Feature Service Articles
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Article at a Glance:
- Ronald Coase’s key insights about the theory of the firm and transaction costs continue to influence the economic research agenda today.
- Within a firm, the price system and constantly contracted tasks would be more costly than authoritative allocation of resources and labor.
- The implication of Coase’s work for corporate governance and the imperfect aspects of prices as a coordinating mechanism in the economy require further research.
Freedom is one of the most powerful ideas in human history, but also one of the most elusive. Defining freedom and the set of human rights associated with it remains a profound challenge for crafters of national constitutions as well as international treaties.
The intellectual origins of this idea stretch back almost 800 years to the Magna Carta. Only in the 200 years since the American and French Revolutions has freedom become a major driving force for political development and the spread of democracy, the political system that to the greatest extent embodies the individual citizen’s inalienable rights as a free moral agent. Today, the idea of expanding the reach of democracy is a central theme of President George W. Bush’s “freedom agenda,” but it remains as controversial as ever.Read more...
Chronicle of a Bust Foretold: Latin America cannot achieve sustainable development without recognizing that wealth is made, not found
Setting aside the headlines from Bolivia and Ecuador for the moment, these appear to be good times for Latin America and the Caribbean. GDP in the region is expected to grow 4% for the fourth year in a row and current account surpluses are rising. However, these positive indicators may be transitory — the very trends that are lending prosperity to the region are driving policies and perspectives down the same “boom and bust” trajectory of the past century.
The high price of commodities is the main source of Latin America’s impressive growth, but that cannot last forever. Unfortunately, today’s moment of prosperity may be enticing policymakers to defer needed reforms, and it may also lull businesses into deferring the arduous climb up the value ladder now being scaled by Asian rivals. Worst of all, it may foment a return to the mistaken economic thinking of the 1960s and 1970s and usher in an era of expropriations, lack of respect for the rule of law, and investment flight.Read more...
A quarter century ago, Mancur Olson published The Rise and Decline of Nations, one of the modern era’s most influential studies on the institutional determinants of economic growth. In it, he linked development patterns in industrial democracies to the entrenchment of organized interests, including those in the business community. Strong business associations, he theorized, actually harm national economies through their efforts to undermine competitive markets.
However, Mancur Olson’s vision of associations as organizations that assist firms primarily through services that redistribute wealth, rather than generate new wealth, does not fare well in the face of the evidence from Russia. Judged on the basis members’ behaviors, the associations that have emerged in Russia do not closely resemble the organizations that Olson described.Read more...
Although the macroeconomic situation throughout Latin America has been continuously improving, the citizens of many countries are turning toward radical leftist leaders. It is apparent that while statistics show growth and increasing prosperity, the average citizen has not reaped any of the benefits. Voters are expressing their frustration with their current socioeconomic status, their lack of options, and their exclusion from the economic system by choosing presidents like Hugo Chávez and Evo Morales.
To address the problems Latin America faces, the institutional environment must be reformed. Without institutional reforms that facilitate wealth creation, entrepreneurship, and enfranchisement, people will remain angry, and their anger will be perfectly justified. If Latin American leaders have the courage to address these issues in a fundamental way, there will not be a future for demagogues and populists.Read more...
Business is under increased pressure to invest and re-invest its resources and profits to meet the social needs and wants of the communities in which it operates. Although these pressures are not new, they have been rising with the spread of globalization and the growing gap between the world’s rich and the world’s poor. The corporate social responsibility debate has taken on a distinct meaning in developing countries, and in many cases the problems arise from the mistaken perceptions of and difficult experiences with market reforms. The result has been reversals from the course of democratic and free market reform as skeptics began to point their fingers at business and blame capitalism for corruption scandals, financial collapses, disastrous privatizations, and similar events.Read more...
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CIPE welcomes articles submitted by readers. Most articles run between 3-7 pages (1000-3000 words), but all submissions relevant to CIPE's mission of building accountable, democratic institutions through market-oriented reform will be considered based on merit. Economic Reform Feature Service articles are primarily geared toward an international, non-academic community of businesspeople, economic reformers, and policy-makers. Specific policy recommendations and articles based on direct experience are encouraged. In addition to articles, we are willing to adapt suitable lectures, speeches, research notes, and academic papers.
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