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Public Policy towards Private Enterprise II

Public Policy towards Private Enterprise II. Industrial Economics. 1990 report. achievement and preservation of favourable outline conditions for enterprises a positive concept of industrial conformity the retention of open markets the acceleration of the process of industrial conformity.

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Public Policy towards Private Enterprise II

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  1. Public Policy towards Private Enterprise II Industrial Economics

  2. 1990 report • achievement and preservation of favourable outline conditions for enterprises • a positive concept of industrial conformity • the retention of open markets • the acceleration of the process of industrial conformity

  3. Key Points of a World-wide Competition Policy Helping European firms to adapt to the new globalised and interdependent competitive situation • Capitalising on the Community’s industrial strengths • Developing an active policy of industrial co-operation • Establishing a concerted approach to strategic alliances • Targeting measures to ensure the competitive functioning of markets

  4. Key Points of a World-wide Competition Policy Exploiting the competitive advantages associated with the gradual shift to a knowledge-based economy • Reforming tax policies so as not to create employment disincentives and to promote incentives • Developing a policy to encourage 'non physical investment (training, research, technical assistance) • Bolstering policies to streamline and rationalise rules and regulations • Reviewing the criteria governing the use of public instruments in support of industry so as to enhance their impact on the growth of value-added and employment • Launching a European policy aimed at quality

  5. Key Points of a World-wide Competition Policy Promote a sustainable development of industry • Increase substantially and co-ordinate R&D efforts in the field of clean technology • Develop economic incentives to support the diffusion of R&D results into products and processes

  6. Key Points of a World-wide Competition Policy Reducing the time-lag between the pace of change in supply and the corresponding adjustments in demand Demand-side measures: • Pursuing initiatives aimed at facilitating a concerted revival in consumption at world level • Promoting the emergence of new markets Supply side measures: • Encouraging continuing structural adjustment by supporting privatisation • Underpinning the dynamism of small and medium-sized enterprises

  7. Key Points of a World-wide Competition Policy Reducing the time-lag between the pace of change in supply and the corresponding adjustments in demand Measures to improve the relationship between supply and demand: • Facilitating partnerships between large firms and their subcontractors • Improving the interfaces between producers and users • Establishing collaboration networks so as to develop clusters of competitive activities

  8. New growth theory Central issues are • external effects of investment in material or immaterial capital • the training of human capital • infrastructure measures • research and development incentives

  9. Week 11bFinancial regulation in industrialising countries Industrial Economics

  10. Asymmetric information issues exist between borrowers and lenders • ex-ante issue of the borrower knowing more about the potential riskiness of and return from the investment project than the lender does. • ex-post issue of the borrower knowing more about how the investment will be utilised than the lender does

  11. The solutions to these issues in an industrialised country are: • The ex-ante situation can be met by reliable accounting frameworks. • The ex-post situation is met by information being provided about the use of the loan and instruments existing that enable the lender to enforce the contract. Thus there needs to be an institutional framework in place with legal rules.

  12. But in industrialising countries ... these frameworks are still being developed Relationship banking

  13. State intervention in Thailand • there seemed to be an implicit government guarantee on deposits that reduced monitoring by lenders. • weak prudence regulation increased the scope for imprudent lending. • financial intermediaries were not treated equally. • there were concerns about the level of probity exhibited by politicians

  14. BIBF • OUT-OUT lending with both the liability and the asset offshore • OUT-IN lending with the liability offshore and the asset onshore

  15. Basel Accord implementation scheduled for 2004 (although 2006 now looks more likely). 3 Pillars • Pillar 1 will set new capital requirements for credit risk and an operational risk charge; • Pillar 2 will require supervisors to take action if a bank’s risk profile is high relative to capital held; • Pillar 3 will require greater disclosure from banks than hitherto to enhance market discipline

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