|
Economic Society
State-market relations have become of
increasing importance for governance in recent years.
No less an advocate of the "invisible hand"
of the market than Adam Smith acknowledged that the
state is necessary to perform certain economic functions.
Most important of these is to deal with "market
failures", i.e. situations when the market fails
to aggregate private choices in an optimal fashion.
State institutions, therefore, are often created and
called upon to regulate the economy. This arena is sometimes
referred to as "economic society".
One assumption that is often made is
that when private firms have an opportunity to influence
the way rules are formulated and implemented, this regulatory
dimension is more effectively managed. It helps making
policy better and it also enhances regime legitimacy
among key economic actors. The norms and institutions
that are put in place to regulate how corporations operate,
how property is owned and protected as well as how capital
may be transferred and trade conducted are all important
aspects of governance.
This arena is of special interest given
that economic liberalization and political democratization
are seen by many as complementary processes. Studies
to date indicate that the relationship between the two
is complex and certainly not linear, as the collapse
of the Argentinian economy at the end of 2001 indicates.
This dimension is also important because it features
in significant ways in the strategies of many development
agencies, for which economic liberalization is viewed
as a precondition for political democracy.
New Paper: Economic Society and Governance
in 16 Developing Countries
|
258KB) 