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TYPES OF ECONOMIES

TYPES OF ECONOMIES. WHO AND WHY?. Who makes economic decisions ? Who owns resources? Who provides goods and services? Why?. Either ... or . Either ... or . Group the following expressions:. government interference privately-owned companies market mechanism market reliance

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TYPES OF ECONOMIES

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  1. TYPES OF ECONOMIES

  2. WHO AND WHY? • Who makes economic decisions? • Who owns resources? • Who provides goods and services? • Why?

  3. Either ... or ...

  4. Either ... or ...

  5. Group the following expressions: • government interference • privately-owned companies • market mechanism • market reliance • state-owned companies • central planners • laissez-faire • government-run business • central planning system • privately-run companies • government intervention • USSR

  6. government interference state-owned companies central planning government intervention USSR market mechanism market reliance privately-owned companies privately-run companies laissez-faire PLANNED E. vs. MARKET E.

  7. ... or both...

  8. Identify the advantages and disadvantages of the market economy as opposed to the command economy (R: p.14).

  9. “The market has a keen ear for private wants, and a deaf ear for public needs.” (R. Heilbroner)

  10. MIXED ECONOMY PUBLIC SECTOR VS. PRIVATE SECTOR Who provides goods and services? Why? (What is their interest?) What do the two sectors consist of?

  11. The government, local authorities (e.g. municipalities, counties) Care for socially important issues of public interest (e.g. protecting environment, consumers, education) Less profitable and unprofitable businesses Private owners Making a profit Profitable businesses WHO AND WHY?PUBLIC SECTOR VS. PRIVATE SECTOR

  12. State services: e.g. education, defence, social welfare, public safety, utilities Government-owned industries: e.g. public corporations* (e.g. electricity company) Municipal enterprises: local government, e.g. bus company Privately-owned companies WHAT DOES IT CONSIST OF?PUBLIC SECTOR VS. PRIVATE SECTOR

  13. The division is not always so clear ... PRIVATE S.→PUBLIC S. →PRIVATE S. → ?... nationalisation denationalisation privatisation ... and there may be cases of cooperation .... PPP

  14. nationalisation vs. privatisation Are the following arguments in favour of nationalisation or privatisation? • The sale of an industry raises money for the government. • Competition makes an industry more efficient. • It is socially right. • These companies are more likely to innovate and develop desirable products than these owned by … . • The government has a better control of the economy. • Consumers are offered more choice and better quality. • An industry is more efficiently managed by that sector.

  15. in the broadest sense contractor seek though leap state enterprise issue vouchers general public auctions public stock offering contradictory goals raise money attract layoffs proponents argue What is privatization, anyway? (Read the text, find answers - R:p.27)

  16. Privatization vs.Nationalization For the sake of debate only, … … imagine that there were only two radical options for land on the Croatian Adriatic coast: full privatisation or nationalisation. Which theoretical option would you be in favour of ? Give reasons.

  17. The Role of Government (1)Galbraith vs. Friedman (R: p.16, MK:, p.110) Galbraith • Main point (topic sentences) • Examples Friedman • Main point (topic sentences) • Examples

  18. The Role of Government (2)Example of notes (R:p.29) The pendulum of control I 2 EXTREME VIEWS(pgs.1, 2) Karl Marx vs. Adam Smith II LESS DRAMATIC CHOICES IN MORE RECENT HISTORY (pgs.3-6) 1. Towards government intervention: e.g. New Deal 2. Towards free market in the 1990s: a) countries in transition (CEE) b) privatisations: W. Europe, Latin America, Asia c) Republican election victory

  19. What has been the direction of the pendulum since the 1990s? The crisis has made the world think …

  20. The Role of Government (3)And recently...? • “Ten short days saw the nationalisation, failure or rescue of what was once the world’s biggest insurer, two of the world’s biggest investment banks, and two giants of America’s mortgage markets” • “government rescue of American International Group (AIG)” The Economist, 20 Sept 2008

  21. The Role of Government (4)And recently, ... (2) “Regulation is necessary and much must now be done to improve the laws of finance”: • better oversight • more transparency • supervision of giants • accounting that values risk better • safer financial transactions (derivatives) The Economist, 20 Sept 2008

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