Textbook Notes (369,072)
Canada (162,367)
POLS 3470 (14)
Tim Mau (14)
Chapter 6

Uneasy Partnership, Chapter 6-Diversity, Dynamism, and the Political Economy of Business- Government Relations.docx

6 Pages
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Department
Political Science
Course Code
POLS 3470
Professor
Tim Mau

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CHAPTER 6 CANADAS ECONOMIC STRUCTURE: Diversity, Dynamism, and the Political Economy of Business- Government Relations  Economic Structure: A term that describes the basic characteristics and divisions of economic activity within either a particular geographic area or an overall economic system.  The structures and networks of business ownership and activity play a vital role in:  1) The nature and levels of economic activity  2) How these factors interact with the institutions and policy of governments.  Two questions arise. Are markets for the production and distribution of goods and services? Are markets for control of corporate structures and the economic activities in which they engage?  The dynamics of structural economic change resulting from the responses of business and governments to technological change and economic globalization since the 1970s have dramatically altered ways in which Canada’s economy is organized.  Continuous change has increased the importance of fostering Canada’s international economic competitiveness and of enabling citizens, business, and government to adapt to circumstances often beyond their immediate control. Complexity, Openness, and Dynamism in Economic Structures  Capital Markets: Processes for organizing and mobilizing savings and investments from varied sources to meet the financial needs of individuals, businesses, governments and other economic actors.  Complexity  Economic structures in developed industrial countries are complex and highly diverse, incorporating different functional economic sectors and types of business activity, which typically involve overlapping economic, political and social networks.  Different elements of sectors such as transportation (air, rail, trucking), financial services (banks, insurance, securities), energy production/distribution (oil, coal, gas), and construction are subject to competitive conditions and approaches to government regulation. Can be between federal and provincial.  Friedrich Hayek (economist/philosopher) explained that the greatest challenge at central state planning of the economy is the difficulty that government policy- makers have in measuring the innumerable economic interactions of producers and consumers in a complex industrial economy.  The effects of this complexity can be seen on at least 4 different levels:  1) The structure of business operations  2) The institutional structures and process of government  3) Regional variations in economic activity  4) The accumulation of overlapping and competing policy objectives Openness  Openness affects the characteristics of economic organization and regulatory systems both within a particular political space or geographic area across political/geographic boundaries.  Reveals the degree of freedom enjoyed by citizens and business to enter (or exit) particular areas of economic activity.  Open economic systems become part of more complex networks of economic activity that may be strengthened or otherwise influenced by the actions of their governments.  The openness of markets to external factors can be measured according to the relative volume/distribution of international trade and capital flows, including foreign investment.  These factors are heavily influenced by legal systems governing both international and domestic economic transactions.  Openness can also include the public/private sector Dynamism  Dynamism is the ability of economic actors and structures to changes in the broader economic environment. May result in political or economic shocks, technological innovations, domestic or international competitive pressures arising from the normal workings of the market economy.  Economic dynamism is inherent to the functioning of a competitive capitalist market economy.  Competition breeds innovation in meeting existing customer demand and in creating new products.  Seen in Canadian financial and capital markets.  Helped to transform the ownership structures of Canada’s largest corporations. Ownership and Control of Economic Activity  Canada’s economic structure  system of advanced capitalism increasingly integrated with the North American global economies.  Strategic Control – The ability to direct a firms priorities and business strategies.  Operational Control – In the hands of professional managers with relatively small ownership stakes.  Institutional investors – Investment banks, mutual funds, and pension funds with significant equity holdings in many firms.  These investors have greatly increased the importance of corporate governance issues (particularly after scandals)  Government Business Enterprises (GBEs) – Organization created and owned by one or more levels of government to sell goods and services to citizens, businesses, or other parts of government.  Canada Corporations Act: Governs the structure and responsibilities of federally registered non-profit organizations.  Canada Business Corporations Act: Governs the structure and responsibilities of federally registered non-profit organizations. Patterns of Ownership and the Market for Corporate Control  The effects of business ownership on economic activity are evident in a number of ways. o Corporations may be privately owned by a single individual or family, closely held by a small group of dominant shareholders, or widely held by a large group of shareholders with no single owner holding a majority of the company’s voting shares
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