ECON 314 Lecture Notes - Lecture 8: Free Trade, Washington Consensus, Balanced Budget
27 Mar 2018
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11. 4 government failure and preferences for markets over planning (cid:523)cont"(cid:524) Problems of plan implementation and plan failure. Deficiencies in the plans and their implementation. Insufficient and/or unreliable data: data problems are real and data reliability can be uncertain. Increasingly, development economists argue that one of the biggest problems in less developed countries institutional weakness. Why: countries who succeeded most were not the ones who engaged in planning those who succeeded had less planning/did not engage in planning (ie. japan, taiwan, Asian tigers): soviet union was the leader in planning lost prestige in 1960s (china who followed su"s example was actually going backwards) Therefore, economic planning is not the solution for less developed countries. Planning: very short period of time the country does well, and then the economy does not do well. Markets do not function without an institution behind it. Contrary to what theory makes us think, almost all markets have to have a variety of institutional background.
