Introduction Comparative Economics as a Field
Comparative Economics Comparative economic systems studies economic systems and their impact on the allocation of resources. ). (Gregory and Stuart) The economic system is the set of institutional arrangements used to allocate scarce resources. The limits of productive resources (labor, land, and capital) dictate the scarcity of resources. As a result of scarcity, we must decide in an orderly way what is produced, how to produce it, and for whom it is produced. If orderly arrangements are absent, anarchy and chaos will result. Economic systems exist within countries both large and small, developed and less developed. Some countries are rich in human capital; others are rich in natural resources.
Comparative Economics Comparative economic systems focuses on how an economy’s organizational arrangements combine with economic policies in distinct natural and historical settings to influence economic outcomes. If the economic system itself or its system components influence resource allocation in identifiable ways, we can select an optional set of organizational arrangements to achieve our economic objectives (for example, rapid economic growth
Development of Comp Econ Marxian critique of the capitalism On Nov. 7, 1917, the Bolshevik took power in Russia, established USSR, developed a different economy system, centrally planning system. In 1930s, as the Western countries experienced the great depression, the USSR experienced a phenomenal growth under the command economy. But the West maintained the free market system while adopted the teaching of Keynes, finally overcame the economic recession.
Development of Comp Econ After the Second World War and the Chinese Communists revolution, in 1950s, about one third of the world population is under the of Soviet type planning system. The cold war race took place in both economic and military areas.
Development of Comp Econ In 1950s-60s, newly independent countries in Asia, Africa and Latin America are pursuing the mix of the market and planning system. Development economics flourish during the period. Many models are developed: two-gap model, unbalanced growth, Dutch disease, vent for surplus, dependency, big push, etc.
Development of Comp Econ In the 70s, the field experienced a critical stage, decline and revival. Practically, many theories failed in practice, such as the import substitution advocated by Prebisch and Singh. At the same time, a group of Asian countries, namely, Taiwan, South Korea, Hong Kong and Singapore, have achieved a rapid economic growth during the period. They adopted an export-led strategy, which is the opposite of Prebisch-Singh model.
Development of Comp Econ In the 80s, the Soviet planning system reached its end. The economies were stagnated, widespread shortages in the market raised the discontent of the consumers. The gap between the Soviet type economies and West market economies was widening. Finally, it led to the breakdown of Berlin Wall and the collapse of the Soviet bloc.
Development of Comp Econ In 1990s, the formal Soviet republics and the Eastern European countries abandoned the Marxism and planned system. China, while politically is still controlled by the Communists, the economy is moved to the market system. Russia and Eastern Europe adopted a more radical reform measure, but China adopted a more gradually changing policy. By 2007, in China, more than 97% of commodities are traded in the market and prices are determined by markets, and majority of firms are no longer owned by the state.
Development of Comp Econ China and India become economically more important in the world. By PPP measure, China and India are the second and fourth largest economies in the world. In recent years, comparative economics experienced a revival, with a new focus on comparing capitalist economies. The theme of the new research is that institutions exert a profound influence on economic development.