy say fu pul uouoDeo I ayo ossaDons Wd aney ANKENY ‘Soyod esisnpet ausouoss0.3ns suntan Sued Supprd,) Ad rernsnp au sr ap ‘Agod euasnput snnousao ne 309 3, ounfoytue aumayy —nsjusy psawaryueg, Siaa5NOD GNV Swuai AaW ‘non puewnp w 3009 apd imag youpe 250} putESns 39.4 DU We Mo inom yep de8 dyno ansod 92g wouyusius asaya ssoBEns sn, unssad ‘uo a pasearsur sey ndino "muse sod juasad ¢ ue as0u 8 Sut juaniad ¢moge Syp5t a ums bed wes avy Apos ye sand nanspeUN i Aaxsnonposd soge ‘yuu Jo 2omos yweuodus aque ‘osaMOH 80K sod swsoiad y {oy aan sino ogy sud IYI poAoN pl Jo yuudofarap 94s wo pasegsuaI:D S919507 40 2NITDIQ IHL ONINNY TG fs Suumyzeynsews popre-synduo> pu 2 Jo syiuans ag se was arom yey ute auauno a4 oy ah pago> stp Suraqare ways sauede{ ag josassanans ip wy MOU eyo UG MY W3ISAS 3SaNVavr aH 40 3uALAa SHE oo gyaew uo aoueyasoea8w pe EH 20 2p OLE oad sae Suyoae pzemoy Rinsou st wopsen znd, snona;dsu09 aso 90 “snp >uouwssen nu o asta ved ase ut pose) ansis Surueg so aes a paw 9961 a9 Sues aude go suuso.od ay) Su “IN 0 om or wp SLING oe a 1 Aur sa80309, a Sum Sop ssi samy snonstdsue> [eA96 ud ANE az aKa a ED Vy SUD c ee fee]Ministry of Finance (MoF) eno Sa seniority wages shunto QUESTIONS FOR DISCUSSION RESOURCES 1 What are the kits? In what they dite from the zaisu? do they resemble and in what ‘re hertsu eld together? sysdo 2. How general isthe system of ifetime employment? In what ways does it help and in what way does ithurt produetvry? 4. How ae Japanese trade unions organized? Does this contribute to labor pence? 4, How does a system of “seniority wages” fer from the normal assump- Wee sites Ministry of Finance trations Trade and Indsty Bureau EconamicPlnning Agency Exonamic Research insite Nasional Tax Administation “Tokyo Stock Exchange J pan Development Bank Import Export Bank of japan ia s panes sternal Trade Organization Misabishi Companies tome Group Companies... peu suitmo com i Ais 7. Is microeconomic industeial policy just about “picking winners"? What else isimportan? ip wre ot go peng inden hp: /wwwbojor pen inde p/m gaspindeve ue wd gop index ead 2 Ieapanei. go pf up: www goip np index it ep Times National Newspaper. [embassy of Japan in Washington, DC fp sunt nc ap cs Books gutenerg ete jut ‘ronomic and Financial Data fo Japan updated ily). tp /worstat gop /19hm [An Outline of Japanese Tax Administeation . hp ent go poutine one hm ra. "panes Bonomi Succes Timing, Cle, end Basins History, Ap 955,131, am, M- Shab, Goverment nd Maras in Econom Declan States Ls rm ‘Kort, Tto, ad aa New York Prager, 98, Cation, Scot. Disied Se MIT and the Bred of gos High Tc Isr Policy, 195-1983 Snore: Stanford Universty Pres, 197 ibe Leviathan” Frvign Ais, Marchi 1955, 9-5, Francs, Prope jeune sunt Dera Thy ont rate London: Reeds, 2, The Challenge Jpn. Abdersb, Erg ‘dard Elgar Publishing, 1958, lleran, Leon fp, Hone fst raed Te Esai bration Pres. Sano to Takatoshi, The ons Economy. Cambridge MET Pres, 1982 seiieeeeam)