Civil Engineering Reference
In-Depth Information
One way of comparing the range of economic systems that presently exist in the
world is to imagine them located on a wide spectrum (similar to that in
Figure 2.1)
.
In theory, each nation could be positioned according to the proportion of resources
owned by the public and private sectors. The nations that have a high proportion
of government owned resources would be located close to the centrally planned
model, and those dominated by privately owned resources would be located at the
other extreme near to the free market model. Such an exercise illustrates that all
economies of the real world are mixed economies; some may come close to one or
other of the economic models, but no nation fits precisely into the pure planned or
pure free market category. During the last two decades there has been considerable
movement along the spectrum. Indeed, we do not actually show the precise position
of any countries in
Figure 2.1,
because as soon as the economies are located, their
position becomes out of date.
In general terms the
transition economies
, such as China and the states
of the former Soviet Union, have shifted slowly away from the pure centrally
planned model, while many European economies (particularly Britain) have
moved closer towards the free market model under the influence of
privatisation
and
deregulation
. But transitions are rarely smooth, as it is difficult to extend
entrepreneurship, liberalise prices formerly controlled by the government, encourage
competition and generally challenge established cultural and economic norms.
The
Transition Report
published annually since 1998 by the European Bank for
Reconstruction and Development (EBRD) offers a reasonably comprehensive
analysis of the progress of transition economies. The 2011 report noted that
recovery from the late 2000s global recession was under way in virtually all
countries of the EBRD region, although its pace varied significantly from one region
to the next. The recovery was distinctively slow in central and eastern Europe (the
former Soviet Union) and fastest in the countries of central Asia, such as Hong
Kong, India and Indonesia, with seven-percentage points difference in GDP between
the slowest and fastest transition economies (EBRD, 2011: 16).
The transition of command economies since the Berlin Wall fell in November
1989 has attracted considerable coverage in both the news media and academic
literature, as economies shifting towards free market systems reflect changes in
national aspirations and culture. Both Russia and China, for instance, have tried
to harness some of the efficiency of the market mechanism in an attempt to raise
the living standards of the Russian and Chinese people and, consequently, the
government's role in these nations has been reduced in recent years. These changes
have not gone unchallenged. For example, China rejected restructuring if it meant
destroying the socialist principles upon which the country was built.
In the UK, and elsewhere in Europe, the mix of public sector and private sector
activity has varied over time because of the differing philosophies that the main
political parties have adopted towards state intervention. For much of the post-
war period the desirability of less or more public ownership of industry lay at the
heart of the political divide in the UK between the Labour and Conservative parties.
In terms of construction activity, from 1955 to 1985, much of the output was
commissioned on behalf of a public authority such as a government department,
