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essay question 1 - PSCI/IS/GEOG 2064: The World Economy and...

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PSCI/IS/GEOG 2064: The World Economy and Global Politics © Professor Edward Weisband Virginia Tech Spring 2007 Essay Question: Competitiveness, Efficiency, and Equity in Heteronomous Markets Part 1: The Basic Logic Stream: Productivity, Governance, and Efficiency We have developed a logic of economic governance anchored by our emphasis on the relationship of specialization to economic activity, productivity, and, ultimately, efficiency. Explain why economic activity is not possible absent economic governance. Economic Governance is necessary for economic activity otherwise it would not be possible. Economic governance takes two forms heteronymous and hierarchical governance. Through specialization and sectoral diversification arrives an increase in risk which needs to be regulated. The state and institutions provide governance in a hierarchical form while individuals and markets provide governance in a heteronymous form. Economic governance is indispensable as a way of confronting risks associated with interdependence caused by specialization. Economic governance makes specialization possible. Economic governance provides the indispensable element of trust that counters the risk that derives from interdependence that is the result of specialization through: Governments, Markets and Firms. Economic governance can be seen as coordinating system. p.42 The state establishes liberties, property rights, and obligations of contract without which people cannot buy and sell. It maintains a monetary system; hence it is drawn into the regulation of banks and the issuing of credit. The Market System uses the example of the market system being the dance and the state providing the dance floor to simplify the relationship between market systems and economic governance. Furthermore, governments offer aid not merely to keep the market system alive but to stimulate growth. To encourage enterprises not to allow risk to sap their energies, it often promises to share losses if they occur; they also allow companies to declare bankruptcy. This encourages growth and development throughout the world economy. As seen in Global Capitalism throughout the 1930s investors were scared to invest because of the possibility of losing money. It joins with other states i.e. WTO to establish rules for international trade. For example,i.e. the u.s. constitution plays a centralist role. Governance can also take form within institutions and is exercised by managerial control systems and directive rules usually on the basis of seniority. Examine national economic competitiveness on the basis of the linkages among the following concepts: specialization, sectoral diversification, sectoral synergies, opportunity costs, and scales of value addedness. GDP measure national final economic output.
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essay question 1 - PSCI/IS/GEOG 2064: The World Economy and...

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