What Governments Can Do to Support their Economies: The Case for a Strategic Econsystem
More than half a decade after the outbreak of the greatest economic crisis since the Great Depression, the world economy is still facing serious difﬁculties. Much more than during a ‘normal’ recession, the Great Recession of recent years has uncovered serious structural problems in the world economy and has brought about levels of unemployment unprecedented in modern times (Elsby et al. 2010). It ﬁrst became clear that the ﬁnancial sector had become in effect self-referential and too much removed from its traditional role of allocating ﬁnance throughout the whole economy (Menkhoff and Meyer, 2010). Following this, the structural weaknesses of the Euro were exposed leading to serious questions about the long-term sustainability of the most ambitious currency union ever attempted.
- The on-going economic crisis has shown that the constitution of different political economies and government involvement are key to creating resilient and sustainable economies.
- In particular, the important SME sector is dependent on a supportive economic framework.
- Economic policy-making needs to be embedded in a broader analytical framework.
- The ‘strategic econsystem’ approach offers such a framework that allows us to capture and examine all policy-relevant aspects.