POL371H1 Lecture : Institutions

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*neoclassical economics: economic transactions are led by price signals. *neoclassical economics: market signals automatically create a balance of interests. *regional context: (a) periphery: large labour force with low wages; specialisation on labour-intensive products because this production is cheaper than in the core. Core: large capital endowment with low interest rates; specialisation on capital- intensive products because this production is cheaper than in the periphery (b) *international trade promotes shifts toward equilibrium: (a) periphery exports labour-intensive products; high demand leads to increasing wage levels (b) core exports capital-intensive products; high demand leads to increasing interest rates. *role of socio-institutional influences (state policies/ strategies) neglected. *land use policies necessary to control social/environmental effects. *land as a source of non-reproductive resources (e. g. iron/coal) Figure: the limits of growth (source: meadows et al. *necessary factor to process raw materials into goods. *adam smith: efficient use of machinery/division of labour. *conducting business within ethnic communities provides access to resources.

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