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POL371H1 (16)
Lecture

Lecture 2: Institutions

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Department
Political Science
Course
POL371H1
Professor
Harald Bathelt
Semester
Winter

Description
Table of contents1Market interaction and spatial equilibrium2Production factors3Institutions and economic interaction4Institutions in spatial perspective5Institutional hysteresis and the micromacro dilemma6Persistence and change of institutions7Innovation and institutions1Market interaction and spatial equilibriumNeoclassical economics economic transactions are led by price signals Fully rational decisions economic manFundamentally different interests of supplydemand1Market interaction and spatial equilibriumNeoclassical economics market signals automatically create a balance of interestsEquilibriums would be unlikely without market signals1Market interaction and spatial equilibrium1Market interaction and spatial equilibriumSpatial equilibrium HeckscherOhlin theoremAssumptions 2 regions coreperiphery2 production factors labourcapital that are immobileGoods are mobileRegional contexta Periphery large labour force with low wages specialisation on labourintensive products because thisproduction is cheaper than in the corebCore large capital endowment with low interest ratesspecialisation on capitalintensive products because this production is cheaper than in the periphery1Market interaction and spatial equilibriumInternational trade promotes shifts toward equilibriuma Periphery exports labourintensive products high demand leads to increasing wage levels b Core exports capitalintensive products high demand leads to increasing interest ratesCONSEQUENCE Wage levelsinterest rates converge toward an equilibriumCRITIQUE Role of socioinstitutional influences state policies strategies neglected
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