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The structural interdependence, in fact, forms the basis for the policy maker's choice behaviour for policy or policy mixes. The spectrum formed by various policy mixes depends on the levels of coordination between agents. Paul Rosenstein-Rodan declared as early as in 1943, that economic development could be thought as massive coordination failure, in which several investments do not occur simply because other complementary investments are not made, and there latter investments are not forthcoming simply because the former are missing. Thus we may conceive two Equilibria under the very same conditions, one based on positive expectations in one sector due to realizations of various policy outcomes in other sectors and other involving frustration and persistent stagnation in which frustration due to negative policy outcome in one sector spill over to the other sector.
This serves as potential explanation why similar policy instruments in similar economics behave differently and give rise to different or dissimilar policy outcomes. It, in fact, depends on the nature of belief and expectations held by agents in different sectors concerning the actions of each other.
It has been accepted to most policy and development economists that among the most important sets of institution in an economy are those that provide for enforcement of contracts.
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critically examine the statement that privatization can always decentralize economic power
The coordination problem relates us to not only the levels of activities like research and developments (R&D) and investments but also to the behaviour of institutions that charact
Probelm 1: (a) What are the main roles of Government in the economic development of a country? (b) What are some of the emerging issues affecting the role of Government?
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