The Standard Model

A seminal development in economics since World War II is validation of the standard model for economic progress. The model has been presented elsewhere (Tweeten et al., 1992; Tweeten and McClelland, 1997; Tweeten, 1999), and is outlined only briefly in this section. Any country following the standard model can be assured of sufficient national product to be food secure. Of course, economic progress differs among countries adopting the standard model because countries differ in natural endowments (including location), institutions, and attitudes. It is important to emphasize that following the growth-promoting standard model is most important for food security in countries held back by unfavorable attitudes and sparse natural resources.

The standard model is prized for its success rather than for its neoclassical economic origins. Economic planners of Hong Kong and Chile have followed it and have succeeded spectacularly, while those of nations rejecting it such as the Soviet Union, North Korea, and Cuba have failed spectacularly. Anecdotal evidence for the standard model is telling, but numerous analytical studies cited by Tweeten (1999) make the case even more compelling.

The standard policy model calls for a lean public sector doing a few things well. Thus, it may seem incongruent that the following outline of the standard model is mostly about the role of government in the institutional framework. The standard model calls for markets to allocate market goods and services, defined as those that are rival, exclusionary, and transparent. (See Tweeten, 1989, chapter 2 for definitions of public and market goods.) Although the market makes most decisions regarding when, what, how, and where to produce in any successful economy, not much need be said about the market because it works on "autopilot" if the proper institutional framework is in place. The challenge is to establish the proper institutional framework.

Some countries appropriately choose the tradeoff of more safety net and less economic growth. Several Asian economies have experienced rapid economic growth and poverty reduction, with the public sector accounting for as little as 10% of their economy. At the same time, some countries of Western Europe have chosen slower growth and a larger safety net, with the public sector accounting for half of more of their capitalist economies. Thus, there is no one optimal size for the public sector.

Was this article helpful?

0 0

Post a comment