In neo-liberal perspective of institutionalisation is relative towards the mutual interest for example, most world leaders believe on free trade as mutually beneficial, so they support trade rules, which help to build up environment for free trade (Baylis, Smith & Owens 2008, p132). Neo-liberalism is all about free market, which has maximum freedom for entrepreneurs within an institutional framework, which characterized by Private Property rights, Individual freedom, free market and free trade (Harvey, D. 2006, p.145). The ideology of neo-liberalism was emerged after the 1973 great recession with the construction of Washington consensus  in 1990 (Harvey, D. 2006, p.148). This essay will look at the impact of neo liberal development policies on poor countries. It is widely believed that adoption of these policies has negatively affected the third world countries.
On the positive side, industrial regulation helps to pass on to the consumer the savings that monopolists enjoy as far as cost reductions while also preventing the restrictions on output and higher prices that are typical of an unregulated monopoly. Additionally, in cases where competition is not practical, a monopoly is encouraged so that consumers can benefit from the low per-unit costs, so long as the monopoly’s prices are regulated (McConnell, 2011). Some negative aspects of industrial regulation are the costs and inefficiency associated with it, and that it can also form a perpetuating monopoly, where a monopoly continues to exist much longer than a natural monopoly should. 3. Explain the entities affected by industrial regulation in terms of market structure.
This economic system relied on the theory that individuals pursuing their own interests, due to natural laws, would be able to serve the general interest simultaneously. In his book “The End of Laissez Faire: The Economic Consequences of the Peace,” Keynes attributes laissez faire to two principles. He states that the “twin buttresses” of laissez faire is that (1) “uninterrupted natural selection leads to progress,” and that (2) the immense incentive that comes
He also speaks on capitalists and he emphasizes equally their vital role and their many problems, along with their many weaknesses and abuses. Included in his book is the benefits of free competitive marketing and government policies that facilitate commerce are distinctly liberal in its point of view. But his primary goal of this was to maximize the prosperity of the economy for the welfare of the people and the financial capabilities of the state. With his invisible hand theory he is responsible for popularizing many of the ideals that make the school of intellectual thinking that later became known as classical economics. With this many other economists had used his work to build on it and make economics more solid and complete the economic theory.
Capitalism mostly has a "free market" economy, which means people buy and sell things by their own judgment. Opposingly, socialism is an economic system characterised by a kind of society where people work together to get a fair standard of living (TheFreeDictionary, 2013). Socialists believe capitalism is bad for society and the government is responsible for reducing it via programs that benefit the poor such as free public education, free or subsidized healthcare, higher taxes on the rich. In contrast, capitalists believe that government does not use economic resources as efficiently as private enterprise and therefore society is better off with the free market determining economic winners and losers (Diffen, 2013). In capitalism, the market determines price, including the price of labour.
People would accept this as long as they could see that the system was fair. Conflict might occur but it could be controlled by socialisation. Socialisation was the process whereby shared values could be passed from one generation to the next. At the time Durkheim was writing he argued that education, the family and religion were three of the important agents of socialisation. Disharmony might arise when people felt the system was not fair, for example, when large bonuses are paid to bankers during a recession.
Free Trade and Its Impacts on the Environment Economic growth and a healthy environment are two things that virtually everybody would love to have. Both provide great utility to the recipients, in this case everybody. Unfortunately, there seems to be an intrinsic tradeoff between economic activity and environmental preservation. Industry and production use resources that deplete our environment and emit by-products that harm the environment. However this production also leads to economic growth that in turn leads to more available income for everybody.
IMPACT OF GLOBALIZATION ON WORLD ECONOMY: POSITIVE IMPACT OF GLOBALIZATION ON WORLD ECONOMY: 1. More efficient markets The sign of an efficient market is where there is an equilibrium between what buyers are willing to pay for a good or service and what sellers are willing to sell for a good or service. If you can improve the way you produce a good or service by doing things such as outsourcing certain processes or buying from an overseas supplier that offers discounts, you can then afford to lower your selling price which results in increased demand and affordability. 2. Increased competition Anytime that you have
This essay introduces the concept of free trade and examines the advantages and disadvantages for trading nations.Whilst many economists and organisations espouse the benefits of free trade, some groups oppose free trade and see it as disadvantageous to many people, particularly in developing countries, where local producers and employees are vulnerable to exploitation. These groups promote the idea of ‘fair trade’ Free trade occurs when there are no artificial barriers put in place by governments to restrict the flow of goods and services between trading nations. When trade barriers, such as tariffs and subsidies are put in place, they protect domestic producers from international competition and redirect, rather than create trade flows. Advantages of free trade i. Increased production Free trade enables countries to specialise in the production of those commodities in which they have a comparative advantage.With specialisation countries are able to take advantage of efficiencies generated from economies of scale and increased output.
15 Marks 3 Nov 09 HL P1 (a) Explain why a firm may practice price discrimination and the necessary conditions for it to take place. 10 Marks (b) “Although a firm may pursue a range of goals, economists usually assume that profit maximization is the main goal.” Discuss this statement. 15 Marks 4 May 09 HL P1 (a) In the theory of the firm, a distinction is made between short-run cost curves and long-run cost curves. Using appropriate cost curve diagrams, explain this distinction. 10 Marks (b) Evaluate the view that greater economic efficiency will always be achieved in perfect competition as compared to monopoly.