Redefining Economic Policy and Institutional Reform – Support for Economic Growth

The paper addresses the effects of economic crisis from the perspective of theoretical developments and how they were reflected in the economy, both nationally and among the actors of the international system. Basic economic paradigms such as the role of price as a mechanism regulating the operation of free markets and the ability to determine prices to reflect economic developments have been tested in various markets. In the context of limited resources available, due to economic contraction it is necessary to redefine accepted social balances. The example analyzed in the paper is that of social policies. In times of economic expansion, modification of such arrangements, even if suboptimal, proves to be difficult because it involves implicit costs, less visible. Economic crisis brings out such costs. Changing these social arrangements requires first the solution and coherent regulatory mechanisms and implementation. They depend on the quality of institutions and social coordination system as a whole. If these mechanisms are complex national, at supranational level we can add additional layers of decision, which explains the difficulty of coordination. The degree of consistency in decision-making mechanisms and their quality determine the cost of adapting to new conditions imposed by the balance. Coordination mechanisms, either national or supranational context, are relevant for redefining of a new balance to streamline existing policies (eg social) that reflects the crisis and the creation of new arrangements to accommodate new engines economic growth.