Governmental discrimination between sectors: the case of Australian water policy
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2011
Authors
Crase, L.
O'Keefe, S.
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Mann, S.
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Book chapter
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Source details - Title: Sectors matter: exploring mesoeconomics, 2011 / Mann, S. (ed./s), Ch.9, pp.239-249
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Abstract
This manuscript raises important questions about the way economists conceptualise the interaction between economic agents. It was noted earlier by Handeler that “all branches of the economy are linked, each one is directly or indirectly a sales market for the other”. However, the thesis presented in his chapter is that aggregate measures of these interactions count for little.Similarly, Mann noted that the behaviour exhibited within sectors differs substantially and thus aggregating economic behaviours across sectors is likely to disguise important nuances. For instance, he observed that “in some sectors,operators tend to spend their money locally whilst in others people buy from more distant sources” with the consequence that “the sectoral structure of an economy will also determine the spatial face of the network through which added value is generated”. Most of these ideas are not especially contentious but the definition of “sectors” is far from precise and the usefulness of the concept in the context of public policy formulation is not always clear. This chapter represents a cautionary note on the argument for distinguishing sectors as the unit of economic debate, especially when the motivation for this approach is grounded in political interest in the preservation of rents. We present a case where the distinction of “sectors” has, in our view, proven unhelpful in improving welfare and promoting reforms that optimise the use of scarce resources. Unlike the other contributions in this volume, this chapter deals with an economic problem in Australia; namely the allocation of water resources between competing users. Nevertheless, there are useful lessons in this case and invariably these will resonate with European readers who are contemplating the role of sectoral analysis in economic debate.
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Copyright 2011 Springer Verlag