Anjar Priandoyo

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Economy: Chicken or egg are two sides of the same coin

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Asking “Which one is first, democratization of economic development?” is the same question ask “Chicken or Egg”. This metaphor is popular to describe the thing that is not clear. Another example is on “Which one is first, being fundamental or become poor” another popular society problem that is complicated.

Chicken or egg dilemma can be simply explained that they are two sides of the same coin. People might argue that to solve the problem it needs both factor. This perspective, can be seen in many examples such as lecturer that should teach and research at the same time.

However, from science point of view, this problem can be seen from different perspective. For example that if GDP is more than $6,000, it is better to have democratization ref. Or if GDP is more than $7,000, according to Kuznet Curve we will have less pollution (more renewable energy).

Economic Growth in Transition Economies
Understanding this issues is important in economics. Economics is a complex problem that including complex factor. Every action has consequences. For every action, we can choose a number of approach / theory / method. For example to change an economic system, we can choose between Shock Therapy vs Gradualism Approach.

Inappropriate Transition Policies might affect growth negatively

  • Large-scale privatisation without adjoining reforms
  • Market opening without supporting reforms
  • Bank liberalisation without enterprise restructuring

Reforms and Economic Growth in Transition Economies: Complementarity, Sequencing and Speed ref

It is complicated
The reason that transition economies could not recover their pre-transition GDP level (even after ten years of transition history) seems to stem from the negative influence of initial conditions on growth rather than the slow speed of economic reform.

The determinants of economic growth of transition economies: Economic reform versus initial conditions Young-Sun Lee & Hyung-Gon Jeong ref

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Written by Anjar Priandoyo

Juni 6, 2017 pada 1:07 pm

Ditulis dalam Science

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