ECON 20B Lecture 4: 1.4 (01/24)
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ECON 20B Full Course Notes
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Document Summary
Markets are usually a good way to organize economic activity. The price system allocates resources to their most efficient uses. This requires respect for property rights, the ability of people to exercise authority over the resources they own. In poor countries, justice system doesn"t work very well: When people fear their capital, there will be less investment. Inward-oriented policies [according to economists, will not benefit society] (e. g. tariffs, limits on investment from abroad) aim to raise living standards by avoiding interaction with other countries. Outward-oriented policies (e. g. the elimination of restrictions on trade or foreign investment) Countries with inward-oriented policies have generally failed to create growth. Countries with outward oriented policies have often succeeded. Technological progress is the main reason why living standards rise over the long run. Ideas can be shared freely, increasing the productivity of many. Tax incentives or direct support for private sector r&d.
