INSTITUTIONS How do we interact with each other in the domain of production and the exchange of goods and services?
What are the
impacts of these on our lives as members of society? ECONOMIC INSTITUTIONS As individuals interacting in a social community, the process of production distribution, and consumption is manifested in economic institutions, which refer to the processes where we engage with each other as producers and consumers of goods and services. It is therefore important to understand these economic institutions. A company or an organization that deals with money or with managing the distribution of money, goods, and services in an economy. Examples are banks, government organizations, and investment funds A. NONMARKET INSTITUTIONS Refers to internal and external organizing and correcting factors that provide order to market and other types of societal institutions and organizations—economic, political, social, and cultural—so that they may function efficiently and effectively as well as repair their failures. In social psychology, 1.RECIPROCITY reciprocity is a social rule that says people should repay, in kind, what another person has provided for them; that is, people give back (reciprocate) the kind of treatment they have received from another.
By virtue of the rule of
reciprocity, people are obligated to repay favors, gifts, invitations, etc. in the future. This sense of future obligation associated with reciprocity makes it possible to build continuing relationships and exchanges. Reciprocal actions of this nature are important to social psychology as they can help explain the maintenance of social norms. 2.TRANSFER 1. Banking: Moving funds among two or more accounts held by the same or different entities. 2. Real estate: Conveyance of title to a property from the seller to the buyer through a deed of transfer, following payment of the price. 3. Securities trading: Delivery of a stock (share) certificate by the seller's broker to the buyer's broker followed by conveyance of the title by recording the change in the stock (share) register. 3. REDISTRIBUTION Can be considered as combination of the features of transfer and reciprocity. In Economics the theory, policy, or practice of lessening or reducing inequalities Income for example through such measures like progressive taxation and anti poverty programs B. MARKET INSTITUTIONS Is one of the many varieties of systems, procedures, social relations and infrastructures whereby parties engage in exchange. 1. MARKET SYSTEM A type of economic system that allows the free flow of goods between and among private individuals and firms with very limited participation from the government. Another principle associated with the market system, integrates both idea of self-interest and competition in the market place. 3. SPECIALIZATION Is another requirement for a market economy, ability to produce goods and services efficiently. 4. MARKET TRANSACTIONS Involves parties who sell their goods and services in exchange for cash from consumers. The exchange of goods and services through a market. The set of market transactions taking place in the economy is most important in terms of measuring gross domestic product (GDP). Market transactions provide the basic data used at the Bureau of Economic Analysis to begin the estimation of GDP. C. STATE-MARKET RELATIONSHIPS Call for a holistic view of the relationship between the material and relational dynamics of society, On the one hand, and between these dynamics and institutional dynamics on the other. The state contains mechanisms that are essential to the existence of markets themselves, and these mechanisms are not “natural” given. Economies are actually institutional production systems wherein the material density of the state both as organization and administration is of relevance. D. INTERNATIONAL TRADE Economic institutions are not only confined to one specific territory or geographic location. International trade benefits nations because it enables economies to employ its resources in ways that increase its total output. The imposition of trade barriers by one nation may also result in retaliation of trade barriers of its own by another nation. GATT General Agreements on Tariffs and Trade WTO World Trade Organization I. KNOWLEDGE QUIZ #4 COMPLETE THE CROSSWORD PUZZLE BELOW. Across 2. An economic system that allows the free flow of goods between and among private individuals and firms with very limited government participation 5. A type of economic system where the government takes over the functions of the market in producing and disturbing essential goods and services 6. Tax on imported goods 7. The granting of mutual concessions among different countries with respect to commercial trade restrictions 9. The limit set on the quantity of imported goods 10. A political body that exercises legitimate control over the use of form within its territory Down 1. A signaling device that indicates the value of the good or service of both buyers and sellers 3. Government spending on the private sector that does not require the absorption or utilization of economic resources 4. Normally levied on workers’ income, business profits, and consumption of goods and services in order to raise revenues 8. Retaliatory escalation of traffics and quotas that reduce the world total output.