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Libertà individuale per la prosperità mondiale

Individual Freedom for Worldwide Prosperity

Anno XXIV, n. 105, aprile-giugno 1989
Centro Einaudi


Abstract disponibile solo in lingua inglese

In the past few years, it has become increasingly evident that needs and opportunities follow parallel trends in the East and the West. While liberal Western economists speak out for openness and an improved system of market incentives, the Soviet Union is moving towards "glasnost" and "perestroika", that is towards a greater degree of economic decentralization. The parallel development is not a mere coincidence: declining communication costs are making the political and economic freedom, to which the West owes its prosperity, more contagious. And even within the West, cheaper communication, lower costs of transportation and a greater degree of factor mobility increasingly narrow the scope which governments have for harmful interventions into market processes. In an open world economy, countries are bound to compete for internationally mobile resources. This forces national governments to be more efficient and less populistic, and to limit themselves to the supply of those goods and services for which they have a comparative advantage relative to private enterprise or voluntary associations.
The constraint for government arises not only from actual competition; it may also arise from potential competition, i.e., from credible threats of emigration by future-oriented, and hence particularly valuable, resources. Corporatist and sclerotic countries that are uncompetitive in world capital markets must face the danger of falling into the poverty trap – in a vicious circle of overpoliticization and overindebtedness, political unrest and economic decline, while open and competitive countries have good opportunities to demonstrate the working of the virtuous circle of individual freedom and increasing prosperity.