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Governing the Global Economy (I): Role of the State (Provider of Public…
Governing the Global Economy (I): Role of the State
Provider of Public Goods and Services
Seen as too risky or unprofitable for individual firms and/or fundmanetal to a population's well-being
TRANSPORT SERVICES
at a variety of geographical scales
eg. German federal state own and operate Deutsche Bahn, one of the most successful train systems in the world.
Nationalisation: the transfer of ownership, property or business from the state to the private sector.
HEALTH AND EDU SERVICES
provision of such services especially for those who cannot afford it
eg. most universities today depend on state-level funding
INFRASTRUCTURE SERVICES
providing basic facilities and amenities eg. roads, highways, power supplies -> ciritcal to attract inward investment
eg. some states provide large public housing programs + improve living standards -> lower cost of living -> lower cost of wages -> ability to attract TNCs (w/ lower wages)
Hong Kong and Singapore
Regulator of Economic Activities
Regulate: to control, esp by making it work in a particular way
States regulate economic actvities ranging from econ, envir, to social and ethical consideration
MACROECONOMIC POLICIES
GDP= C+I+G+(X-M)
Fiscal Policies
raise/lower taxes on companies and/or individual citizens and to determine approp levels and recipients of govt. expenditure
increase/decrease tax -> dampen/stimulate domestic demand,
Monetary Policies
to influence size of money supply within the country by either speeding up//slowing down rate of circulation
impact country's international currency exchange rate
affect cost of exports
imports
main mechanism: manipulate interest rate
mechanism: injecting money into economy
eg. Japanese govt. decided to double the volume of money in ciruclation in an attempt to reverse the long-standing problem of deflation in the ecnonomy
example: all govt. intervened massively to re-stimulate their economies. combined stimulus expenditure of G20 countries (2009) was US$692 billion, 1.4% of GDP
eg. Congress approves $700 billion Wall Street fund, most expensive US govt. intervention in history
Trade Policies