What do Arabian revolutions have in common with the Coase theorem?

Gennady Bilych ()

Macroeconomics from Socionet

Abstract: The latest events in the Arabian world, the sequence of people’s marches demanding democratic changes, made the question of command economies economic efficiency pressing again. If you make a list of all countries of the world and range them by income per capita, it will turn out that the decisive mark is not presence of mineral resources, size of the territory, population, geographical location, or the popularity of the government. A country’s place will depend on the level of political and economic freedoms. There is not a single exception here. Argentina, Australia, South Korea, Cuba, the USA, Mozambique, Congo and Germany hold their places only in accordance with presence or absence of certain freedoms in their territories. If far from the top of the list you spot a country, in which, at the first glance, there seem to be private property and political freedoms present, look for red flags signaling of certain limitations. These may be limitations for land and minerals private ownership, extensive licensing for various activities, orders, regulations, instructions and lots more. These countries’ economic and political fields are covered with restricted areas enclosed with high or not very high fences, sometimes of barbed wire, entrance to which is prohibited for all or is limited to a handful of chosen ones. The list of countries remains fairly stable, but sometimes dizzying leaps down or to the top occur. An example of an unusual leap was shown a few decades ago by Ireland. 25 years ago Ireland was one of the poorest countries in Europe, in 1987 its GDP per capita was almost twice as little as the indexes of the Great Britain. But then the “Celtic Tiger” made such a head-turning leap that many still cannot come round. In 1990ies it not just caught up but left behind both Great Britain and Germany. The main driving force of the powerful growth was the increase of economic freedom level and general deregulation of the economy.

Date: 2011-04-10
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Persistent link: https://EconPapers.repec.org/RePEc:nos:wuwpma:bilych_gennady.85552-009

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