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- Ronald Coase pioneered the work on transaction cost, which was transformative to economics at large.
- The International Society for New Institutional Economics (ISNIE) continues Coase’s work and celebrates his legacy.
- Oliver Williamson commemorates Coase, who was known for generously sharing credit for his work.
Unprecedented stability and growth have taken hold in some major Latin American countries. The reasons are more original than they may seem.
The political climate is warming up once again, with major elections taking place in several countries. Economic prospects remain bright, as low interest rates and high prices of raw material exports bolster Asian-style growth rates, while China in particular sucks in huge quantities of soya, iron, copper, oil and gas. The emerging markets are awash in liquidity, with high yields attracting investors. Latin America has recorded three successive years of growth, its first such run in half a century.
But underneath this impressive performance lies a rather turbulent social and political picture. Global markets may have spurred the growth, but a cocktail of persistent poverty and social discontent have enhanced the popular appeal of anti-globalization policies.Read more...
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...
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