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Title
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Contents
1 Part 1:.......................................................................................................................................4

1.1 Principles of Economics....................................................................................................4

1.2 Applied Economics and Statistics.....................................................................................4

1.3 The Global Economy........................................................................................................5

1.4 Contemporary Economic Challenges................................................................................6

2 Part 2:.......................................................................................................................................7

2.1 Econometrics.....................................................................................................................7

2.2 Macroeconomics & Microeconomics...............................................................................8

2.3 Components of Microeconomics......................................................................................9

2.4 Components of Macroeconomics......................................................................................9

2.5 Behavioural and Experimental Economics.......................................................................9

2.6 Financial Markets and Institutions..................................................................................10

2.7 Development Economics.................................................................................................11

2.8 Environmental Economics..............................................................................................12

2.9 China and the World Economy.......................................................................................13

2.10 Contemporary Issues in the UK Economy......................................................................14

3 Part 3:.....................................................................................................................................15

3.1 Advanced Microeconomics.............................................................................................15

3.2 Advanced Macroeconomics............................................................................................15

3.3 Advanced Behavioural and Experimental Economics....................................................16

3.4 Advanced Econometrics: Theory and Applications........................................................17

3.5 Labour Economics..........................................................................................................18

3.6 Industrial Organisation....................................................................................................19

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3.7 History of Economic Thought.........................................................................................20

3.8 International Trade Theory and Policy............................................................................21

3.9 Decision Theory and Games...........................................................................................24

3.10 Public Economics............................................................................................................25

3.11 Health Economics...........................................................................................................26

3.12 Economics of the European Union.................................................................................27

4 References..............................................................................................................................31
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1 Part 1:

1.1 Principles of Economics

In the last 30 years, the study of the economy has expanded and covers an immense
variety of topics. Among the most important definitions of economics is that economics is the
study of how labour, capital and land prices are set in the economy and how they are used to
allocate resources (Becker, 2017). It explores the behaviour of financial markets and analyses
how they allocate capital to the rest of the economy. It examines the distribution of income and
suggests some formulas to help the poor without negatively affecting the results of the economy.
It examines the influence of spending, taxes and public budget deficits on growth. It is the study
of the oscillations of unemployment and production that constitute the economic cycle and
elaborate measures to improve economic growth (Brink, 2016). It examines the patterns of
international trade and analyses the consequences of trade barriers. Finally economics analyses
growth in developing countries and propose measures to encourage the efficient use of resources
(Cherrier, 2017).
One of the basic principles of economics is scarcity. Scarcity means that society can offer
less than what individuals want to have. In the same way that a household cannot give all and
every one of its members everything they want, a society cannot provide each and every one of
the individuals with the highest level of life to which they aspire. Since the desires are unlimited,
it is important that an economy makes the most out of its limited resources, which brings us to
the fundamental principle of efficiency (Balcerzak and Pietryka, 2017). Efficiency means using
the resources of society in the most efficient way possible to meet the needs and desires of
individuals. The essence of the economic theory is to recognize the reality of scarcity and then
figure out how society should be organized in such a way that it uses resources more efficiently.
This is where economic theory makes its exceptional contribution (Ullah and Giles, 2016).

1.2 Applied Economics and Statistics

Applied economics can be defined as the field of economics in which economic
principles and theories are applied to situations in the real world and the aim is to predict
potential outcomes. Statistics has gained more and more influence in society. In the newspapers
 5

appear daily statistical results on the economy, health, opinion, and policies (Angrist, et al.,
2017). Statistics are necessary when the phenomena under study cannot be predicted accurately,
because they have a component of chance, of uncertainty. But the chance is no longer the product
of our ignorance, but a form of expression of our knowledge. Uncertainty can be controlled and
quantified thanks to statistics. When statistics are based on certain data, they can provide very
valuable information to society (Sloman and Jones, 2017). Statistics can be used to understand
how the human population has evolved from its origins to the present, how countries have
changed in the last hundred years, some historical statistical data, how statistical knowledge
informs the world of how to live more and better, how the so-called deterministic chaos can be
described in statistical terms, how to demystify some miracles and surprising results with
statistics, the difference between determinism and randomness, how to find out who was the true
author of a work (Ullah and Giles, 2016).
In general, users of the economic field do not carry out surveys to obtain the statistical
information they need but use statistics produced by different agencies: such regional statistics
offices, EUROSTAT, etc. (Cherrier, 2017). Researchers and economists typically gather data
from databases developed by states and other organisations and provide statistics on the most
diverse topics: such as population figures, prices, labour costs, hotel occupation, mortgages, etc.
(Angrist, et al., 2017).

1.3 The Global Economy

With the impact of the last global financial crisis dying, there is more room for
policymakers to deal with issues regarding sustainable development in the longer-term. There
were a couple of economic crises in the last decade having negative impacts on various
economies and on the banking system in 2009, followed by the sovereign debt crisis in Europe in
2010-2012, and then the period of readjustment of prices at the global level during 2014-2016
(Becker, 2017). The global economy has been strengthening while the crises subside and
accompany pressures on the economies, therefore the policies have been changing to recover
from the economic crises and are now more focused on the long term issues that hinder the long
term goals of sustainable development (Balcerzak and Pietryka, 2017).
It is estimated that in 2017 world economic growth has reached 3.0%, a percentage that
represents a strong acceleration compared to the meagre 2.4% in 2016 and constitutes the highest
 6

global growth rate registered since 2011. Continuous improvement in the labour market
indicators in many economies and there has been more growth in many countries in 2017 than in
the previous year. Worldwide, it is expected that in 2018 and 2019 growth will remain stable at
3.0%. The strengthening of economic activity has been uneven in the different countries and
regions (Brink, 2016). The main factor of string growth in the gross world product is the
development in the developed countries, although the most dynamic regions in the world are
East and South Asian regions. The cyclical improvements in Argentina, Brazil, the Russian
Federation and Nigeria as these economies overcome the recession also account for
approximately one-third of the increase in the global growth rate between 2016 and 2017 (Brink,
2016). However, the economic benefits of The last few years continue to present an unequal
distribution by countries and regions, and in many parts of the world, the economy has not yet
returned to growth at vigorous rates. The economic outlook remains bleak for many commodity
exporters, underscoring the vulnerability to the cycles of expansion and contraction of countries
that rely heavily on a small number of natural resources. In addition, the long-term global
economic potential is dragging down the drag on the long period of low investment and weak
productivity growth that followed the global financial crisis (Becker, 2017).

1.4 Contemporary Economic Challenges

In the wake of the economic recession and banking crises, one of the important
challenges faced by the world is protectionism which could compromise the rebound in world
trade. World trade rebounded in 2017. During the first eight months of the year, world
merchandise trade grew at the fastest pace since the end of the crisis (Popkova, Chechina, and
Sultanova, 2016). This recovery is mainly due to the growth of the demand for imports in East
Asia due to the increase in domestic demand in the region, encouraged by accommodative
policies. In several of the main developed economies, imports of capital goods have increased
again thanks to the fact that companies have taken advantage of the best investment conditions
(James, 2017).
Recent adjustments in some of the most important trade relations, such as the decisions of
the United Kingdom of Great Britain and Northern Ireland to leave the European Union and the
United States of America to renegotiate the North American Free Trade Agreement and re-
 7

evaluating the provisions of its other commercial agreements in force, have caused concern about
the possible escalation of trade barriers and disputes. Also, trade barriers and disputes could
intensify if other countries respond with retaliation (O'brien and Williams, 2016). An
increasingly restrictive trade environment could reduce the growth prospects in the medium
term, due to the interdependence that exists between trade, investment and productivity growth.
In this context, policies should focus on defending and reactivating multilateral trade cooperation
and highlighting the benefits that can be obtained from trade in services (Popkova, Chechina, and
Sultanova, 2016).
Another important economic challenge is the sustainable development issue across the
world. The weak increase in per capita income makes it difficult to achieve sustainable
development goals in several regions. There are continuing concerns about the uneven economic
recovery in various countries and thus future prospects of goals of sustainable development at the
global level remain shadowed. Many countries have even suffered setbacks due to the decline in
average incomes in four large developing regions in 2016 (Gale, 2019). For the period 2017-
2019 more problems are expected and very small growth in terms of GDP per capita in Western
and Southern, Central Africa, Latin America and the Caribbean, and Western Asia. In the
aforementioned regions, there are 275 million people living under extreme poverty, and thus
highlight the criticality of long-term goals of sustainable development hindered by the structural
economic problems, as well as not hinder the achievement of the goals of eradicating poverty
and creating decent jobs for all. If these issues are not addressed, a quarter of the population of
Africa could live in extreme poverty by 2030 (Carley and Spapens, 2017).

2 Part 2:

2.1 Econometrics
The description of economic reality is not a simple task. In order to represent that reality
in a simplified but adequate way, econometric models have become a common tool in economic
analysis. Econometric models are based on economic models, to which they incorporate a
component of uncertainty or randomness that, as we have seen in previous chapters, is inherent
in the socioeconomic field and that we will usually denote by u. Consider, by way of illustration,
one of the most emblematic economic models: the Consumption function of Keynes, which
 8

describes the behaviour of consumers in terms of income (Wooldridge, 2015). In his General
Theory (1936), JM Keynes states the fundamental psychological law according to which
consumption is a growing function of income C = f (R) and also, an increase in income will
always cause an increase of lesser magnitude in consumption: 0 <dC dR <1 where dC dR is the
Marginal Propensity to Consumption. In addition, Keynes considers that once the primary needs
are met, it will tend to accumulate, which causes the proportion of income saved to be greater as
real income increases: dC dR <CR, that is, the marginal propensity to consume It is less than the
average propensity. From the economic model described above we can specify the following
econometric model (Keynes, 2018):
C = β1 + β2R + u, 0 <β2 <1, β1> 0
There is a wide variety of econometric models, which reach very high levels of
complexity and sophistication. Logically, in this topic we will limit ourselves to presenting an
introductory treatment, studying only linear single-equation models. Econometric models collect
in one or more equations the relationships between economic magnitudes (Bhaumik, 2015).
Following a causality criterion, the variables that intervene in the models are classified as
endogenous (those that are explained by the model) and predetermined that encompass both the
exogenous variables (determined externally to the phenomenon being modelled) and the delayed
endogenous variables (determined within of the process but in moments before the one
considered) (Abramitzky, 2015).

2.2 Macroeconomics & Microeconomics

When the economy became a discipline of study, two main fields of analysis emerged:
the micro and the macro. Microeconomics is mainly dedicated to the economic activities of
consumers and producers as individuals or as groups of suppliers and demanders known by
markets (Acemoglu, Ozdaglar, and Tahbaz-Salehi, 2017). On the other hand, macroeconomics
deals with economic groups, that is, the economy as a whole. The two most important problems
in the macroeconomic field are unemployment and inflation. Thus, it largely covers the
individual in particular, but over which his intervention is relatively small. Both the cause and
the solutions to these problems belong to the scope of governmental action, which affects the
economy (Johnson, 2017).
 9

Micro and macroeconomics have certain interrelations: the government's economic

policy, wage policy for example, directly affects consumers by decreasing or increasing their
purchasing power. These effects can be analysed through microeconomics. Likewise, the
decisions of the group of consumers to increase their consumption increase aggregate demand
and may generate a general increase in prices. Then the problem is the subject of macroeconomic
attention (Becker, 2017).

2.3 Components of Microeconomics

Microeconomics studies the behaviour of individual decision-making units: companies
and families and the functioning of the market for each good or service. Thus, for its study,
microeconomics has the following components or groups of topics (Brink, 2016)
i. The economy of Consumption or Demand Theory U.
ii. Production Economics or Theory of Supply
iii. Product Market Structures
iv. Government intervention in the Market
v. Factor Market Structures
vi. General Balance

2.4 Components of Macroeconomics

Macroeconomics studies the behaviour of large economic aggregates: Gross Domestic
Product, Aggregate Demand, Aggregate Supply, Consumption, Investment, employment. Thus,
for its study, macroeconomics has the following components or groups of topics ((Angrist, et al.,
2017)):
i. National Accounts: the national accounts
ii. Goods Market, theory and fiscal policy.
iii. Money Market, theory and monetary policy.
iv. Labour Market, theory and employment policy.
v. Foreign Market, theory and foreign trade policy
vi. Economic cycles and stabilization policy.
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2.5 Behavioural and Experimental Economics

Behavioural Economics is a branch of the economy that in recent years has
revolutionized the way of understanding economic decision-making processes in particular and
human behaviour in general. This arises from an essentially inter and transdisciplinary approach,
differing from the traditional approach of Neoclassical Economics. According to the definition in
the Behavioural Economy Series of Princeton University, Behavioural Economics uses the
models, facts, and methods of other sciences to identify and describe accurate results about
cognitive ability and social interaction of humans, and to understand the impacts of the results on
economic and human behaviour (Kao and Velupillai, 2015). Psychology has been the most
relevant science, but there is also an important role of sociology, Biology, Anthropology, as well
as other sciences that are affecting economic behaviour and studies. Behavioural Economics is
integrated into empirical methods and techniques that help economists to draw from other
sciences and conduct more experiments and studies in economic studies to develop better
policies (Durlauf and Blume, 2016).
On the other hand, according to Mullainathan and Thaler (cited in Berndt, 2015),
Behavioural Economics is a discipline that combines Economics and Psychology, by
investigating what happens in markets when agents suffer from the limitations and complications
of human beings. Regardless of the definition, which depends to a large extent on the theoretical
side, this particular branch of the Economy delves into the study and analysis of the anomalies of
human behaviour and its effects on economic decisions. Insofar as these anomalies describe a
subject other than the rational individual defined according to the neoclassical economic models
used so far, this line of investigation can be considered to question the theoretical assumptions of
the free market (Berndt, 2015). Within this context, if the market efficiency depends on
behaviour economic agents that are supposed to be rational, as suggested by the neoclassical
economics, there are chances to discover systematic anomalies of irrationality, in economic
agents’ behaviour to understand market dynamics (Kao and Velupillai, 2015).

2.6 Financial Markets and Institutions

The main role of financial institutions is to transfer the excess of funds from those who
have it to those who need it. Financial institutions facilitate business, education, families, and
state to finance growth and development strategies. If there are no financial institutions and
 11

markets, then people with an excess of funds have no secure way to deal with their funds and
those who need funds lack access to funds (Burton, Nesiba, and Brown, 2015). Families and
companies that provide funds to the financial markets earn a return on their investment. This is
needed to guarantee the supply of funds to the financial markets. Otherwise, these markets could
not transfer funds to those who require them (Kidwell, et al., 2016).
The main participants in the financial markets are the lenders or those who have an
excess of funds or the surplus units of funds, they provide savings to the institutions in the
financial markets. On the other hand, there are participants who need funds or are called deficit
units in the market, they gain access to surplus units through financial institutions and markets
(Cherrier, 2017). The deficit units include individuals, companies as well as states, who access
surplus units through financial institutions. The funds are converted into securities that have
certified claims of the issuers. The debtor the borrowed funds are issued to deficit units by the
institutions who then pay interest regularly to increase the savings and wealth of surplus units
(Kidwell, et al., 2016). These transactions allow businesses and states to finance their growth
strategies while the wealth of surplus units increase (Burton, Nesiba, and Brown, 2015).

2.7 Development Economics

Development Economics is an inherently multidisciplinary area of study whose
discussions address issues ranging from international cooperation, the role of multilateral
organizations and civil society, to the environment, heteropatriarchy, colonialism, the
epistemology of knowledge or needs, freedoms and human capabilities. Unfortunately, these and
other debates related to the sub-discipline have not yet been incorporated into the Economics
curriculum. In this chapter, we intend to humbly help to fill this deficit by offering an accessible
and introductory text that facilitates its gradual insertion into the curricular meshes (Sunley and
Martin, 2017).
The Economics of Development, as a subdiscipline of the Economy, was born after the
Second World War and was formally constituted at the end of the 1940s. Although it is anecdotal
to offer a specific date to place the beginning of an area of study, there is a certain consensus to
establish the day on which the speech of President North American President Harry S. Truman
(in 1949) took place as the starting point of the nascent Development Economics. For the first
time, the so-called countries poor, impoverished, backward, South, developing, less developed,
 12

underdeveloped, peripheral or Third World, become the object of study of social scientists
(Siggel, 2016).
There are different theories that have revolved around the field of Development
Economics during the last six decades will shape term development economics. Their
presentation does not follow an exclusively chronological order since the type of approach in
which they have been grouped has also been taken into consideration. Overall the theoretical
approaches can be differentiated as orthodox and heterodox approaches to development (Roland,
2016). The orthodox approaches are those theoretical trajectories that start from the hardcore of
neoclassical economics and understand that the market and its expansion are the fundamental
engines of Development. Approaches that do not respond to this pattern have been labelled as
heterodox. This classification leads us to consider theoretical proposals of a very diverse nature
as heterodoxy (Thirlwall and Pacheco-López, 2017).

2.8 Environmental Economics

Environmental economics focuses on all the costs inherent to the deterioration and
control of the environment, apart from the totality of the benefits derived from the protection of
resources and the environment in a global cost-benefit scheme, with balance of costs and benefits
in each sector of human activity, strengthening the resource base to which the present and future
generations will turn (Hussen2018). The science of economics is related to the allocation of
resources, with or without a specific price, for different individual and social uses, the
distribution of production between individuals and groups, the successes and failures of
economic systems and the implications of sustainable development (Hanley, 2016).
A possible definition of economic instruments for environmental purposes would be: they
are all those economic tools that influence in one way or another the behaviour of the agents and
that affect their decisions that affect the environment (Hussen2018). For many this definition can
be somewhat broad in relation to others that usually refer to a very limited range of options and
instruments that have the regulatory authority or that can be generated by private agents
(Tietenberg and Lewis, 2016).
It is necessary to analyse the role of many elements that go far beyond the sphere of
action of the regulator to understand the framework in which it operates, and explicitly consider
that in a large number of cases its tools have a limited scope in relation to other decisions or
 13

macroeconomic or sectoral policy actions, which have a much greater effect on the agents'
behaviour towards the environment. There is a wide range of economic policy decisions that
directly affect the environmental behaviour of the agents, of which only a small part is affected
by the environmental regulator, and which are rather elements over which their influence is
marginal (Hanley, 2016), and even in it must seek to correct the negative effects caused by other
economic instruments available to entities other than the aforementioned regulator. Part of the
activity of the latter must be the design of instruments that counteract market failures that affect
negative decisions for the environment by other decision makers, or even correct market failures
induced by these (Hussen2018).

2.9 China and the World Economy

The studies on unequal ecological exchange have been based on the seminal work of
Bunker (1984 and 1985), and the unequal exchange theory proposed by Emmanuel (1972), to
demonstrate the unbalanced and disproportionate nature that they gain the matter transfers from
to the centre from the periphery and exploit periphery’s environmental space - that becomes a
space for intensive production and disposal of waste from the centre (Overholt, 2016). Thus, the
ecological footprint of the nations at the centre of the economic system implies the land
appropriation, labour and resources in under-developed economies, thereby increasing
degradation of the environment (Gilpin, 2018).
In this sense, the magnitude of the effect of China's industrial transition on global demand
for resources has not had, if considered in absolute terms, precedents. The Chinese economic
transition has been responsible for most of the annual growth in the global consumption of
materials since the beginning of this century (Overholt, 2016). Thus, according to the Chinese
market acquires increasing importance in the exchange of materials on a global scale, the
characteristics of its market influence, increasingly, in the form adopted by the industries of
production and exploitation of natural resources worldwide. It could be affirmed, then, that this
unprecedented Chinese economic and material growth is contributing to transforming the
economic, social and ecological relations of the current stage of the capitalist accumulation
regime (Jin, Li, and Wu, 2016).
At present, the Chinese development process seems to be entering a new phase. This
stage is characterized because it combines a firm commitment to external insertion in
 14

international markets, and in global production networks, with a shift towards satisfying the
needs of an increasingly important internal demand (Gilpin, 2018). This bicípite strategy is
giving rise to a process of industrial diversification that has two differentiated aspects: one, the
outside, composed of the industrial branches of greater added value; another, the interior,
embodied by intermediate productions, which tries to cope with the new needs that arise from the
socio-economic changes that shape contemporary Chinese interior demand (Jin, Li, and Wu,
2016). It is in this context of change that the study is situated, in which the relationship between
the capitalist development process and environmental degradation is analysed through the
behaviour of the material flows that take place in the Chinese economy (Overholt, 2016).

2.10 Contemporary Issues in the UK Economy

Undoubtedly, the British economy has come out very handicapped with the decision of
the country to leave the EU. Although they warned from the beginning of the harsh economic
consequences that would suffer, the British ignored the warnings and nothing more to know the
result, the economy suffered. Standard & Poor's lowered the UK rating from a triple-A, which
means maximum solvency, to a double A with a negative outlook (Minford, 2019). This
perspective will affect, according to them, the British economy in general, its trade balance,
fiscal accounts and also its financial sector. Fitch Group before the campaign for the referendum
withdrew the AAA rating to the United Kingdom, and after the vote is returned to lower its rating
establishing it in AA (Tori and Onaran, 2018). Both agencies agreed that the Brexit would cause
political instability as it has happened, with the threat that Scotland, Wales and Northern Ireland
may depart from the United Kingdom to remain in the European Union (Coulter, 2018).
The day after the referendum the pound fell drastically, losing more than 8% of its value
against the dollar, and 6% against the euro. This means that investors see the political situation
that the United Kingdom goes through as bad. In fact, since the referendum, the pound has
depreciated 14% against the dollar and 12% against the euro, which has helped to trigger prices
(Minford, 2019). In addition, after the elections of 2017 the pound was also weakened by the fear
that May lost an absolute majority, something that materialized. To this day, the value of the
pound remains low and trades at 0.8535 with the euro. The annual variation rate of the CPI in the
United Kingdom in May 2017 was 2.9%, 2 tenths higher than the previous month. The monthly
variation of the CPI (Consumer Price Index) was 0.3% so that the accumulated inflation in 2017
 15

is 1.4% (Coulter, 2018). It is the maximum level since 2013. According to the ONS, this increase
it was due to the higher costs of cultural goods and services, of electricity, in addition to clothing
and food products. This increase was offset by the decrease in the price of fuel and airfares (Tori
and Onaran, 2018).

3 Part 3:

3.1 Advanced Microeconomics

The subject Advanced Microeconomics constitutes a key point in the academic training
of the economics degree, and especially at the university level. This subject is generally
considered one of the last steps in the microeconomic formation in the regular economics
degrees (Fiedler and Costantini, 2018). It complements normally the training received in the
basic microeconomics subject, and at the same time fits into a global design that can include
other compulsory or optional subjects, such as the Decisions Theory, the Theory of Jocs, the
Theory of Social Education, etc. (Kaplan and Violante, 2018).
At various universities, and in their regular economics studies, the subject the theory of
decision and the theory of Jocs is a compulsory subject. As optional subjects, the academic offer
includes subjects such as Public Decisions and Social Choice, Information Economics,
Economics of Natural Resources, Mathematical Economics, among others, which are closely
related to the subject of the subject Advanced Microeconomics (Jo, 2015).

3.2 Advanced Macroeconomics

Advanced macroeconomics is fundamentally the introduction to the dynamic
macroeconomics which closes the macroeconomics learning but at the same time lays the
foundations so that the economists can continue to pursue postgraduate studies in economics
with a solid base regarding the fundamentals of the current macroeconomics. Advanced
macroeconomics is a general guide for students, presenting the contents of the subject at a
theoretical level (Fiedler and Costantini, 2018). The fundamental objective of is to introduce
students to the dynamic macroeconomics. For this, the student is introduced to the basic tools of
the dynamic analysis, fundamentally the use of differential equations to define the behaviour
 16

over time of the different macroeconomic variables. In addition, certain dynamic optimization
techniques are also introduced (Cherrier, 2017). The objective is to build the basic dynamic
general equilibrium model and study its components and its main characteristics. This model is
the cornerstone of the current macroeconomics (Fiedler and Costantini, 2018).
Advanced macroeconomics also involves using dynamic programming to solve dynamic
optimization problems in discrete time. According to Kaplan and Violante, (2018) the discrete
equivalent to the Ramsey model whose solution and analysis gave us the same information as in
the continuous case. Economists could ask what the meaning of learning is in this new technique,
not trivial if it helps them to solve the same kind of problems simply transferred to a discrete
environment. As in the case of difference equations, the introduction of certain types of
uncertainty is relatively simple in the discrete case (Kaplan and Violante, 2018). If time is taken
as a continuous variable, stochastic calculation techniques are needed to be able to incorporate
uncertainty in economic models. However, in a discrete time the problem is greatly simplified.
This is the fundamental reason for the use of dynamic programming in economics. If the reader
flips through any advanced macroeconomics book, he will notice that most of the problems that
use this technique include uncertainty (Cherrier, 2017).

3.3 Advanced Behavioural and Experimental Economics

The advanced Behavioural and Experimental economics applies scientific research to
cognitive and emotional trends for a better understanding of the economic decision-making
process and its effects on market prices, benefits and resource allocation. Although its origin can
be found in the work The Theory of Moral Sentiments written by Adam Smith (1759 cited
Dhami, 2016) on the psychological principles and moral sentiments that govern human
behaviour, the truth is that it began to take centre stage in the mid-twentieth century, following of
the models on expected utility and discounted utility in decision making under conditions of
uncertainty and intertemporal consumption. Probably, the most relevant publication is the article
entitled Prospect Theory: An Analysis of Decision under Risk in which it was explained the
anomalies in rational economic decision making through cognitive psychology techniques
(Berndt, 2015).
According to Dhami, (2016), the new economy must combine approaches of both
behavioural economics and Keynesianism and proposes the following guidelines for economists:
 17

(i) face the uneasy reality that financial markets are significantly different from the perfection
because they are subjected to false extraordinary illusions and to the madness of many people;
(ii) admit that Keynesian economics is the only possible solution to respond to recessions and
depressions, and (iii) strive to incorporate the realities of finance into macroeconomics. In turn,
Spiliopoulos and Ortmann, (2018) questions whether the individual, in its private sphere, and the
State, in the public sphere, through its regulation and stabilization functions, have learned to
predict future economic and financial crises, as well as to fight them more effectively, reducing
their negative effects and shortening them over time, noting that the only feasible option to
achieve these objectives would be to understand the role of animal spirits within behavioural
economics (Spiliopoulos and Ortmann, 2018).
Behavioural economists seem to want to place emotions and feelings (guilt, shame,
indignation, empathy, sympathy, fear or disgust, among others) in a prominent place of our
decisions. As if it were an alarm system, they indicate the dangerous or aversive situations that
we should avoid and those that are pleasant to us (Berndt, 2015) and, therefore, we should
approach. Although this seems like a simple question, emotions are one of the most complex and
difficult to explain psychological processes, as pointed out by Spiliopoulos and Ortmann, (2018)
by stating that almost everyone thinks they know what emotion is until they try to define it; At
that time, virtually no one claims to understand it (Dhami, 2016).

3.4 Advanced Econometrics: Theory and Applications

The interest in studying causal relationships in the real world has been crucial in science
throughout its history. The concept of causality has varied over the centuries. However, the
background of the discussion remains the same: the interest in doing a study about the causal
relationship between the variables (Lim, 2015). This study begins with the initial question of any
impact study: what is the causal effect of one variable X on another variable Y? Answering it can
be a matter not so trivial from the analytical point of view or from the data. So to have an idea of
this effect, we should have some idea about the existence of a causal relationship between these
variables (Asteriou and Hall, 2015).
From the perspective of economics and econometrics, from the first decades of the
twentieth century, the analysis of causality was configured as the study of real-world variables,
establishing some sort of sequential or logical order between them. In this way, and under
 18

theoretical or non-testable judgments, a structure of causal ramifications is established that unites

those variables and generates the observed data. When we apply this analysis to the economy, we
find that the data-generating process is governed by economic relations underlying it. These
relationships are usually simplified and systematized through the so-called economic models,
which clearly define their exogenous and endogenous variables, and whose causal relationships
are the result of the behaviour of economic agents (for example, profit maximization) of the
company) (Lim, 2015). In these models, the exogenous variables have an effect on the
endogenous variables and not the other way round, and therefore we can affirm that the causal
relationships between economic variables have in themselves a basis in economic theory.
Likewise, the impact of one variable on another can be studied by altering one of the exogenous
variables and observing its effect on one or more endogenous variables, keeping everything else
constant (the Marshallian notion of a ceteris paribus change) (Asteriou and Hall, 2015).

3.5 Labour Economics

Since the publication of The Wealth of Nations by Adam Smith in 1776, the labour
market has been a constant in the development of economic thought, so that in the 21 st century,
with the Medical, technological and social advances that have had a direct impact on the well-
being of people with disabilities, economists can count on the analysis of their relationship with
employment with the whole doctrinal body offered by another area of our science such as Labour
Economics (Katz, 2015). Labour Economics examines the organization, functioning and results
of labour markets, the decisions of the agents that participate or can participate in them and the
economic policy related to employment and the remuneration of labour resources, which are
supposed to they are scarce in relation to desires and where individuals will choose when they
compare costs and benefits, responding to existing incentives or disincentives (Ehrenberg and
Smith, 2016).
The analysis of the labour market in the classical economy was one more piece in a great
theory of growth. In spite of everything, the classic arguments about supply and demand of work,
differences of wages, unemployment, etc. they can be discussed with certain independence from
that theory. Labour economics refers to various issues such as the division of labour (in the sense
of Adam Smith), the distinction between productive and unproductive labour and the Marxian
concept of exploitation (Albert and Hildenbrand, 2016). They are issues a little disconnected
 19

from all the above. But not for that reason they are not important. In our opinion, they contribute
to giving a more complete vision of the arguments that in the field of labour economics emerged
during the classical period (Hyde, 2015).

3.6 Industrial Organisation

The Industrial Economy refers to the analysis of markets and the behaviour of companies
in those markets. It considers the existing relationships between market conditions (structure),
the performance of companies (behaviour) and the determination of the different economic
variables (results). Traditionally these analyses have been restricted to industry, hence the name
of the economy or industrial organization, but can be extended to other economic activities such
as services or even agriculture (Ehrenberg and Smith, 2016). However, the extensive regulation
and interventionism in agricultural markets and in a large part of the service activities, or the
peculiarities of the functioning of the factor, capital and labour markets, make it convenient to
treat these markets differently (Devine, et al., 2018).
It is a fundamentally microeconomic analysis, but the theories of industrial organization
are separated from conventional microeconomic analysis insofar as they consider that the nature
of competition in markets is broader than simple competition through prices. Frequently,
competition through innovation (product and process, product design and differentiation,
marketing networks, etc.) plays a more important role than the simple competition in prices. The
consequence is that economists cannot speak of a tendency towards a statically defined
equilibrium as a perfect competition market (Hyde, 2015). Markets experience a continuous
change since the behaviour of companies constantly modifies market conditions. In turn, the
behaviour of companies is affected by the valuation of the results in the market that modifies
business expectations. This dynamic conception of competition is separated from the tradition
closest to the neoclassical synthesis, although it integrates many of the problems posed in models
of imperfect competition (Albert and Hildenbrand, 2016).
The origin of the industrial economy goes back to some of the studies, mainly empirical,
that since the end of the nineteenth century are made on the functioning of product markets. In
the 50s it will develop as an independent economic discipline. On a common background, like
the one that has been previously defined, different schools or approaches will emerge (Katz,
2015).
 20

3.7 History of Economic Thought

Throughout history, human beings have tried to satisfy their needs, according to the
natural conditions in which they live. Much of these needs are met through activities that are
considered economic since it requires the proper use of goods, natural or processed, that are
acquired in the environment. Such goods may be abundant or scarce, so their use should be
moderate to meet present and future needs (Skousen, 2016). To meet their needs, human beings
use the available means, which can be given alternative uses. An example is water, a natural
resource whose sufficiency or scarcity depends on geographical areas; its use is intended for
consumption for the preservation of life, animal or vegetable, for the generation of electrical
energy or for the transformation and reproduction of food products in arid or fertile areas, that is,
that the satisfaction derived from its use can be immediate or for a future mediate (Hamilton,
2017).
In some areas the water is so abundant that it can even be harmful to nature and the
population; in these places, this resource can be freely used to the point where waste is reached.
In other areas, its availability is limited, even scarce, so it is necessary to rationalize its use
(Vaggi and Groenewegen, 2016). The way in which water can be used properly is based on
knowledge derived from its existence, distribution and consumption, which is recognized as one
of the functions of the economy. The production, preservation, distribution and consumption of
this element will largely depend on plant and animal life, but the responsibility for this will be
essentially human. And as happens with water, it occurs with many other products whose need,
acquisition and consumption are vital for societies (Barber, 2017). The dynamics of population
growth in some areas and the infinity of the needs and desires of individuals sometimes causes
the shortage of some resources, which forces their rational use. This indicates that all the
possibilities must be selected in order to decide the destination of the resources. That is a
decision of an economic nature (Hunt and Lautzenheiser, 2015).
Alfred Marshall (1842-1924 cited in Hunt and Lautzenheiser, 2015) pointed out that
economics is a study of humanity in the ordinary business of life; it examines that part of the
individual and social action that are closely connected with the use and achievement of the
material requirements of well-being. Another English economist, Lord Lionel C. Robbins (1898-
1984 cited in Hamilton, 2017) redefined, as many others have done. thinkers, the field of
economics to say that it is the science that studies human behaviour as a relationship between
 21

scarce means that have an alternative use. Thus, in the definitions of economics we find in one
way or another that it is the science of economizing, so the issue that concerns the economy as a
whole is to find the options to achieve it (Barber, 2017).
The selection of alternatives involves choosing some and abandoning others to produce a
specific good or service, through the use of available resources. For example, for a society at
some time require some inputs such as fruits, vegetables, etc., but if we think of an urban society
the demands of consumption vary, for example, according to the climate: in hot season are
consumed more fans and in cold periods, more heaters (Skousen, 2016). These possibilities of
production and consumption of certain goods according to the climate indicate how a certain
product can be privileged over another in accordance with the conditions, needs and available
alternatives, in certain times (Vaggi and Groenewegen, 2016). Although there are different
meanings of economics, the expression has an etymological foundation: it is formed by the
Greek voices oikos (house) and nomos (law), which literally means administration of the
heritage of the house, which is nothing more than the generation, accumulation and distribution
of available wealth (Vaggi and Groenewegen, 2016).
Sometimes the expression political economy is used. The policy aggregate indicates that
it is about the administration of the polis, that is, the city-state, which was the social organization
of the ancient Greeks. The concept of economy comprises, therefore, the individual economy and
the social economy in all its complexity (Barber, 2017). Thus, the economy is the science that
helps the understanding of the generation, acquisition and distribution of wealth for the family
and for society or the State. Therefore, the basic knowledge of the economy is, along with other
human activities, such as legal, political or philosophical, one of the necessary foundations to
understand the set of actions of individuals in societies (Skousen, 2016).

3.8 International Trade Theory and Policy

Although economists are usually very cautious when it comes to making considerations
about well-being, the traditional theory affirms without a doubt that international exchange
improves global welfare. International trade allows many of the goods that are demanded in a
country, because they are part of the utility functions of citizens, reach their hands (Viner, 2016).
Without this exchange, as no country is able to fully satisfy the demand for goods made by its
 22

citizens, especially in the case of more developed economies, welfare would be lower. From the
above reflection, it immediately follows that a trade policy that obstructs free trade harms the
welfare of citizens because it does not allow the economy to reach a Pareto optimum (Leamer
and Stern, 2017).
Hence, the two fundamental theorems of well-being derive that affirm that all competitive
equilibrium is efficient in the sense of Pareto and that any Pareto optimum is attainable through a
competitive market. What follows immediately from these theorems is that the intervention only
manages to distort the attitudes of economic agents (since the market is efficient and distributive
neutral) and does not allow for Pareto-efficient situations to be achieved (Ethier, 2017). While it
is true that the assumptions on which the theory of general equilibrium is based are very
restrictive (in fact we can say that its demonstration is a mental experiment of a high level of
abstraction) and really has little to do with them , economists cannot fail to mention where the
theoretical support on which the entire justification for non-intervention in the economy is based
and from which, just as a concrete case, the justification for laissez-faire in the field of the
international economy (Rugman and Verbeke, 2017).
Regarding trade policy, the traditional theory is based on not justifying active commercial
policies in which there is competition in all industries, so there are no market failures that must
be corrected by the state. In an industry that operates in perfect competition, the price is equal to
the marginal cost, there are no extraordinary long-term benefits, only accounting benefits (Stern,
2017). If an industry presents prices above the marginal cost, new companies will enter the
industry and the price will fall to match the marginal cost, with which the extraordinary benefits
will disappear. It is the competition that eliminates the extraordinary benefits. If all the industries
work in this way, there are no sectors that are more valuable in the margin (either because they
have extraordinary benefits or because they produce positive external effects that revert to the
benefit of society as a whole), that is, there are no strategic industries (Ciuriak, et al., 2015).
Therefore, any type of industrial policy, both internally and as export subsidies, will only distort
the market by creating inefficiency and shifting resources from one sector to another in an
unnatural way and completely unfair to industries and/or companies. not selected In order for
perfect competition to be a reality, a series of assumptions must be fulfilled: there must be no
entry barriers to the industry, the good offered by all companies must be homogeneous, there
 23

must be perfect information and there must not be any type of market power, that is, no buyer or
seller should be able to influence the market price of the good (Chacholiades, 2017).
The first thing to keep in mind when talking about explanations of international trade that
go beyond the neoclassical model and comparative advantage is that they are not closed theories.
Its authors are proud that thanks to the complementarity between the models of industrial
organization (especially those dealing with the structure of markets) and those of international
trade, a new answer can be given today to the question: why Is it traded? (Leamer and Stern,
2017) This pride is that they can finally be modelled, that is, exposed in a rigorous and
formalized way, situations of imperfect competition or increasing returns to scale and draw new
scientific conclusions in a field in which everything was previously explained (although not in a
completely satisfactory way) by the traditional models, in which everything fit, but which were
based on assumptions that were too simplistic and far from reality (Ciuriak, et al., 2015).
The new theories also respond to the changing nature of trade and are particularly
interesting today, when economic globalization (and therefore the generalization of the
international division of labour and the massive exchange of goods) is a reality that affects more
and more countries (Viner, 2016). It should be noted that these theories do not intend to revoke
the conclusions of the model of factor proportions, but to complement them in cases where they
were not capable of explaining trade flows. As a result of these analyses, a new explanation of
trade is obtained: when trade between countries is intra-industrial (instead of inter-industrial),
(Stern, 2017) it does not respond to the pattern of comparative advantage, but can only be
explained taking into account yields increasing scale and differentiation of products, that is,
assuming and modelling the imperfection of market structures (be they oligopolies or
monopolistic competition) (Stern, 2017).
In addition, these analyses emphasize the importance of certain aspects related to the
location and the dynamic development of the industries that are not taken into account by the
traditional theory (because they are impossible to integrate in the models), but that does not stop
having a determining importance when defining patterns of trade (Rugman and Verbeke, 2017).
These aspects are the importance of historical circumstances and economic geography in the
location of industries and the decisive role played by technological externalities and dynamic
economies of scale (learning curves) when configuring the guidelines that govern international
trade (Ethier, 2017).
 24

By integrating all these elements with the traditional Heckscher-Ohlin model it is

possible to give an explanation of the trade that is much more complete and closer to reality. This
does not mean that there are no doubts about certain aspects of the exchanges, nor that a single
model has been designed that encompasses all the findings of economic science (in fact the main
weakness of international trade models in imperfect competition lies in they are not applicable in
all cases (Leamer and Stern, 2017) because, as happens to many models of industrial
organization, they are ad hoc explanations for certain phenomena that neoclassical theory is not
able to explain satisfactorily). On the other hand, it can be said that today economists have a
catalogue of international trade models that are much more complete than they had only twenty
years ago (Viner, 2016).

3.9 Decision Theory and Games

Suppose there is an industry in which, in the absence of perfect competition, there is a
market failure. Suppose that this industry is a global duopoly, where a national company
(company B) and a foreign company (company A) operate. When economists find their selves in
an imperfectly competitive market in this industry there will be extraordinary benefits, that is, the
benefits that can be achieved in it are above those that would be obtained in any other possible
investment, for the same level of risk. Companies will try to get as much profit as possible since
they are maximizing (Okasha, 2016). There will be an international competition to capture them.
Economists also suppose that both companies sell their products in a third market that is neither
nation A nor B (where companies A and B, respectively) are located. In principle, nothing allows
us to suppose that one of the companies will be able to obtain a greater amount of benefits if they
start from the same situations (White, 2018).
An example of the situation described above and that P. Krugman has popularized in the
literature is to consider companies A and B as producers of commercial aircraft (Okasha, 2016).
This implies that we are facing an industry with important entry barriers, where the good
produced has a very high price and where the highest technology is used (which in turn can have
important external effects) (Fang, et al., 2016).
Suppose that both companies are capable of producing a new plane that is being
demanded by a multitude of airlines (for example a 200-passenger jet that incorporates certain
 25

new technology), and suppose that they are the only ones in the world capable of producing it
(White, 2018). For simplicity, suppose that companies must decide between entering (producing)
and not entering (not producing) in the market; there are no intermediate options (Suleiman,
2017).
Let's suppose that table below, a matrix of results of the game represents the benefits or losses
that both companies can obtain depending on how they behave. We are facing a situation in which
economists must analyse the strategic behaviour of both companies (Okasha, 2016).
Both companies compete on equal terms COMPANY B
ENTER: PRODUCE DO NOT ENTER:
DO NOT PRODUCE
COMPANY ENTER: PRODUCE (-10,-10) (100,0)
A
DO NOT ENTER: DO NOT (0,100) (0,0)
PRODUCE

3.10 Public Economics

Public economics refers to normative economics, in the sense that it is concerned with the
degree to which public programs serve to achieve the desired objectives, as well as the way in
which the best results can be achieved. The evaluation must consider the effects of public
programs on economic efficiency and on the distribution of income (Bernheim and Taubinsky,
2018). The public economy is aimed basically at the study and deeper knowledge of public
policies, for which the necessary instruments for the analysis and application of the same are
provided. The scope of public economics is broad and tries to answer common questions (Pigou,
2017), such as: Why does the State exist? What is the level of intervention that must exist? What
are the goods and services that it must produce or finance? How should the State achieve Public
goals? What restrictions does it face in the political process? and what type of financing, and in
particular taxes, should be used? (Stiglitz and Rosengard, 2015)
The public economists argue that, in the absence of market failures, the free functioning
of competitive markets leads to economic efficiency. This relationship between competence and
efficiency is formally raised in the following two theorems:
First theorem: All Walrasian or competitive equilibrium leads to an optimal Pareto
situation (Pigou, 2017).
 26

Second theorem: All optimal Pareto combination or point implies the existence of a
Walrasian equilibrium (Bernheim and Taubinsky, 2018).

3.11 Health Economics

Due to resource constraints, budget deficits, which must necessarily be controlled, and
the high cost that health services represent for society, some countries, especially developed
ones, have introduced the tools of health for some time now. Economic Evaluation applied to
health, with the objective of evaluating not only the effectiveness of new technologies and
services but also their efficiency; that is, the association between its effectiveness and its cost
with a social approach (Baio and Dawid, 2015). The organization of the health system, which is
based on primary care, participates not only in the identification of needs, but also in the
planning and execution of its actions, but in an environment where resources are limited.
Therefore, it will necessarily have to address the study and implementation of the economic
evaluation, and this has encouraged us to write about some economic concepts applicable in this
level of attention (Phelps, 2016).

The Economy is the science that deals with the study of the allocation of resources in
order to maximize social welfare. The above definition is valid to explain what is Health
Economics if we think about the allocation of resources within this sector and in social welfare in
terms of health (Olsen, 2017). This is a branch of the economy with a particular conceptual
theoretical development, as well as with own methodologies and analysis techniques. Within the
fields of application of the Health Economics are the determinants and determinants of health,
health and its value, the demand for medical attention, the offer of services, economic evaluation,
balance, and others (Sloan and Hsieh, 2017). The objective of the Economic Evaluation in Health
is to study the distribution of scarce resources available to obtain the maximum possible yield,
measured through the improvement in the indicators of quantity and quality of health (Phelps,
2016). It would be interesting to explain some characteristics implicit in the definition of Health
Economics and economic evaluation in this sector, without thereby losing generality. Among
them the following (Sloan and Hsieh, 2017):
 27

a) The Economy and in particular the Economic Evaluation in health explicitly analyzes
the different alternatives of choice of procedures, services or medical technologies to solve or
prevent a health problem; that is, it identifies the alternatives, costs and benefits of each one
(Phelps, 2016). In reality, in the health sector, as in others, decisions are being taken on the
allocation of resources, according to the possible benefits they produce, implying that implicit
economic evaluations are being carried out. For example, if in a municipality is detected that the
main health problem is intestinal parasitism, associated with inadequate hygienic conditions in
homes, it may be decided to assign a higher percentage of the budget for the solution of
environmental hygienic problems, in relation to what could be assigned to other programs.
Derived from thinking, implicitly, that the benefit is great since it is about solving the main
health problem that affects that community (Olsen, 2017). Then, in a case like that, we would
have to evaluate among several alternatives to solve the problem of parasitism: the construction
of new health services, or health promotion activities to modify hygienic habits, or the increase
in the availability of medicines, or also some combination of them. The explicit Economic
Evaluation helps the objective analysis of each alternative, and a possible decision making in
favour of the most efficient, a concept that we will define later (Phelps, 2016).
b) The needs to be covered in the sector are unlimited and resources are scarce. It means
that the resources consumed in a health-related activity, limit the realization of another within or
outside the sector, so, if the budget available to resolve the parasitism is low, and the construction
of sanitary services and the promotion activity is high; then, inevitably, the construction of the
first ones will have to be postponed, and the second alternative will have to be replaced, and the
medicines will consume much of the budget, while limiting health promotion actions and
acquiring more medicines. The above can also be applied in the macroeconomic field (Baio and
Dawid, 2015).

3.12 Economics of the European Union

Long before the Single European Act was drafted, economists had pointed out that the
economies of the member states would have to behave more closely - a process known as
convergence - if they wanted to collectively exploit their full potential. The economic and
monetary union should be the next step, difficult, but necessary and desirable, to continue
moving forward (Ellerman, Marcantonini, and Zaklan, 2016). In 1969, the EU set itself the goal
 28

of achieving economic and monetary union (EMU) before 1980. However, the road was not easy.
The recessions of the 1970s paralyzed the work on EMU - and the consequent single currency -
as well as slowing down progress in other areas. The process was resumed in 1978 with closer
collaboration on exchange rates and was fully relaunched in 1988, culminating with the
conclusion of the first of the three EMU stages in 1990 (Tsoukalis, 2017).
In that year, for example, The EU abolished the last remaining restrictions to bring money
from one Member State to another, make transfers or invest in another EU country. From now
on, you would not have to fill out a form in order to acquire foreign currency to go on vacation
or study in another country. During the following years, a sharp dividing line was drawn between
the finances of governments and central banks (Nugent, 2017). Governments could no longer
approach central banks to issue more money in order to lend a hand if they could not balance
their budgets. The second stage of the EMU was reached before 1994, with the creation of the
European Monetary Institute (EMI), the predecessor of the current European Central Bank
(ECB) (Pietrzak and Balcerzak, 2016). As part of this process, governments committed
themselves not to live beyond their means, setting limits for the indebtedness they could
accumulate and for their budget deficits. The EU countries agreed to establish a system of
multilateral surveillance or supervision, to control situations in which the budgetary policy
decisions of a member state could have harmful effects on the economies of other member states
(De Grauwe, 2018).
In 1992 it was decided that five criteria would determine whether a Member State was
prepared to adopt the single currency. These criteria are known as the Maastricht criteria because
it is in this city that the Treaty was signed in which they were defined. The criteria refer to
(Molle, 2017):
• price stability: the rate of inflation should remain less than by at least 1.5% than the
average inflation rate of the three Member States with the lowest inflation in the previous year
(Molle, 2017);
• the deficit in the budget (the difference between revenues and public expenditures): in
general the budget deficit must remain below 3% of GDP (De Grauwe, 2018);
• the debt: its limit was fixed at 60% of GDP, although a country with a higher percentage
can, nevertheless, adopt the euro if its level of indebtedness decreases constantly (Tsoukalis,
2017);
 29

• the long-term interest rate: it should not exceed over 2% of the average interest of three
Member States with the lowest inflation rate in the previous year (Ellerman, Marcantonini, and
Zaklan, 2016);
• Stability of exchange rates: the exchange rate should be in the pre-established range
with predicted fluctuations. The margins are determined by the exchange rate system of Europe.
It is an optional system in which only those Member States participate that have linked local
currency with the Euros (Nugent, 2017).
Over the past three decades, the attention given by the various EU authorities to the social
economy has increased, although sporadically and with variances between organizations (De
Grauwe, 2018). The significant character of the social economy in the economic and social
development in Europe positions it as the cornerstone of the social model of Europe (Pietrzak
and Balcerzak, 2016).
The social economy has travelled a long road to gain recognition by institutions and
therefore the European policies are now being formulated within the context of the social
economy since 1980. It concluded in 1989 when the Commission to the Council published the
document titled the Social economy enterprises and realised that European market should
abandon borders, and establish a legal statute across Europe to enhance cooperation,
relationships and integrated societies, through the development of the Social Economy Unit
(Tsoukalis, 2017). In past decades, the European Economic and Social Committee (EESC) and
the Parliament, published several proposals, reports, and resolutions to stress new social values
as per the concepts of social economy. Reports were published by the Parliament to highlight the
concepts of cooperation and regional development, and the role of relationships in the
development of Europe (Nugent, 2017). The possibility of creating a European Association law
explored by the Commission and the Council. The EESC also sponsored a conference in 1986, in
association with the Coordinating Committee of the European Cooperative Associations
(CCACC), to report a series of studies on the cooperatives, associations, and mutual societies
(Nugent, 2017).
A series of setbacks and many advances have occurred since 1989 to recognise and apply
social economy policies. the Social Economy Unit of DG XXIII was the first public
administration body that gained specialization in the application of the social economy, under the
 30

leadership of Jacques Delors. The main mission was to allocate scarce human and financial
resources for the following (Ellerman, Marcantonini, and Zaklan, 2016):
• take initiatives to strengthen the sector of cooperatives, mutual societies, associations
and foundations (Tsoukalis, 2017);
• elaborate European regulations for cooperatives, mutual societies and associations
(Ellerman, Marcantonini, and Zaklan, 2016);
• analyse the sector (Nugent, 2017);
• ensure consistency of EU policy affecting the sector (Pietrzak and Balcerzak, 2016);
• serve as liaison with existing representative federations (Molle, 2017);
• establish relationships with the parts of the sector that are not organized (De Grauwe,
2018);
• publicize the cooperative sector, mutual societies, associations and foundations to those
responsible for decision-making (Tsoukalis, 2017);
• evaluate the problems facing the sector (Ellerman, Marcantonini, and Zaklan, 2016);
• represent the Commission on issues relevant to the other EU institutions (Nugent,
2017).
 31

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