In the last decades, more and more economists have advanced the idea that significant obstacles impeding economic growth (especially in less developed regions) consist in different market failures, preventing entrepreneurs from taking the necessary actions to exploit profit opportunities: coordination failure. This paper provides a refutation of the idea that coordination failures as manifested in the inability of clusters to emerge can serve as

Development economists have argued that large-scale industrial policy is the best remedy to correct the “coordination failure” they claim prevents market economies from making the complementary investments needed to lift poor countries out of poverty. At the root of their argument is a misunderstanding of the entrepreneur’s role in fostering economic growth.

Banking supervision has attracted considerable attention in the last decades, as attempts to prevent the occurrence of financial crisis have intensified. We argue that past regulations have had unintended negative effects, which because of a lack of clear understanding of the fragility of banking activity and the mechanism of political decisions, will continue to contaminate the results of present, upgraded regulation. Thus, a reorientation in thinking

The information externality in entrepreneurship theory argues that the social benefits arising from entrepreneurial actions are greater than the private gains. Entrepreneurs who discover profit opportunities signalize to other entrepreneurs the efficient path of investments, and the latter can imitate the former acting upon this information. Market failure to internalize this information externality creates an useful role for state, which can provide

The theory of optimum currency areas (OCA) is widely used, at present, by professional economists to defend a system of independent fiat currencies. Mainstream economists maintain that there are benefits to be derived from a system of fiat fluctuating currencies, although not necessarily from the present international monetary order. The OCA theory is supposed to provide the basis for the preservation of flexible exchange rates between regions that

Among the arguments advanced by mainstream economists in favor of independent fiat currencies, the thesis that the exchange rate completely insulates the economy from changes in foreign prices has a central importance. The occurrence of changes or shocks emanating from foreign markets is not a sufficient condition, however, for monetary nationalism. Another condition for the independent fiat currencies to be desirable in mainstream literature, are

Brain drain occurs when skilled individuals leave their native countries. It is often argued that this phenomenon has strong negative effects on the origin countries, preventing them to capture the advantage of investing in human capital formation and realize a higher growth. This analysis shows that the negative consequences of brain drain have been overemphasized, mainly because of the confusion between capital and technology. It demonstrates that