3/2007

Editorial

Is more intense competition a positive for entrepreneurial innovations and, in the end, for economic growth? Over the years, economists and policy-makers have actively debated the issue. Numerous theoretical studies appear to lend support to the idea that the relationship between firms' incentive to innovate and the degree of product market competition is humped or inverse-u shaped, implying that monopoly and perfectly competitive markets provide the weakest incentives for entrepreneurial innovations.
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Do research and development subsidies stimulate innovation at all levels of product market competition? 

According to modern growth theory, product market competition is the prime factor in the comparative growth performances of different countries as well as for individual countries over time. Product market competition also seems to play a prominent role in international economic and political discourse, not least because the benefits of globalization – perhaps the most significant manifestation of more intense competition – are currently a hot topic for debate in various circles around the world.
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Is integrated supervision the key to efficient supervision of the financial services sector? 

Over the last thirty-or-so years, financial deregulation and innovations in information technology have lent wings to the process of change in European financial markets. Deregulation and progress in IT have ushered in new growth opportunities for financial institutions and so have improved their possibilities for participation in international mergers and acquisitions. 
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How have economic reforms affected growth in transition economies? 

Why are socially beneficial and welfare-increasing reforms not implemented? Sometimes the answer is that various pressure groups manage to stop reforms that are not to their own benefit even though they may be beneficial on net to the whole society. But another possible answer is the genuine uncertainty about the effects of the reforms, in which case it may be optimal to move slowly and try to learn from both own mistakes and those of others. 
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