3.10. Competition and External Anchors Are Key

1. Put your phone in your bag!

PUT YOUR
PHONE IN
YOUR BAG!
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

2. Anchor!

ANCHOR!
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

3.

DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

4.

Week #1: Foundations: Incentives & Trade-offs
Week #2: Margins & Gains from Trade
Week #3: Exchange & Transaction Costs
Week #4: Firms, Profits & Income
Week #5:Value, Wealth & Sources of Progress
Week #6: Market Forces & Unintended Effects
TOPIC OF THE WEEK:
Week #7: Institutions that Support Progress
Week #8: Midterm Exam [20 Oct – 24 Oct]
Week #9: Macro Stability & Policy
Week #10: Trade & Part 3
Week #11: Government’s Basic Roles
Week #12: Political Economy & Rules
Week #13: Government Support Programs
Week #14: Planning & Competition
Week #15: Final Exam [15 Dec – 19 Dec]

5. External Anchors Are Key

EXTERNAL ANCHORS ARE
KEY
ELEMENT 3.10

6. Review

REVIEW
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

7. “A corporation is the most efficient way to commit crime legally.”

“A CORPORATION IS THE
MOST EFFICIENT WAY TO
COMMIT CRIME
LEGALLY.”
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

8.

subsidy
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

9. Economic Logic Test

ECONOMIC LOGIC TEST
Subsidies should target real market failures
Without failure, subsidies distort choices
Encourages lobbying instead of efficiency

10. Distorted Incentives

DISTORTED
INCENTIVES
Firms chase political
favors over innovation
Connected businesses
gain unfair advantage
Market discipline
weakens

11. Rent-Seeking

RENT-SEEKING
Groups spend resources
to secure subsidies
These efforts create no
new wealth
Society loses subsidy
cost and wasted effort

12. Cronyism Risk

CRONYISM RISK
Close ties between
officials and selected
firms
Success depends on
connections, not
performance
Erodes trust and
efficiency

13. External Anchors Are Key

EXTERNAL ANCHORS ARE
KEY
ELEMENT 3.10

14. Hayek’s Insight

HAYEK’S
INSIGHT
Economy is a
complex garden,
not a machine.
Planners cannot
design it; they can
only set
conditions for
growth.

15. LIMIT REGULATION

16. Regulation Has Two Sides

REGULATION
HAS TWO
SIDES
Good regulation
protects consumers
and ensures
fairness.
Excessive
regulation raises
costs and slows
entry.

17. Cost of Excessive Regulation

COST OF EXCESSIVE
REGULATION
Compliance burden reduces
innovation time.
Small firms are hit hardest,
limiting competition.

18. Bureaucratic Risk

BUREAUCRATIC RISK
Licensing and permits can
become barriers to entry.
Opens door to corruption or
favoritism.

19. When Regulation Helps

WHEN REGULATION HELPS
Prevents fraud, protects health and safety.
Works best when simple, transparent, consistently enforced.

20. When Regulation Hurts

WHEN REGULATION HURTS
Overlapping agencies and unclear rules slow decisions.
Uncertainty lowers investment and confidence.

21. EXTERNAL ANCHORS

22. Domestic Rules Aren’t Enough

DOMESTIC RULES
AREN’T ENOUGH
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

23. Why Domestic Rules Aren’t Enough

WHY DOMESTIC RULES AREN’T ENOUGH
Governments face pressure
from interest groups.
Risk of reverting to
protectionism without constraints.

24. Definition: External Anchors

Institutions or agreements
DEFINITION:
EXTERNAL
ANCHORS
that limit arbitrary policy shifts.
Examples: WTO, FTAs, independent
regulators, rule-based monetary
policy.

25. World Trade Organization

WORLD TRADE
ORGANIZATION
Established in 1995 to regulate
global trade
Promotes free and rules-based
international trade
Resolves trade disputes
between member countries
Reduces trade barriers such as
tariffs and quotas
Supports economic integration and
trade stability worldwide

26.

DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

27. How External Anchors Improve Discipline

HOW EXTERNAL ANCHORS IMPROVE DISCIPLINE
Ensure policy
predictability
across political
cycles.
Reduce sudden
tariff hikes or
interventionist
laws.

28. Example: WTO Membership

EXAMPLE: WTO MEMBERSHIP
Requires transparent tariff and
subsidy rules.
Limits domestic lobby
influence on trade policy.

29. Example: Independent Regulators

EXAMPLE: INDEPENDENT
REGULATORS
Telecom, banking, energy
regulators operate outside
politics.
Ensure fairness, improve investor
trust.

30. Competition + Simple Rules = Healthy Economy

COMPETITION + SIMPLE RULES = HEALTHY ECONOMY
Competition drives efficiency
and innovation.
Light, smart regulation protects
consumers without slowing
markets.
External anchors keep policies
stable and credible.

31. Summary

SUMMARY
Excessive regulation harms
growth and protects
incumbents.
External anchors prevent
policy reversals.
Together they create a resilient,
fast-growing economy.

32. Any questions?

ANY QUESTIONS?
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

33. Thanks

THANKS
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS