Nations economic institutions

Nations Failing

• Inclusive economic institutions encourage innovation, as with the patent system.
• Extractive economic institutions hinder people with blocked opportunities and incentives.
• Poor nations lack technology, healthcare, government services, and education access.
• James Robinson argues poor nations can't afford the changes needed to become rich.
• Rich nations grant citizens opportunities while poor nations block incentives, causing poverty.
• Patent systems exemplify innovation while Carlos Slim became rich through monopolies.
• Carlos Slim reduced Mexico's national income by 2% ($130B) from 2005-2009 while blocking innovation.

Economic Development

• Economic development improves well-being.
• Economic development requires inclusion and sustainability.
• Sustainable development meets present needs compromising needs of future.
• Economic development includes infrastructure, mortality, not only salary.
• Economic development represents a multidimensional and sustainable approach.
• GNP: all products and services by Filipinos outside of the Philippines.
• GDP: all products and services by Filipinos within the Philippines.
• Economic development includes poverty alleviation and inclusive growth.
• Sustainable development addresses present needs without compromising the future.
• Development constitutes a multilevel phenomenon.
• Democratic backsliding means a change toward authoritarianism from democracy.

East and Southeast Asian Problems

• Aging populations plague Japan and South Korea.
• The Philippines struggles with overpopulation.

Global Supply Chain

• The global supply chain process transforms raw materials into output.
• Global supply-chain management distributes goods and services transnationally to maximize profit.

Development and State Interventions

• Inclusive economic institutions drive economic and political success.
• Inclusive economic institutions and relationship are mutually reinforcing.
• Extractive economic institutions cause economic failure.
• Extractive economic institutions do not incentivize saving, innovation, or investment.
• Elite groups run the resources of countries to enrich themselves.
• Extractive political institutions support elite control over resources.
• States with extractive institutions are doomed to economic failure.
• Authorities favoring certain companies and colluding with them highlights extractive institutions.
• Politics greatly contributes to the perpetuation of extractive and economic institutions.
• Politics determines who gets what, when, and how.
• Institutions (inclusive and extractive) influence how economy is organized and how politics is conducted.
• Distribution of power, a monopoly, must consider normative and discretional state intervention.
• Strength of enforcing regulations and laws, is key to state success.

State Capacity/Autonomy

• Nations fail for lack of means to succeed and state and autonomy.
• State capacity enables states to direct society, even in crisis, by mobilizing resources.
• State autonomy relates the state and surrounding sectors.
• Interest co-option in the state leads to interests.
• Embedded autonomy means being able to link with private entities and able to work independently.
• Embeddedness means public-private cooperation.
• States need to be autonomous to avoid capture by rent-seeking groups, but be able to coordinate development.
• States has to be embedded to link with social groups.
• State capacity enables states to implement official goals of groups and socio-economic.
• State Autonomy - state agencies must formulate goals independent of other social groups influences.
• Embedded Autonomy enables leaders to use state agencies to manage society through planning, and actions.
• Key actions include extracting resources, regulating social relationships, and penetrating the territory.

Crony Capitalism

• Crony capitalism is an extractive institution where the rich get richer and the poor get poorer.
• Crony capitalism exists in capital-intensive industries, commercial and economic centers.
• Crony capitalism exists anywhere where billionaires wealth is proportional to the GDP
• George M. Taber in the 1980s, coined "crony capitalism" to describe the economy under Marcos Sr.
• A market distortion where only a few people benefit while the majority suffer.
• State interference furthers inequality in crony capitalism.
• Economic systems have mutually advantageous relationships between leaders and officials.
• Business performance depends on political ties under crony capitalism
• Individuals who are connected gain unfair advantages in crony capitalism.
• Philippines ranks 4th out of the CCI (Crony-Capitalism Index) in 2022; Russia is 1st and Malaysia is 2nd.
• Thailand and Singapore invest domestically while the Philippines invests offshore.
• Monopoly power restricts competition, serving as a rent source for crony capitalism

Source of Rents

• Land and resources can be accumulated under crony capitalism.
• The tech sector and government regulations or preferential treatment are sources of rents.
• Banking licenses, infrastructure contracts, tax breaks, are all sources of rents within crony capitalism.
• Marcos Sr. gave behest loans to unqualified Marcos cronies
• State intervention employs state coercion to make involuntary deals happen.
• State intervention is shaped by cooperation and collusion between private and public actors.
• Normative State Intervention targets social groups that meet certain criteria.
• Normative State Intervention effects are based on formal and objective criteria.
• Discretional State Intervention targets specific people based on subjective criteria.
• Discretional State Intervention is personal and has a double standard.
• Regulatory intervention includes price control, prohibition, and market entry limits.
• Budgetary intervention includes taxation and government spending.
• Property-taking refers to state takeover of private assets.
• Supervisory intervention means exerting full force through police and tax office.

Effects of Price Control

• Equilibrium price set by the market based on supply and demand.
• Price ceilings set a maximum threshold.
• Price floors set a min threshold.

Economic Development

• Economic development improves social and economic conditions.
• Economic Development is the process in which an economy grows, changes and becomes more advanced
• Economic development improves wealth, health, education, and housing.
• Economic Development considers poverty, freedom, and inequality indices.
• Industrial transformation shifts society from agriculture to industry.
• Economic structural changes include developments in economic or social infrastructure.
• Social transformation creates lifestyle changes accompanying urbanization.
• Cultural transformation shifts organizations and relationships to be more merit-based.
• Political transformation includes democratization and institution-building for establishment of rights.
• The (changing) role of the state in economic development has reduced to have minimal role.
• Neo-classical economics provision of essential public works, guarantee property rights and economic liberties.

Expanded Role of the State

• The state provides the market ambiance for investments to grow.
• Marxist & socialist thinking as well as Keynesian thinking in the 1900s emphasized state role.
• Command economies under the socialist regimes of the USSR faltered and collapsed.
• Problems exist because centralized economies did not work.
• Perestroika & Glasnost refer to Gorbachev's attempts of economic liberalization in the USSR.
• Free markets, private enterprise, minimal government intervention return to the market.
• Washington Consensus promotes growth led by free markets, liberalization, deregulation, and privatization.
• Over time this was associated with neoliberalism.
• Finding the balance between government and efficient private markets is key.

Neoliberalism

• Ronald Reagan & Margaret Thatcher embraced neoliberalism.
• Neoliberalism is a political project to re-establish capital accumulation and economic elite.
• Neoliberalism advocates a laissez-faire approach by reducing state intervention.
• Neoliberalism promotes unfettered market forces and capitalist paths with free trade.
• Neoliberalism eliminates prize control, deregulates, and reforms labor.
• Market fundamentalism is known as the "Washington Consensus" (WC) or "neoliberalism" (MF).
• The Washington Consensus helps Latin American countries recover.
• Institutions like the IMF and World Bank are associated with neoliberalism.
• Neoliberalism embodies embodied in SAPs, like privatization, liberalization, and deregulation.
• Market fundamentalism ignores distributional concerns in pursuit of economic efficiency.
• The markets did not deliver socially desirable outcomes from WC policies, leading to failure.

Problem with Market Fundamentalism

• The current neoliberal prevents developing countries from industrial and technology policies.
• Failure threatens to undermine economic structures within developing countries in Africa.

Washington Consensus

• There came to be general consensus on the failure of the Washington Consensus.
• The Washington Consensus led to to a failure to understanding structures.
• Strict policies and instruments are attributed with Washington Consensus.
• Policies include maintaining fiscal discipline.
• Also reordering public spending.
• Also reforming tax policy.
• Allowing the market to decide interest rates should be part of the policy.
• Maintaining competitive exchange rates as well.
• Permitting inward foreign investment.
• Privitizing state enterprises also key.
• Secure property rights through deregulation.
• Embracing a variety of instruments is key to achieve development.
• With key standards like living, equality, and sustainability.
• With economy being sustained, producing, and advanced through technology.

Developmental State

• Developmental state are also know as "plan rational state".
• Interventions key to experience with unique transformative.
• Relationship of state, market, society important though politics.
• South Korea, Hong Kong, Singapore, Taiwan known for rapid economic growth.
• A state intervenes to accelerate program.
• Actively intervene and direct market.
• Influence the direction by government intervention.
• Direct help social goal, mobilization to guide.
• Not necessarily to be with state capitalism, command to have centralized economies.
• With social goals to guide.

3 Paradigms on Process

• Three major paradigms explain the development process known as neoclassical.
• It uses neoclassical agenda, relies or benefits of the market.
• State is reduced in neoclassical to distributive functions.
• Dependency approach, viewing economic linkages.

Rostow's 5 Steps

• Dependent on global economy or market for high mass consumption.
• With diverse investment by industry through take off.
• Transitional with supplies and specialized infrastructure.
• The first traditional relies on sustenance as agricultural to transform through global economy.
• By state with society to focus.
• Focuses industrial as state through planning.

Japanese Model

• Key to key of development rationalize.
• Strong political led to development to benefit from market and long term economical gain.
• Has control through state led interventions.
• Select and pick through practices.
• Committing to development and regulations.
• Supporting with wider society and state.

Adaptive State

• An ability to ease the process through recollating the resources.
• Markets produce opportunities as failures.
• High supply lead to failure.
• Investors create to follow.
• Having equal information and advantages.
• Economic advantage known as chonyism.
• Restricting transactions.
• Technicians may glitch and have incident.
• Market mainpulates over advantages.
• Has access through taxation with red tape.

Japan Model Policies

• Has detailed measured like policy.
• Selectiveness or strategic industry.
• With total portion industry and services.
• With light labor and knowledge.