Market Failure and Government Failure in Europe Essay

Market Failure and Government Failure in Europe - Essay Example For several decades, a debate has been raging in development economics on the relative virtues of the free market as opposed to state intervention. With the help of analytical models of a market economy, the interventionists have demonstrated what they have considered as serious instances of market failures. That is to mean, the inability of a market economy to reach certain desirable outcomes in resource use. The protagonists of the free market on the other hand, compile impressive lists of ill-covered and counterproductive policy measures implemented by the governments of different nations at different times. As a result, there has been serious wastage of resources in the economies of these countries. This debate has inevitably remained inconclusive. The analytical results on market failure do not disappear in the face of the evidence that most governments have performed rather badly. In cases where there appears to be scope for improvement over the market outcome, the search for corrective measures continues. Some protagonists of government failure tend to question the significance of such market failures. Some have voiced skepticism about the ability of governments to take any action in the economy which is not counterproductive. However, none of them has been able to explain why less developed European countries failed to grow during the first half of the 20th century.

Review of literature on Brady Plan Research Paper

Review of literature on Brady Plan - Research Paper Example According to Rosen (2008, 102-103), this period built a new government in the U.S. and saw the democratic elections in Uruguay, Chile, Brazil, and Argentina, and the establishment of new administrations in Venezuela and Mexico. Within this setting, cutting down debt was one method to bolster developing economies in Latin America. Consequently, these countries take advantage of democratic transformation as a bargaining ticket to gain more favorable debt arrangements. These countries, as developing democracies, thought that pressing for inflexible strictness and full debt settlement would estrange newly entitled voters and threaten the continued existence of democratic governments (Hiatt 2009, 388). In September 1985, President Garcia remarked quite frankly that â€Å"We are faced with a dramatic choice: it is either debt or democracy† (Maswood 2008, 94). In view of this, the objective of this research paper is to analyze the status of the Brady Plan after 23 years of its implementation with a focus on Brazil and Mexico. In particular, this paper tries to answer the question, how did the Brady Plan help solve the problems faced by Mexico and Brazil as a result of the Latin American debt crisis? The success of the loan industry ended in 1982 due to the emergence of the debt crisis, raising alarm on global markets (Buckley 2009, 54). This bleak condition forced several international financial organizations to generate a remedial program, which may function to prevent a potential disaster. This mission engaged the government of the United States, but not, at the outset, as the major player. Basically, the Brady Plan included a rigorous debt assistance program where industrial banks may select from a list of debt-stock reduction and new currency selections, practiced within the context of policy contingency (Iqbal & Kanbur 1997, 25). In actual fact, not many industrial banks were eager to grant a new