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An economic institution is characterized as a set of human-created constraints that shape the human interactions that lead to economic growth. It can also be described as a permanent activity associated with a party or people's customs.
The paper contends that disparities in national growth are mostly due to differences in economic institutions. These economic institutions must be reformed in order to address the growth crisis. Regrettably, the reform process is so complicated when these institutions are mutual decisions that decide the outcome of the democratic process. The economic institutions of a community depend on the nature of political bodies and the distribution of their powers in the society. Despite the fact that it’s widely known that the political equilibrium is the sole support to these economic development institutions, it’s also clear that the political nature of the institutions presents difficulty in reforming the institutions (Sunket, 2016).
Describe the key features of a particular economic development institution
On the basis of above definition, economic development institution has the following features;
Economic development institutions have the purpose in that they have goals and objectives for social needs satisfaction.
Goals and objectives of the institution help in provision that guide the activities of the institution. The economic institution must therefore clearly define its purpose and align its educational objectives to its purposes. The statements must be formally approved to define its essential values.
The economic institutions tend to observe codes of conduct.
Economic development institutions must be associated with codes and ethics in achieving their success. They must clearly outline characters that provide immediate sentiments to other individuals.
The institutions associates to and derive rights from the society.
Social and economic institutions in a country lead the process of economic development through political platforms. As determinants of attitudes and motivations, the institutions are flexible in encouraging people to avail and embrace economic opportunities to lead high living standards (Margareta, 2015).
Explain a particular economic development institution's effect on the political arena in the countries in which it is located
I will give the effect of Internal Revenue Service as tax collection agency on political arena. The institution is a revenue service to the federal government of US. The body is responsible for administration of internal revenue code and collection of taxes and has its headquarters in Washington D.C.
The economic institution above prohibits of other organizations in the participation on any intervention or political campaign. The institution law clearly states that any contribution to campaigns funds made on behalf of the organization will be charged as violation to the prohibition of the campaign activity.
Certain expenditures may not be prohibited by the institution depending on the circumstances. For instance, voter educations practiced in non partisan manner do not qualify to be prohibited by the institution on the basis of the above law. However, a voter education conducted with a bias for one candidate over or has an effect that favors one party is prohibited.
Explain a particular economic development institution's effect on the social and environmental performance of the countries in which it is located.
The economic institutions are used in comparison of Gross Domestic Product. The measures that include; entry barriers, corruption, and property rights in different countries provide correlation with various economic outcomes that includes the rate of economic development and growth. Moreover, this type of correlation fails to establish if the countries with are poor because of worse institutions (Margareta, 2015).
Internal Revenue Service has greatly influenced individuals’ attitude towards work and efficiency for the economic growth. Inspirations to the people to work hard makes the institutions to be growth oriented. This means that there is promotion or restriction of growth to some extent.
The institution also contributes to scientific attitude of the society along with the changes presented. If the change is favorable within the service, it provides atmosphere for progress and the occurrence of the anticipated changes when there is development of technical knowledge.
The economic institutions also impacts on the labour productivity. The social setting of a country impacts on the productivity of labour to some extent. When there are unfavorable changes in the social institutions, it leads to inadequate development of labourers.
Describe the social, economic, and environmental responsibilities and influences of economic development institutions
Protection of private property
Economic institutions play a vital role in private property rights. The rights, economic freedom and well being is guided by the institutional environment of secure property rights and increased standards of civil liberties. The success of these economic institutions is linked to the country’s economic development and so must make policies that protect economic rights.
Provision of checks and balances against the government
Checks and balances are majorly applicable in constitutional government and are of fundamental importance. Separate branches including economic development institutions can be given powers by the government to monitor the economic progress through provision of checks and balances.
Extraction of resources and provision of measure of economic institutions
Extraction is a concept that refers to a country that derives big portion of its productivity from non renewable resources. Resource extraction by the nation can help explain the reason why some countries remain in abject poverty and the reasons for their failure. Economic and political institutions are the factors that underlie the economic success of a nation.
Explain a particular economic development institution's effect on the economic performance of the countries in which it is located.
Economic activities simply show the balance between the government, people and businesses (Luca, 2012). Supply by the economic institutions determines the economic potential. The productive capacity depends on the skills and size of the workforce. Through influencing the incentives, the effect can be reflected on each of these factors. For instance, reduction of tax rates in slaries only encourages people to work more.
On the budget effects, a tax cut slows down long run economic growth through increase f budget deficits. These long run effects of tax policies not only depend on effects of incentive but also its budgetary effects.
Explain the effect of economic development institutions on economic cooperation and competition between countries.
Economic development institutions ensure self expression and grants free flow of information. The institutions also encourage the formation of formation of clubs and associations. The two roles above form social relationships prosperous in nature thus facilitating environment conducive to greater economic interaction between countries. Through this, wide array of information is shared as a result o interaction. The process of cooperation also allows resource sharing through use of democratic institutions. The countries are used to reduce risks associated with economic activities (Luca, 2012). The economic institutions through creation of favorable environments pool resources in provision of investments such as infrastructure, education and health.
Luca Ferrini. (2012). The importance of Institutions to Economic Development. Retrieved
on August 7, 2017 from http://www.e-ir.info/2012/09/19/the-importance-of-institutions-to-economic-development/
Margareta D. Hanouz. (2015). Why Institutions matter for economic growth. Retrieved
on August 7, 2017 from https://www.weforum.org/agenda/2015/01/why-institutions-matter-for-economic-growth
Sunket Suman. (2016). Meaning, Characteristics and Other Details. Retrieved August 7,
2017 from http://www.economicdiscussion.net/articles/institutions-meaning-characteristics-role-nd-other-details/13121
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