Economic Systems

This book presents the report on the European economic system, which was submitted to the President of the European Commission in July 2003. The report is divided into three parts. The first contains an assessment of the economic performance in terms of growth, stability, and cohesion. The second explores the challenges facing the European Union. The third presents a series of policy recommendations for the future.

In the past decade or so, systems integration has become a key factor in the operations, strategy, and competitive advantage of major corporations in a wide variety of sectors (e.g. computing, automotive, telecommunications, military systems, and aerospace). In the past, systems integration was confined to a technical, operations task. Today, systems integration is a strategic task that pervades business management not only at the technical level but also at the management and strategic levels. This book shows how and why this new kind of systems integration has evolved into an emerging model of industrial organisation whereby firms and groups of firms join together different types of knowledge, skill, and activity, as well as hardware, software, and human resources to produce new products. The business of systems integration has fundamental implications for the capabilities of firms. Firms have made a transition from being vertically integrated to being the integrator of somebody else's activities. This book, the first to systematically explore the re‐invention of systems integration from a business and innovation perspective, is based on contributions from leading international scholars. It delves deeply into the nature, dimensions, and dynamics of the new systems integration, deploying research and analytical techniques from a wide variety of disciplines including, the theory of the firm, the history of technology, industrial organisation, regional studies, strategic management, and innovation studies.

After a turbulent century of unprecedented social and technological change, capitalism has emerged as the dominant ideology and model for economic growth in the richest, most developed countries. But only thirty years ago economic growth was faltering, inflation rising, and the Left were arguing for greater state intervention in industry. How did this transformation happen? And what price have we paid in the process? This book provides a history of the problems facing the economies of Europe, Japan, and the US during the latter half of the 20th century, and questions whether capitalism has really brought the levels of economic growth and prosperity that were hoped for. The book then looks at the impact the rapidly developing economies of China and the South are likely to have on the older economies of the North. As the race is on to maintain growth and protect competitive advantage, the book asks: is the ‘race-to-the bottom’ inevitable, with welfare states being dismantled to meet competitive demands? Or is there an alternative model that sees a strong commitment to welfare provision as essential to economic growth? Can we afford not to tackle inequality at home as well as abroad?

Capitalist economies have developed with a fair amount of diversity among themselves, which should have resulted in dramatic differences in levels of development. The fact that these differences are for the most part not noticeable may indicate that capitalism is based on such robust mechanisms that it accommodates varied institutional environments. In other words, institutional differences would be akin to national folklore, with few if any consequences for economic dynamics. If institutional specificities did have an effect, competition among nations would sooner or later lead to the adoption of international ‘best practices’. This book challenges these views on several counts. There are some elements of truth in the statement that differences in macroeconomic policy mix could explain in part the differences in economic performance. But this does not amount to saying that institutional specificities do not matter in explaining important differences in the basic economic mechanisms of the different countries. There is a considerable amount of theoretical and historical work that insists on the central role of institutions in economic dynamics.

The collapse of the Doha Round hangs heavily over an already troubled world economy. Some have concluded that this failure is simply the result of a lack of political will and a pre-occupation with issues such as terrorism. But as this book reveals, the World Trade Organization needs serious structural changes, not just political backbone. It shows for instance that the WTO—now with 153 members—has become increasingly unwieldy in terms of concluding trade agreements and he suggests that countries organize around specific platform positions, a strategy that would make the “holy grail” of consensus once again possible. The book also argues for financial support for poorer countries so that they can participate effectively in negotiations and it contends that the principle of the “single undertaking” (that “there is no agreement until everything is agreed”) has become a serious and perhaps crippling constraint, and must be modified.

Beer was the drink of choice in many ancient societies and throughout the past centuries in large parts of the world. Right now, it is globally by far the most important alcoholic drink, in volume and value terms. The largest brewing companies have developed into global multinationals. The beer market is characterized by strong growth in emerging economies, by a substantial decline of (per capita) beer consumption in traditional markets, and a shift to new products. There has been a strong interaction between governments (politics) and markets (economics) in the beer industry. For centuries, taxes on beer or its raw materials were a major source of tax revenue for governments. Governments have also regulated the beer industry for reasons related to quality, health, and competition. The beer market is not only an interesting sector to study in itself but also yields important general economic insights. This book is the first economic analysis of the beer market and brewing industry. It comprises a comprehensive and unique set of economic research and analysis on the economics of beer and brewing. The various chapters cover economic history and development, demand and supply, trade and investment, geography and scale economies, technology and innovation, health and nutrition, quantity and quality, industrial organization and competition, taxation and regulation, and regional beer market developments.

Transition in Central and Eastern Europe has led to a U‐shaped response of output, that is, a sharp decline in output followed by recovery. Six years after the beginning of transition, most of the countries of Central Europe now seem firmly on the upside. Most of the countries of Eastern Europe are still close to the bottom of the U; an optimistic view is that they are now negotiating the turn.

This U‐shaped response of output, its causes and its implications, is the subject of this book. That transition came with an often‐large initial decrease in output should be seen as a puzzle. After all, the previous economic system was characterized by myriad distortions. One might have expected that removing most of them would lead to a large increase, not decrease in output. This is not what happened. The purpose of this book is to understand why, and to draw general lessons.

Derived from the 2001 Santa Fe Institute Conference, “The Economy as an Evolving Complex System III,” represents scholarship from the figures in the area of economics and complexity. The subject, a perennial centerpiece of the SFI program of studies, has gained a wide range of followers for its methods of employing empirical evidence in the development of analytical economic theories. Accordingly, the chapters in this volume address a wide variety of issues in the field of economics and complexity, accessing eclectic techniques from many disciplines, provided that they shed light on the economic problem. Dedicated to Kenneth Arrow on his 80th birthday, this volume honors his many contributions to the Institute. SFI-style economics is regarded as having had an important impact in introducing a new approach to economic analysis.

This book addresses the nature of industrial dynamics, structural change, and transformation in our time. The central focus is on the question of evolutionary processes and complex transformation in the economy, with particular emphasis on the nature of flexibility and stability. The 19 authors — many of whom are leaders in their field — share a common approach to the economy as an inherently dynamic and complex system consisting of diverse components and activities, which are interacting and changing in different ways over time. Framing the book this way stresses the necessity of analyzing not only economic transformation, but also that diverse actors are deciding, doing, and acting in ways which affect the outcomes. The chapters are grouped within three themes: 1) Experimenting and Inertia, 2) Evolution and Adaptation of Structure, and 3) Innovating and Technological Transformation.